(Photo: Shutterstock)
Health savings accounts have come a long way since their introduction in late 2003.
With humble roots shrouded in confusion and misconceptions, HSAs lived their early years primarily serving as a transactional spending account similar to an FSA, serving accountholder needs focused on a 12-month cycle.
Recommended For You
But times have changed. Over the past 18 years, perpetually rising health care costs have driven a shift to more consumer-focused health care and massive upticks in leveraging high-deductible health plans paired with an HSA. Health care consumers have become better informed, more financially literate and more actively engaged in not only controlling their current health care costs, but also planning for their future health care expenses.
And with the pandemic providing an extra spark, HSA accountholders have become increasingly engaged with an HSA's focus on savings over the past year—particularly its unique ability to be used as an additional long-term, tax-advantaged investment vehicle.
The numbers can't be ignored
If clients are still hesitant about offering an HDHP option, or if they offer an HDHP option but no employer-sponsored HSA program, a quick run through the numbers can paint a telling picture.
Recent HSA market research from Devenir highlights continued steady HSA asset and account growth coupled with notable increases in HSA accountholder investing and investment asset growth.
As of January 2021, HSA assets exceeded $87 billion held in more than 31 million accounts, marking a year-over-year increase of 31% for assets and 9% for accounts.
Perhaps more impressive, as of December 31, 2020, an estimated 1.7 million accountholders were investing a portion of their HSA funds, netting 29% of all HSA assets in investments. In turn, HSA investment asset growth jumped to nearly $24 billion at year end, marking a 52% increase from the previous year.
In one year's time, HSA investing has truly taken off and is quickly bleeding into the mainstream. It's not just savvy accountholders taking advantage of an HSA's long-term investment potential and expanding their portfolios. Industry experts, financial advisers, HSA providers and many others have taken note.
What HSA accountholders want from their HSA provider
While some HSA providers are adjusting and adapting to meet the increased demand for HSA investment options, others remain stuck on the sidelines. And some still offer no investment options at all.
An HSA accountholder survey completed earlier this year by PlanSponsor shows that nearly 80% of accountholders want access to HSA investment options. HSA investing is no longer an optional benefit. It's become an expectation.
And when it comes to the type of investment options, quality is key.
In a recent Drivewealth poll, 82% of respondents indicated a modern HSA investment platform should offer fractional trading, equities investing and exchange-traded funds.
HSA investors want options. And they want an easy-to-use, seamless experience that integrates into their HSA platform, provides multiple investment models and functions similarly to other investing tools they're familiar with.
Clients need to know these expectations so they can adjust course if their current HSA program strategy doesn't measure up.
The increased importance of HSA education
Despite all the increases in HSA usage and investing, many clients and consumers are still in the dark when it comes to HSA education—so much so that 65% think that HSAs and FSAs are the same.
Clients need to understand how a well-structured HSA program with the right HSA partner is a win-win, netting them substantial FICA tax savings, a critical recruitment and retention tool and other benefits, while providing their employees with multiple avenues for tax savings, flexibility and an additional long-term investment vehicle for better overall financial wellness.
Same as with investment offerings, educational support varies greatly between HSA providers. Those that offer comprehensive educational resources along with digital decision support tools can help clients drive results and boost engagement in their HSA program.
A critical connecting point to employees' long-term financial wellness
Most clients want to play a role in helping their employees achieve better financial wellness both short and long term. While offering an employer-sponsored HSA program is a great step in taking a more active role in that effort, the HSA investing surge provides a proof point that simply offering an HSA program in and of itself isn't enough.
Clients may need to rethink and retool the goals and objectives of their HSA program as the goals and objectives of HSA accountholders continue to evolve. And they need their brokers to help them along the way and connect them with the best HSA partner to achieve the results they want and provide the best experience to their employees—investment-wise and otherwise.
Tom Torre is CEO and co-founder of Bend. For nearly 20 years, Tom has led organizations in the consumer-directed health care space. With Bend, he leads a dedicated team helping individuals, employers, financial institutions, health plans and other partners leverage a next-generation HSA platform that improves financial wellness and simplifies health care saving.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
