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A soft labor market is holding down sales of health savings accounts, but it's also increasing employers' interest in shifting to health benefits programs that combine high-deductible coverage with HSAs.
Scott Cutler, the chief executive officer of HealthEquity, a big player in the HSA market, gave that assessment of the health benefits market Tuesday, during a conference call with securities analysts.
HealthEquity held the call to go over earnings for the second quarter of its fiscal year, which ended July 31.
The Draper, Utah-based company reported $60 million in net income for the quarter on $233 million in revenue, up from $36 million in net income on $204 million in revenue for the comparable period in 2024.
The company ended the quarter supporting 10 million HSAs, or 6% more than it was supporting a year earlier. Total HSA assets increased 12%, to $33 billion.
The number of new HSAs sold fell 13%, to 163,000.
Cutler said he was happy that quarterly HSA sales were roughly comparable to what they have often been.
"The HSA market is a function of new employment, job growth, people being able to move between jobs," Cutler said. "When you look at the labor statistics, which are showing employment growth down 40% year-to-date, year-over-year through July, that shows that the macro environment for job growth has been tough."
But health insurance costs have been increasing two or three times faster than wages, and HealthEquity has case studies that show how shifting to use of high-deductible, HSA-compatible health coverage can hold increases down, Cutler said.
"In a more challenging environment, that value proposition becomes a lot stronger," Cutler said. "We're encouraged by the signs that we've had with our enterprise sales pipeline and the retention that we've had from our existing customers."
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A provision in the One Big Beautiful Bill Act that will let HSAs pay direct primary care practice membership fees should also help increase employer adoption of HSA-compatible health plans, Cutler said.
He predicted that the direct primary care provision and a provision that will let holders of coverage with very high annual out-of-pocket spending maximums use HSAs should help add 3 million to 4 million U.S. families to the universe of people eligible to contribute to HSAs.
HealthEquity streamed the conference call live on the web and posted a recording on its website.
Cutler is the latest executive to say he sees strong employer hunger for ideas about how to improve benefits and lower the cost.
Executives at benefits firms like Willis Towers Watson have also talked about an increase in employer interest in change-management services.
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