HSA assets surpass $60 billion, growth expected to continue
As the cost of healthcare rises more employers are turning to health savings accounts as a method to help workers cover the cost of care.
The number of HSAs has exceeded 26 million with assets that top off at $61.7 billion halfway through the year, according to the latest research from investment advisory and consulting firm Devenir. This accounts for a year-over-year increase of 12% for accounts and 20% for assets, the firm reports.
“Health savings account holders are increasingly aware of their healthcare costs in retirement. To help meet those future healthcare expenses, over one million accounts are now investing their HSA dollars,” says Jon Robb, senior vice president of research and technology at Devenir.
Devenir projects by the end of 2021 the HSA market will approach $88 billion in HSA assets held by more than 30 million accounts.
Companies are already seeing value in the benefit. More than half of employers offer a high deductible health plan that is linked to a savings account such as an HSA and 56% offer HSAs as a benefit, according to data from the Society for Human Resource Management.
Shobin Uralil, co-founder and chief operating officer of Lively, an HSA provider, says he expects this number to accelerate overtime and more employees look to HSAs as a way to cover healthcare costs.
“As more HSA providers increase investment education, access and remove fees, we expect this number to accelerate. Because of the unmatched tax-advantages, we’re seeing growth in HSAs as a vehicle not only for health savings in the near term, but for anticipated health costs in retirement as well,” he says.
See also: HSAs: the other retirement account
In a recent views piece for Employee Benefit Adviser, Craig Keohan chief revenue officer of HealthSavings Administrators echoes this perspective on retirement. These tax advantaged accounts can help employees pay for healthcare expenses in retirement as well as nonmedical expenses, once they reach 65.
“HSAs offer unparalleled tax advantages on retirement medical expenses and are the single best way to save for retirement, period,” he writes.
Uralil says advisers should consider bringing more personalized benefits packages, including HSAs, to their clients. This will help to break the yearly open enrollment cycle, and help to create more long term savings for employees, he adds.
"Offering healthcare plans that are coupled with health savings options like an HSA creates more flexibility for employees,” he says. “This not only creates a direct way for employees to save and prepare for future health costs, but a clearer path for employers to reduce healthcare premiums."