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CCH® BENEFITS — 5/12/08

HSA Account Holders Report Higher Than Average Incomes

From Spencer's Benefits Reports: In a recent report to Congress on health savings account (HSA) participation rates, the Government Accountability Office (GAO) stated that tax returns indicate HSA account holders reported higher incomes than other tax filers.

The GAO report, dated April 1, notes that the number of tax filers reporting HSA activity increased between 2004 and 2005, nearly tripling from about 120,000 to about 355,000. Industry estimates suggest continued growth in HSA participation in 2006 and 2007.

Higher Incomes, More HSAs

Among tax filers between the ages of 19 and 64, the average adjusted gross income (AGI) for those reporting HSA activity in 2005 was about $139,000, compared with about $57,000 for other filers, according to the GAO. Income differences between HSA and other filers existed across all age groups. Moreover, about 59% of HSA filers had AGIs of $60,000 or more, compared with 26% of other tax filers.

Tax filers’ reported HSA contributions in 2005 totaled about $754 million, including those made by account holders and employers. This was about twice the value of reported withdrawals—which totaled about $366 million. Among all filers reporting HSA activity, the average HSA contribution was about $2,100 and the average HSA withdrawal was about $1,000. Among filers who reported HSA contributions in 2005, about 41% did not withdraw any HSA funds that year, while about 22% withdrew as much or more than their reported contributions. About 93% of reported withdrawals were for qualified medical expenses.

HSA contributions and withdrawals reported by tax filers in 2005 generally increased with income. Average contributions ranged from about $1,400 for filers reporting incomes of less than $30,000 to about $2,800 for filers with incomes of $100,000 or more. Average withdrawals ranged from about $600 for filers reporting incomes of less than $30,000 to about $1,300 for filers reporting incomes of $100,000 or more.

Similarly, average contributions and withdrawals generally increased with age. Average contributions ranged from about $1,400 for filers ages 19 to 34 and to about $3,000 for filers ages 55 to 64. Average withdrawals ranged from about $600 for filers ages 19 to 34 and to about $1,200 for filers ages 55 to 64.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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