Here’s why health savings accounts can contribute to inequality

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A popular way to save for out-of-pocket medical expenses could contribute to health-care inequality, new research suggests.

Health Savings Accounts are tax-exempt accounts for Americans, including high-discount health insurance policies. Federal law established them in 2003. Since then, HSA has grown rapidly as employers have adopted high-discount plans for their workforce to save money.

HSAs provide a three-tier break on income tax: contributions are tax-free, such as withdrawals for investment earnings and eligible medical expenses.

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When used optimally, according to financial advisors, they are one of the most effective ways to preserve and build wealth.

However, according to a new report published by the Employee Benefit Research Institute, black and Hispanic savers, women and low-income people are not using accounts as effectively as others, such as men, high-income and white and Asian savers.

Alumni groups contribute less money to HSAs, have smaller balances, and invest less often in these funds – dynamics that could reinforce and exacerbate existing health disparities across racial, gender and income lines, according to the report.

The report, written by Jack Spiegel, a research associate at the institute, states that “racial, ethnic and income-based inequalities are problematic in the use of HSA.”

“To the extent that those who have registered [in high-deductible health plans] Also, do not enroll in HSA, do not take full advantage of the tax benefits offered by HSA or do not save enough, it may be more difficult to pay for their medical expenses and may delay or abandon the necessary care. ” “Delaying or giving up care has a detrimental effect on health,” he wrote.


According to the EBRI, about 58% of private-sector workers are enrolled in a highly-discounted health insurance plan. These plans usually carry a lower monthly premium but higher out-of-pocket costs. Total HSA assets exceeded 100 billion in January, according to Davenier, a consulting firm.

White account holders have an average HSA balance of $ 5,004, while black and Hispanic savers have $ 3,438 and $ 3,737, respectively.

This difference is not due to the length of ownership of the account; According to EBRI everyone has had their HSA for about the same amount of time (average three years).

Ethnic, racial and income-based discrimination in the use of HSA is problematic.

Jake mirrors

Research Associate of Employee Benefit Research Institute

Instead, it’s mainly due to contributions: White savers contribute an average of $ 1,806 to their account each year, which black and Hispanic savers receive by $ 494 and $ 412, respectively.

White and Asian savers also take larger and more frequent deliveries from their accounts than black and Hispanic savers, suggesting they are spending more money on health care, the report found.

The report does not elaborate on the larger socio-economic factors involved in the game. But the data reflect widespread wealth and income inequality among Americans.

According to the Federal Reserve, whites accounted for 84% of the সম্প 142 trillion in U.S. assets by the end of 2021. By comparison, blacks hold 4% and Hispanics 2.5%.

The average Black and Hispanic saver may have fewer ways to pay the HSA each year or to use other funds for out-of-pocket medical expenses (thus postponing HSA withdrawals and creating savings for future years).

The EBRI report is based on data from more than 11 million accounts. It uses zip codes (which are inconsistently white, black, non-white Hispanic or Asian) as a proxy for income, race and ethnicity.

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