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With more than 31 million health savings accounts holding nearly $93 billion in assets as of midyear 2021 per Devenir Research, HSAs and their place in the market have continued to evolve at a rapid clip. And while health insurance and HSA confusion still exists for both employees and employers, more and more individuals and businesses are harnessing the win-win benefits HSAs offer.
Gone are the days of HSAs serving primarily as a transactional 12-month spending account. From more employers offering contributions to employee HSAs to more accountholders investing at least a portion of their HSA dollars, the health savings account of 2022 has come a long way in the nearly 20 years HSAs have been in existence.
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2022 HSA updates – what's changed, what's staying the same
Along with the organic evolution HSAs have experienced, they've also experienced somewhat standard updates year over year, including changes to contribution limits, out-of-pocket maximums and minimum deductible limits.
For 2022, maximum annual HSA contribution limits have risen modestly, seeing a $50 increase for accountholders with individual coverage, and $100 for those with family coverage. That means individuals can contribute up to $3,650, and families can contribute up to $7,300. On top of those limits, any HSA accountholder 55 or older can also utilize an annual HSA catch-up contribution of $1,000 for either coverage. And it's important to remember, the HSA contribution limits set by the IRS include all contributions from all sources—the accountholder, employer and anyone else.
Along with contribution limits, high-deductible health plan annual out-of-pocket maximums have also increased slightly for HSA-qualified HDHPs. This year, OOP maximum limits have risen to $7,050 for those with individual coverage, and $14,100 for those with family coverage.
And when it comes to HDHP minimum deductible limits to ensure HSA eligibility, those have remained static for 2022, matching the 2021 minimum limits of $1,400 for individuals, and $2,800 for families.
HSA education is critical to continued adoption
While industry projections indicate continued strong HSA growth in everything from accounts to assets and investments, barriers to HSA adoption still exist for some.
The first key barrier to address and overcome is HSA education.
More and more individuals and employers are gaining a deeper understanding of HSAs and how to make the most of them. But for others, HSAs are still riddled with confusion—and often costly misconceptions.
On the employer side, a recent survey from Bend Financial revealed that while 93% of employers find it important to be part of their employees' long-term financial wellness through the health and retirement plans they offer, an astonishing 56% didn't realize that an employee needs an HDHP to be eligible for an HSA. It's misconceptions like that which lead to only half of those employers offering an HDHP with an employer-sponsored HSA program. And of those employers, nearly 50% cite educating employees as their biggest challenge when using benefits vendors.
No surprise, confusion surrounding HSAs and health care benefits in general still abounds with employees and individuals.
In another survey from Bend, nearly three-quarters of employees had no clue how 401(k)s, health insurance or HSAs worked at their first job. And 65% of health insurance consumers didn't know that HSAs and FSAs are two different things.
Clearly, proactive education is still needed across the board—for brokers, employers and individuals—to continue to move HSAs forward.
Investing opportunities continue to surge
Along with more HDHP participants opening HSAs and contributing more to them, more HSA accountholders are utilizing their account's unique ability to be invested and used as a long-term savings vehicle.
According to Devenir's mid-year research in 2021, nearly two million HSA accountholders were investing at least a portion of their HSA funds at the end of June, netting more than 32% of all HSA assets in investments. That's a 73% year-over-year increase and a remarkable number that can't be overlooked.
The consumer appetite for HSA investing opportunities is surging, and many employers are rethinking their HSA program goals and objectives to meet the demand. And that includes who they're choosing as their HSA vendor.
The HSA vendor landscape still varies
Last year marked a great deal of activity in the HSA industry, including numerous HSA vendor acquisitions, consolidations and partnerships. However, HSA vendors and their capabilities—especially when it comes to investments and ease of overall use—still varies across the board.
Some are still lagging behind the curve, while others are meeting current demands and looking forward to the future of HSAs. Because from all market indications and otherwise, the future of HSAs is bright.
Individuals, employers, brokers and others can all stand to make the most of all health savings accounts offer by finding the right HSA partner. For 2022 and for the years ahead.
Tom Torre is CEO and co-founder of Bend Financial. 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.
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