Annual individual Health Savings Account (HSA) contributions fell in 2020, according to a study by the Employee Benefits Research Institute. HSA balances increased modestly by $400 as average annual individual contributions fell 2%.
Account owners often use the accounts to cover current expenses, such as deductibles, coinsurance, and copayments. That’s instead of fully taking advantage of the tax preference by contributing the maximum or maintaining HSA balances for retirement health care expenses. However, the longer a person owns an HSA, the more likely they are to use it as an investment vehicle. Over time, balances increase and there are larger annual contributions and greater use of investments.