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Consumers make record contributions to Health Savings Accounts in 2012

By Maryalene LaPonsie on April 24th, 2013

Consumers feeling pinched by rising health insurance rates may be seeking relief in high deductible plans.

According to a survey conducted by financial management firm Devenir, contributions to Health Savings Accounts - which must be associated with an eligible high deductible plan - reached record levels in 2012. Consumers deposited more than $13 billion to their accounts last year.

More health insurance plans connected to HSAs

The Devenir survey looked at data from the 50 top HSA providers in the country. It found the overall number of HSAs increased 22 percent to more than 8.2 million accounts in 2012. Total assets for these accounts grew 27 percent to $15.5 billion.

Balances in HSAs saw growth in the last year as well. The average account balance was up 4 percent from 2011 to $1,879. When accounts with balances of zero are eliminated from the equation, the average balance for 2012 rises to $2,283.

"With both record contributions and withdrawals in HSA accounts in 2012, we continue to see that not only are people using their HSA dollars for current medical expenses, but more importantly they are actually accumulating savings for future medical expenses" said Jon Robb, Vice President of Research at Devenir, in a written statement.

HSAs linked to cheap health insurance

The appeal of HSAs lies in their tax incentives. Money deposited in the account, up to a certain amount, is eligible for a tax deduction. However, to receive the deduction, the account must be linked to a qualifying high deductible health plan.

In 2013, qualifying high deductible health insurance plans must have deductibles of at least $1,250 for self-only coverage and $2,500 for family coverage. However, out-of-pocket costs - including the deductible and co-pays but excluding premiums - are capped at $6,250 for self-only plans and $12,500 for families.

Although out-of-pocket costs can be high on these plans, high deductible medical insurance typically comes with two distinct benefits: significantly cheaper premiums compared to traditional health insurance plans and the ability to use an HSA.

For 2013, the IRS will allow individuals to deduct up to $3,250 deposited in an HSA. Those with family coverage can claim a deduction of up to $6,450.

Money from an HSA must be used for qualified medical expenses and any amount not spent at the end of the year can be rolled over for future use. Devenir estimates there will be $26 billion in assets held in HSA accounts by 2015.

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