Morningstar Releases Eighth Annual Study on Advancements and Opportunities in Health Savings Account Industry
Assessments of the leading providers highlight continued progress and identify areas for significant improvement
Overall, the study found meaningful improvements in HSA features, such as lower fees and better investment options. However, Morningstar highlights substantial room for growth in the industry, with just four providers receiving an Above Average or better rating on both evaluated use cases.
"Efforts by providers to enhance HSA offerings have proven beneficial for investors," said
Highlights from the study include:
-
Total assets in HSAs soared to
$123 billion in 2023, maintaining their strong growth trajectory. This growth is driven by the increased prevalence of high-deductible health plans (HDHPs) since HSAs were introduced. - Fidelity continues to lead among providers, earning a High assessment for both its spending account and savings account features. Notably, it offers an interest rate of 2.69% on all balances, far surpassing other providers, none of which offer more than 1% on any balance level.
- HSA contribution limits are set to rise in 2025, bolstering their already outstanding tax advantages, which are superior to 401(k)s, IRAs, and 529 plans. Proposed legislation would also allow individuals to contribute to an HSA even if their spouse uses a flexible spending account (FSA) and enable certain fund rollovers from FSAs into HSAs.
- Providers and regulators could improve participant awareness and simplify processes to increase engagement in HSA features. For instance, unlike retirement plans, automatic enrollment in HSAs is not permitted by the government. Furthermore, many providers impose minimum account balance requirements before participants can invest.
- From 2019 to 2022, several acquisitions among key players in the space led to significant consolidation among HSA providers. Recently, the pace of such deals has slowed, marking a noteworthy shift in the industry landscape.
- Providers' investment menus are strong, as evidenced by the Morningstar Medalist Rating. At least 89% of each lineup consists of funds with Gold, Silver, or Bronze ratings.
The overall assessment of each HSA provider is listed below.
HSA Provider
|
Overall Assessment as Investing Account |
Overall Assessment as Spending Account |
|
Average |
Average |
Bank of America |
Average |
Below Average |
Fidelity |
High |
High |
|
Average |
Above Average |
HealthEquity |
Above Average |
Above Average |
HSA Bank* |
Above Average |
Above Average |
Lively |
Average |
Above Average |
NueSynergy |
Above Average |
Average |
Optum |
Average |
Below Average |
Saturna |
Above Average |
Above Average |
UMB |
Average |
Above Average |
* |
This year's study included one new addition: NueSynergy, a business service provider that is expanding the reach of its HSA offerings to a national level. Morningstar does not assess HSAs offered by employers, as details can vary depending on relationships and headcount.
Click here to read the HSA Landscape Report, which includes complete assessments for the 11 providers and methodology. An article on Morningstar.com summarizing the report’s findings is available here.
About
Morningstar’s
Morningstar’s
Medalist Ratings are not statements of fact, nor are they credit or risk ratings, and should not be used as the sole basis for investment decisions. A Medalist Rating is not intended to be nor is a guarantee of future performance. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.
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Source: Morningstar, Inc.