Here’s why health savings accounts can contribute to inequality

The Good Brigade | Digital Vision | Getty Images

A popular way to save for out-of-pocket medical expenses could contribute to health care inequity, according to new research.

Health Savings Accounts are tax-advantaged accounts available to Americans with high-deductible health insurance policies. Federal law established them in 2003. Since then, HSAs have grown rapidly as employers adopted high-deductible plans for their workforces to save money.

HSAs offer income tax reduction at three levels: contributions are tax-exempt, as are investment earnings and withdrawals for eligible medical expenses.

More of your money your future:

Here’s a look at more stories on how to manage, grow and protect your money for years to come.

When used optimally, they are among the most effective ways to save and build wealth, according to financial advisors.

However, black and Hispanic savers, women and low-income people are not using accounts as effectively as others, such as men, higher incomes and white and Asian savers, according to a new report from the ‘Employee Benefit Research Institute.

According to the report, early groups tend to contribute less money to HSAs, have smaller balances, and invest those funds less often — a dynamic that can reinforce and exacerbate health inequities already present in HSAs. based on race, gender and income.

“Race, ethnicity, and income-based gaps in the use of HSAs are troublesome,” according to the report, authored by institute research associate Jake Spiegel.

“To the extent that registrants [in high-deductible health plans] do not also enroll in HSAs, do not take full advantage of the tax advantages that HSAs offer, or do not save a sufficient amount, they may have more difficulty paying medical expenses and may delay or delay needed care. give up completely,” he said. “Delaying or forgoing treatment has deleterious effects on health.”


About 58% of private sector workers are enrolled in a high-deductible health insurance plan, according to EBRI. These plans generally have a lower monthly premium, but higher payouts. Total HSA Assets eclipsed $100 billion in January, according to Becoming, a consulting firm.

White account holders have an average HSA balance of $5,004, while black and Hispanic savers have $3,438 and $3,737, respectively.

This difference is not due to the length of ownership of the account; each had their HSA for roughly the same length of time (three years, on average), according to the EBRI.

Disparities based on race, ethnicity, and income in the use of HSAs are troublesome.

Jake Spiegel

associate researcher at the Benefits Research Institute

Instead, it’s largely down to contributions: White savers contribute an average of $1,806 to their accounts each year, an amount that eclipses that of black and Hispanic savers by $494 and $412, respectively.

White and Asian savers also receive larger and more frequent distributions from their accounts than black and Hispanic savers, suggesting they spend more money on health care, the report said.

The report did not specify the broader socioeconomic factors at play. But the data reflects broader disparities in wealth and income among Americans.

White people held 84% of the $142 trillion in American wealth at the end of 2021, according to at the Federal Reserve. By comparison, blacks held 4% and Hispanics 2.5%.

The average black and Hispanic saver may have fewer ways to contribute money to an HSA each year or use other funds for out-of-pocket medical expenses (thus postponing HSA withdrawals and accumulating savings for years). future).

The EBRI report is based on data from over 11 million accounts. It uses zip codes (those that are disproportionately white, black, non-white Hispanic, or Asian) as a proxy for income, race, and ethnicity.