Heath savings accounts are the hot ticket item in private sector benefits these days. On Monday, Bank of America announced a record 34% growth in health savings accounts 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.

Among 600,000 BoA accounts, 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," says 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."

HSAs are designed to work together with a high deductible health plan. 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," says 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% 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% (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," says 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."

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