Health savings accounts continue to hit impressive growth milestones, but it appears more work is needed on the investment front, an industry report shows.
Shedding light on the evolving HSA market, Devenir’s 18th semi-annual HSA survey and follow-up research report reveals that HSAs now exceed 26 million accounts and held an estimated $61.7 billion in assets as of midyear 2019.
These findings equate to a year-over-year increase of 12% for accounts and 20% for HSA assets for the period ending June 30, 2019. The survey data was collected in July 2019 and consisted primarily of the top 100 providers in the HSA market.
Investment Opportunities
Devenir further notes that HSA investment asset growth has rebounded from the 2018 year-end market volatility. According to the report, strong market tailwinds boosted HSA investment assets to an estimated $13.3 billion at the end of June – up 35% year-over-year. The firm estimates that total HSA assets at year-end 2019 will be $64.2 billion, with $13.8 billion – or nearly 22% – of that contained in investments.
On average, investment account holders hold a total balance of nearly $16,000 (deposit and investment account), which is more than six times larger than a non-investment holder’s average account balance. The report notes that there are now more than one million accounts that are investing a portion of their HSA dollars, but that represents slightly over 4% of all accounts.
Contributions
Devenir further reports that account holders contributed more than $22 billion to their accounts in the first six months of 2019, up 12% from the year prior. The industry estimates withdrawals of $15.2 billion for the first six months of 2019, resulting in a 31% retention rate, which is consistent with previous years.
As for where the contributions came from, the 2019 year-to-date estimates show that 31% came from an employer, with an average employer contribution of $648 (for those making contributions). The year-to-date employee contribution estimate was 52% of all HSA dollars contributed to an account, with an average contribution of $1,121 (for those making contributions). In addition, 13% of contributions came from an individual account not associated with an employer, with an average individual contribution of $1,546 (for those making contributions) and the rest coming from IRA rollovers and other sources.
Looking ahead, Devenir projects that by the end of 2021, the HSA market will approach $88 billion in HSA assets held in more than 30 million accounts.
