Health Savings Accounts paired with high deductible plans are becoming more popular, according to the Employee Benefit Research Institute. In 2006, there were 1.2 million accounts worth a total of $835 million, whereas in 2010 the institute reported 5.7 million accounts worth $7.7 billion.
The Institute has also indicated more than half of these plans provide coverage for families with incomes below $100,000. This may be due to lower costs, since HSA-eligible plans can reduce annual premium spending by more than $2,000 compared to traditional plans.
HSAs may be an effective long-term investment and a way to save in preparation for pre-retirement healthcare expenses, according to one expert. Older account holders may benefit as well by taking advantage of the ability to make catch-up contributions that exceed otherwise applicable annual limits.
While HSAs do penalize non-qualified withdrawals more strongly, according to SmartMoney, avoiding such withdrawals allows significant tax savings for any account holder. Much like older consumers can benefit from catch-up payments, married couples can contribute significantly more to their HSAs.
These factors are among those likely increasing the popularity of HSAs.
