Women's Health Savings Lag Men's Even Though They're Expected To Live Longer - Investopedia

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Women are expected to live longer than men and can take on more healthcare costs over their lifetime. However, women’s health savings account (HSA) balances are, on average across generations, about 15% lower than men’s, a Bank of America (BoFA) report showed.

Key Takeaways

• A study of health savings accounts showed that women’s balances were on average about 15% lower than men’s, across generations. 
• Women spent more of their accounts on healthcare expenses, averaging a net savings of $512, compared with $640 for men.
• An HSA can help cover up to 95% of retirement health care costs when utilized, but only 8% of account holders make the maximum contributions.
  

Women are more likely to spend the savings in their health savings accounts, a tax-deferred plan that can be used for healthcare expenses. The 2023 Gender Lens in Health Savings Accounts report from Bank of America showed that, overall, men’s average HSA net savings were $640, 25% higher than women’s average net savings of $512.

A healthy woman’s retirement healthcare insurance premiums are almost $200,000 higher than those of a healthy man, estimates show. And the report found that more women were likely to take distributions from their HSA accounts, with 67% making withdrawals, compared with 64% of men. 

The report based on the 566,000 HSA accounts administered by Bank of America found that both men and women are taking advantage of the accounts at about the same level, with 72% of men and 70% of women account holders making contributions. 

More Employees Taking HSA Accounts, Few Maximizing Contributions, Making Investments

HSAs have grown at a rate of about 24% over the past 16 years, with 35.5 million employees starting accounts since the savings account type was first introduced in 2003. Like a 401(k), employees can contribute to HSAs from their paychecks, but the study found that fewer than one in five participants met the balance criteria to maintain an investment account. 

Estimates show that an average 65-year-old couple retiring in 2021 needed close to $296,000 for out-of-pocket healthcare costs in retirement. The BoFA report found that a 45-year-old couple that takes the most allowable contributions to age 65 could cover up to $281,975 in out-of-pocket costs, about 95% of that total. Additionally, they would also see $57,730 in tax savings from the contributions.

However, only 8.24% of HSA account holders make the maximum contribution, although the percentage of women doing so is slightly higher than men.

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