Fidelity® Health Savings Account Enrollment Grows 53 Percent in 2012

Employers Offering a Combination of HSAs Alongside 401(k)s Help Drive Improved Retirement Savings Outcomes for Employees

BOSTON – Fidelity Investments® today reported a 53 percent increase in health savings accounts (HSA) being opened in 2012, raising the number of individual accounts administered by the company to 182,000 from 119,000 at the end of 2011. Fidelity currently manages $471 millioni in health savings account assets, an increase of 44 percent over the prior year. In addition, the number of companies offering the Fidelity HSA® rose to 72, up from 57 at the end of 2011.

“The opportunity for triple tax advantagesii for individuals, the ability to carryover unspent funds year over year and the financial realities companies face in rising health care costs continued to drive the strong growth in our HSA business,” said William Applegate, vice president, Fidelity Investments.
A strategy being proven effective by many employers involves offering a high-deductible health plan together with an HSA, along with a defined contribution (DC) plan, as an integrated benefit offering. This enables a broader view into employee savings opportunities and behaviors, thus helping employers further a “culture of savings” in the workplace.

“Employer benefit plans and savings programs that include financial education to employees at all stages of their careers are helping to drive smarter savings decisions by employees,” said James M. MacDonald, president, Workplace Investing, Fidelity Investments. “The long-term impact of these decisions is now more important than ever as expenses in retirement, such as health care costs, continue to grow.”

For the past two years, Fidelity has analyzed the savings behaviors of employees who save in both a Fidelity HSA® and DC plan and found that on average, these employees tend to save more of their annual salaries in their DC accounts than those employees with just the DC plan aloneiii.

According to the 2012 Fidelity Retiree Health Care Cost Estimate, the average couple will need about $240,000 to cover the costs of health care in retirement. Saving in an HSA provides account holders with an efficient and tax-advantaged way to help  prepare for these costs. HSA contributions, investment earnings, and distributions used to pay for qualified medical expenses are not subject to federal taxes. Unlike health flexible spending accounts, balances can be rolled over year to year and be invested to pay for qualified medical expenses in the future, including in retirement.

On average, account holders in Fidelity HSAs had contributions of $2,380 made to their accounts in 2012, which included money from both the employer and employee. The annual HSA contribution limit set by the IRS increased this year to $3,250 for individuals, up from $3,150 in 2012, and $6,450 for families, up from $6,250. People who are age 55 or olderiv can save an additional $1,000 per year in catch-up contributions, similar to some tax-advantaged retirement accounts such as 401(k)s or Individual Retirement Accounts (IRA).

Fidelity noted growth in its HSA business across multiple industries, including large and mid-size corporations, plus tax-exempt institutions such as universities and health care providers. Fidelity added US Foods, one of America’s leading foodservice distributors headquartered in Rosemont, IL, and Seattle University among others in 2012.

About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.1 trillion, including managed assets of $1.7 trillion, as of March 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

 i Assets as of February 28, 2013.
ii Tax advantages are with respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation. See a tax professional for more information on the state tax implications.
iii 8.5% average annual deferral rate for participant with an HSA and DC plan vs. 8.1% for participants with just a DC plan as of December 31, 2011. Analysis of nearly 27,000 account holders making contributions to both an HSA and DC workplace savings plan.
iv Age 55 or older during the calendar year.

Investing involves risk, including risk of loss.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

Fidelity Investments Institutional Services Company, Inc.
500 Salem St., Smithfield, RI 02917

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