Bank of America Sees Record Growth in Health Savings Accounts

Bank of America today announced a record 34 percent growth in health savings accounts (HSAs) in 2011, adding more than 50,000 accounts last year. The growth is attributed to increases in account use among employees of existing corporate clients, and new relationships with individuals and employers.

Our health benefit solutions include HSAs, health reimbursement arrangements (HRAs) and flexible spending accounts (FSAs). More than 600,000 individuals and more than 2,000 corporations nationwide take advantage of these accounts through Bank of America. Among them, HSAs are the fastest growing, approaching 200,000 user accounts and more than $300 million in account balances.

“The use of HSAs is rapidly increasing, based in no small part on the rising cost of health care to employers and employees alike,” said Kevin Crain, head of Institutional Retirement and Benefit Services for Bank of America Merrill Lynch. “We see more and more companies, including many of our corporate clients in the large and middle markets, adding consumer-driven health plans to their broader benefit offerings.”

An employee can make pre-tax contributions to an HSA for current and future qualifying medical expenses, such as doctor visits, prescriptions and some over-the-counter medications. For individuals using an HSA outside of the workplace, contributions are tax deductible. HSAs are designed to work together with a high deductible health plan (HDHP). The account is owned by the employee or individual, earns tax-free interest, can be carried over from year to year, and moves with an employee wherever the employee goes – to a new job, when changing health plans, or into retirement.

“In addition to the tax benefits, these accounts offer individuals more control over their health care spending and the option to accumulate longer-term health savings,” added Crain. “They also encourage more responsible use of health services and lifestyle decisions.”

Annual contribution limits for HSAs, set by the IRS, rose slightly in 2012 for individuals and employees with single coverage, from $3,050 last year to now $3,100, and from $6,150 to $6,250 for employees with family coverage. The average contribution to Bank of America HSAs in 2011 was $2,016, with employers contributing more than 20 percent of this total average to their employees’ accounts last year. During the last two years, since the beginning of 2010, the average account balance has grown more than 10 percent (now exceeding $1,600 per account), demonstrating that users are saving more in these accounts and also carrying balances forward year to year.

“Future health care costs and funding retirement consistently rank among individuals’ top financial concerns, with health and wealth becoming two sides of the same coin,” said Justin Raniszeski, Health Benefit Solutions executive for Bank of America Merrill Lynch. “Approaching your financial life in this integrated fashion, and using multiple tax-advantaged saving vehicles in the workplace, can help chip away over time at what may seem like insurmountable savings needs.”