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Majority of account holders spend down health savings accounts: Survey

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A majority of health savings account holders spend most of their account balances to pay for health care expenses, resulting in relatively small year-end balances, according to a new survey.

The joint America’s Health Insurance Plans/American Bankers Association survey found that in 2012 a majority — 52% — of account holders spent more than 80% of their HSA balances on health care expenses, while just 26% of account holders spent less than 20% of accumulated funds on health care expenses. Twenty-one percent of account holders spent between 20% and 80% of balances for health care expenses.

With much of the HSA balances being tapped during the year to pay for health care expenses, the balances themselves are relatively small. At the end of 2012, 19% of HSAs had a zero balance, while 31% had balances between $1 and $499, according to the survey, which was released Thursday.

Still, some account holders have been able to build relatively high balances. For example, at year-end 2012, 12% of accounts had balances of more than $5,000 and 14% had balances between $2,000 and $4,999. The average account balance in 2012 was $2,136.

A key reason for the relatively low balances is that HSAs must be linked to high-deductible health insurance plans, with employees drawing on their accounts to pay for uncovered expenses, such as those falling under the deductible. This year, the minimum deductible for single coverage in health plans linked to HSAs is $1,250, with a $2,500 minimum deductible for family coverage.

The survey is based on an analysis of 1.4 million HSAs that were open as of Dec. 31, 2012.

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