Each month Devenir highlights a selection of articles to keep you abreast of the latest trends and developments in the HSA marketplace.
A summary of the articles included in the March 2018 edition:
- Health Savings Account Assets Up 22% in 2017
- More Than Half of Employees Contributing to Both HSA and 401(k)
- Employees’ Concern with Covering Health Care Costs in Retirement Intensifying
- Has Enrollment in HSA-Eligible Health Plans Stalled?
- Are You Using Your Health Savings Account To Its Full Potential?
- Are HSAs a Better Investment Vehicle Than 401(k)s?
Health Savings Account Assets Up 22% in 2017
Devenir, a national leader in providing investment solutions for health savings accounts (HSAs), released the results of its 15th semi-annual health savings account survey and resulting research report. Devenir found HSAs grew to an estimated $45.2 billion in assets in over 22 million accounts at the end of 2017 and that by the end of January 2018 HSA assets had risen to almost $50 billion.
The survey data was collected between January and February of 2018 and primarily consisted of top 100 HSA providers in the health savings account market, with all data being collected for the December 31st, 2017 period as well as a January month-end update, since we have historically found it to be such a significant month for the industry.
Key findings from the Devenir 2017 Year-End HSA Survey and resulting research report:
- HSA accounts exceed 22 million. The number of HSA accounts rose to 22 million, holding over $45 billion in assets, a year over year increase of 22% for HSA assets and 11% for accounts for the year ended December 31st, 2017.
- HSA investments accelerate asset growth. A strong market helped propel HSA investment assets to an estimated $8.3 billion at the end of December, up 53% year over year. The average investment account holder has a $16,457 average total balance (deposit and investment account).
- Seasonally low unfunded accounts. Less HSAs (20 percent) were unfunded at the end of 2017 compared to 24 percent at the end of 2016.
- Employer relationships become the largest driver of account growth. Direct employer relationships became the leading driver of new account growth, accounting for 41% of new accounts opened in 2017.
More Than Half of Employees Contributing to Both HSA and 401(k)
While some studies show that debt and unforeseen bills are derailing some employees’ efforts to save for retirement, an Alight Solutions study finds an encouraging element—most employees are not foregoing 401(k) contributions to contribute to health savings accounts (HSAs).
The 2017 study, which fielded responses from over a million people at 34 large employers receiving recordkeeping services from Alight, found 57% of HSA-enrolled participants are contributing to both their HSA account and 401(k), among 61% who are participating in their 401(k) and utilizing employer-sponsored health insurance.
Employees’ Concern with Covering Health Care Costs in Retirement Intensifying
ConnectYourCare (CYC) recently released a report showing more than two thirds (68.7%) of employees identified health care expenses in retirement as a greater concern than lifestyle or other retirement expenses; this rate is up more than 5% from the past year.
CDH Account Trends: Tax-Advantaged Account Usage, Outlook and Perceptions – 2018 Report is based on two separate studies of over 40,000 survey respondents and data from over one million accounts across the nation. The report analyzes health care account usage trends, contribution and spending patterns, trends by account holder age, and account holder perspectives on Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Arrangements (HRAs).
Are You Using Your Health Savings Account To Its Full Potential?
Financial advisors looking for additional growth opportunities for clients may not need to look very far. The answer could be right in their clients’ health-care plans. Four out of 10 health savings accounts (HSA) with investments had balances of more than $10,000 dollars, according to CNBC.
HSAs are used in conjunction with high-deductible health insurance and offer participants a savings account with tax-free growth for medical expenses. Balances in HSAs can be rolled over to the following year and offer savers a triple tax benefit. All assets grow tax free; participants can make pretax contributions or contribute on a tax-deductible basis, and assets can be used free of tax to cover qualified medical expenses.
Are HSAs a Better Investment Vehicle Than 401(k)s?
Of course it depends on what factors you consider, but when considering the tax advantages, an argument can be made that HSAs are a better investment vehicle, particularly when used only for qualified medical expenses, a new report claims.
“HSA Investing: 3 Reasons Investing in an HSA is Not the Same as a 401(k),”” a new white paper from Devenir, takes an in-depth look at the benefits and limits of investing in an HSA versus a 401(k).