Health Savings Accounts (HSAs), which allow individuals to store and withdraw funds for certain qualified medical expenses, are frequently offered as part of an employer’s benefits package. According to one report, nearly 40% of companies offered an HSA-qualified health option in 2021.

Despite their popularity, HSAs can come with significant drawbacks. A recent analysis conducted by the Employee Benefits Research Institute (EBRI) found stark differences in the way individuals contribute to and utilize their HSAs based on their race, ethnicity, gender, and income.

These findings suggest that HSAs may not be equally beneficial for all groups and could frustrate organizations’ diversity, equity, inclusion, and belonging (DEIB) initiatives, which have become increasingly common. According to one report, 89% of companies have a formal DEIB strategy, and 79% plan to raise their DEIB budgets in 2022.

Collectively, this suggests that companies that currently offer HSAs or are considering doing so should think carefully about whether they might exacerbate DEIB issues. To do so effectively, they’ll need to take a closer look at the data. Before that, though, it’s important to gain a better understanding of why HSAs have become so popular in the first place.

Benefits Of HSAs

Businesses provide HSAs because they offer several advantages to employees and the companies they work for.

Benefits Of HSAs For Employees

  • Lower taxable income: Employees can withdraw money they contributed to their HSA as long as it is used for qualified medical expenses. If their company permits payroll deductions, where part of their salary is put directly into their HSA, they can retain more of their net income without paying taxes on it.
  • Increased savings: Like any savings account, the money employees invest in their HSAs grows over time. Because withdrawals are tax-free, they provide an advantage over other common savings accounts, like a medical IRA or a 401(k).
  • Lower monthly premiums: HSAs are paired with high-deductible health insurance plans, which typically have lower monthly premiums. This saves employees money on their health insurance payments.
  • Greater control and flexibility: Employees can decide how much they put in their HSAs and what medical expenses they use the money for. In many cases, this may allow them to pay for medical care that a lower-deductible plan would not have otherwise covered.

Benefits Of HSAs For Employers

  • Lower payroll taxes: Just like employees, employers are not taxed for the money they contribute to their employees’ HSAs.
  • Lower healthcare plan costs: HSAs are paired with high-deductible healthcare plans, which are typically less expensive for employers.

Report Summary

To examine how HSA usage differs by race, ethnicity, gender, and income, the EBRI analyzed its massive HSA database, which contains detailed information on over 11 million accounts. They found some alarming discrepancies.

Differences By Race And Ethnicity

The report found that account holders in predominately White ZIP codes had larger HSA balances than individuals living in disproportionately Black or Hispanic ZIP codes. Specifically, those who lived in predominately White areas had an average HSA balance of $5,004, while those in Black and Hispanic areas had an average balance of $3,438 and $3,737, respectively.

Not only were the balances different, but the amount contributed by individuals from these ZIP codes also differed. Those living in disproportionately Black or Hispanic Zip codes contributed around $500 less on average compared to individuals living in disproportionately White areas.

Surprisingly, the size of the balances was not correlated with how long the accounts had been around. This means the race- and gender-based discrepancies cannot be explained in terms of how long individuals have had their HSAs. However, contributions could be a reflection of compensation differences among races.

Differences By Gender

According to the EBRI, there are significant differences between the average balance of male and female account holders. On average, male HSA account holders had $5,500 more in their accounts than female account holders.

Though women tended to have smaller HSA balances, the EBRI found they are more likely to make withdrawals from their accounts, which may be because women tend to incur more medical costs.

Differences By Income Level

Unsurprisingly, the balance of an account holder’s HSA and the amount they contributed are strongly correlated with their income. As income increased, so did the average balance and contribution level.


Though they come with several advantages, HSAs have the potential to exacerbate inequities and undermine DEIB efforts. In light of the EBRI’s report, employers who currently offer or are considering offering an HSA-based health plan should take at least one of the following steps.

  • Check for income discrepancies: If wage gaps exist between individuals of different races or genders, an HSA won’t benefit all groups equally. As a result, organizations must examine how their employee’s salaries are distributed before offering an HSA.
  • Communicate and educate: Sometimes, underrepresented groups do not utilize benefits due to a lack of education or awareness. For example, one study found that a lack of financial education contributes to why Black and Hispanic individuals often contribute less to their 401(k)s. To combat this, organizations offering HSAs must clearly communicate what they are, why they are valuable, and how to use them. Companies looking to go the extra mile can provide their employees with access to a financial advisor who can coach them through the process and help them make informed contributions.
  • Go for a low deductible plan: In high-deductible health plans, individuals must pay out of pocket for a significant amount of medical expenses before their plan starts covering medical services or treatments. HSAs incentivize people to save up to meet their deductibles. This is not necessary in low-deductible plans.

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