HSA Assets Surpass $50 Billion, But Overall Investment Percentage Still Lags

HSA assets continue a steady drumbeat of impressive growth, but many HSA holders still do not appear to be taking full advantage of their investment opportunities.

Devenir’s 16th semi-annual Health Savings Account survey and resulting research report found that HSAs grew to an estimated $51.4 billion in assets across more than 23 million accounts halfway through 2018 — a year-over-year increase of 20.4%. The firm expects the number in HSA assets to grow to $54 billion by the end of 2018 and to approach $75 billion covering more than 29 million accounts by the end of 2020.

The total number of HSAs grew to 23.4 million at the end of June, up 11.2% from a year ago and more than double the amount from 2013. Devenir notes that this account growth in the first half of 2018 was in line with recent years. Overall, accounts grew by 5.2% in the first half of 2018, compared with 5.0% in 2017, 8.5% in 2016, and 5.5% in 2015.

Investment Assets

Backed by a strong market, HSA investment assets approached $10 billion at the end of June, up 45% year over year. The average investment account holder has a $16,007 average total balance (deposit and investment account), which, according to Devenir, is more than eight times larger than a non-investment holder’s average account balance.

Moreover, consider that only 19% of all HSA assets are in investments as of June 30, 2018. The report further shows that investment assets are realizing sustained growth, rising from $1.1 trillion in 2011 (and representing 8% of assets in investments) to an estimated $10.9 trillion by the end of 2018 (representing 20% of assets in investments).

Fewer Unfunded Accounts

Other key findings show that there were fewer unfunded accounts. According to Devenir, fewer HSAs were unfunded (15%) at the midway point of 2018, compared to 20% at the same time in 2017. “We continue to see seasonality in the percentage of accounts that are unfunded as accounts are opened during the fall open enrollment season, but often not funded by employers until the beginning of the following year,” the report states.

The drop off in the percentage of unfunded accounts can also largely be attributed to a continued uptick in the closure of accounts, as many HSA providers clean up dormant accounts, the report explains.

Perhaps not surprisingly, the leading driver of new account growth is direct employer relationships, accounting for 42% of new accounts opened in the first half of 2018.

In addition, the industry estimates $19.7 billion in industry contributions and $13.7 billion in withdrawals for the first six months of 2018, resulting in a 31% retention rate, which is relatively consistent with the three previous years, according to the data.

The 2018 year-to-date employer contributions estimate shows that 32% of all HSA dollars contributed to an account came from an employer, with the average employer contribution of $658 (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 $1,086 (for those making contributions).

Devenir’s survey was conducted in July 2018 and consisted primarily of top 100 HSA providers in the HSA market, with all data being requested for the period ending June 30, 2018.

Add Your Comments

One Comment

  1. Bradley Dickens
    Posted August 28, 2018 at 10:43 am | Permalink

    I like the triple tax deferral, contribution, and withdrawal. There’s a mis-concept that these monies are “invested” and yet are only allowed to be placed into money markets with balanced exceeding a certain amount. I wonder how much money would be placed into these if we added a 4th option to actually invest the money???

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