HSA Contributions Differ by ZIP Code, Income, and Race

A recent study adds a new twist to the never-ending debate about the rising costs of healthcare.

The Employee Benefit Research Institute (EBRI) analyzed high-deductible health plans (HDHPs), which are typically offered with health savings accounts (HSAs), through the lens of demographics.

Together, the HDHP-and-HSA combination has quickly become a part of everyday healthcare management for workers and organizations across the United States. But the EBRI report, “Examining HSAs Through a DEI Lens,” reveals that there are discrepancies in HSA account-holder behavior between ZIP codes with different race and ethnicity profiles.

The report finds that HSA account-holders in predominantly White ZIP codes have an average HSA balance of $5,004, compared with averages of $3,438 and $3,737 for account-holders living in disproportionately Black and Hispanic neighborhoods, respectively. Interestingly, the average balances do not correlate to how long the accounts have been in existence, according to the analysis. Therefore, the difference in these balances reflects not time, but rather contribution behavior.

Also, account-holders living in disproportionately White ZIP codes contribute $1,806 to their HSA annually, on average, compared with $1,312 and $1,294 for disproportionately Black and Hispanic ZIP codes, respectively. And employees in White and Asian ZIP codes are more likely to take advantage of the ability to invest HSA balances. Only 6.3 percent of account-holders in Black ZIP codes, and 7 percent of those in Hispanic ZIP codes, are HSA investors, according to the report.

Gender also plays a role in the spending behavior of HSA accountholders. EBRI says that male HSA account-holders have substantially larger balances ($6,517), on average, than do female account-holders ($1,981). Similarly, men contribute an average of $1,980 annually, compared with women’s contributions of $1,508. Salary discrepancies, and some families receiving healthcare benefits through a male worker, may explain some of these gaps.

Interestingly, although women contribute less to their HSAs, a higher share of female account-holders (66 percent) take distributions than do males (62 percent). Women tend to incur more medical expenses than men, which explains the distribution, although men, when taking distributions, take a higher proportion than women.

Finally, the EBRI study looked at the effects of income on HSA contributions and distribution behaviors. As expected, average HSA balances increase alongside income. Account-holders living in the lowest income quartile have an average balance of $2,229, compared with $3,009, $3,693, and $5,919 for those living in the second, third, and highest quartiles. EBRI notes that despite HDHPs often featuring lower premiums than other healthcare plans, lower-income account-holders may have cash flow or budgetary issues that make it difficult to contribute as much to their HSAs as their higher-income counterparts.

From: BenefitsPRO