Health benefits alternative: HSA balances growing — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Health benefits alternative: HSA balances growing

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Average health savings account (HSA) balances increased from $1,408 to $1,933—up about 37%—in 2014, according to the Employee Benefit Research Institute.

An HSA is a tax-exempt trust or custodial account that an individual can use to pay for health care expenses. Contributions to the account are deductible from taxable income, and distributions for qualified medical expenses from the HSA are not counted as taxable income. Tax-free distributions are also allowed for certain premiums. Any interest or other capital earnings from the account build up tax-free as well.

HSAs are significant because they are a key part of so-called “consumer-driven” health plans.

The number of employers expected to offer an HSA-eligible health plan either as an option or as the only health plan option is expected to continue to increase, making HSA-eligible health plans and HSAs a growing option for employment-based coverage.

Starting from nothing about a decade ago, HSA-eligible health plans now cover an estimated 17 million policyholders and their dependents.

On a yearly average, individuals who made contributions deposited $2,096 to their accounts, while HSAs receiving employer contributions received an average of $1,021 a year.

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