Assets continue to climb as the space matures, yet issues in
transparency and fees persist
CHICAGO, Oct. 26,
2023 /PRNewswire/ -- Morningstar, Inc. (Nasdaq:
MORN), a leading provider of independent investment insights, today
published its seventh annual landscape study on health savings
accounts (HSAs) available to individuals. The study evaluated 10 of
the top HSA providers on two different use cases: as investment
accounts to save for future medical expenses and as spending
accounts to cover current medical costs. This year, Fidelity
remained the industry leader as the only provider to earn a High
overall assessment for both its Investing Account and Spending
Account.
Overall, the study found HSA features have improved in the past
year with several plans cutting fees and offering higher quality
investment menus. However, the industry is still maturing and falls
short on several issues like transparency, ease of use, and
costs.
"Despite market volatility over the past year, investors in HSAs
showed resiliency and continued to put money into their accounts.
Assets have climbed since our study last year as HSA offerings
continue to improve—a reflection of the industry maturing," said
Greg Carlson, lead author of the
study and senior manager research analyst. "Even so, there are
several ways for HSA providers to progress. Our study identifies
areas that are key to making the industry more
investor-friendly."
Highlights from the study include:
- Through mid-year 2023, total assets in HSA accounts reached
roughly $116 billion—a 21-fold
increase since 2006. The growth has been fueled by the increasing
use of high-deductible health insurance plans, the only place in
which participants can use HSAs, coupled with the accounts' strong
tax benefits.
- While interest rates have risen substantially over the past
year, most HSA providers continue to pay modest rates, signifying
an area of improvement for the industry. For average spending
account balances, only Fidelity pays an interest rate that
significantly exceeds the average national FDIC-insured savings
account rate of 0.46%.
- Providers' investment menus continue to improve. Among the 10
providers in the study, 96% of the mutual funds and ETFs offered
earn a Morningstar Medalist Rating of Bronze or better, up
from 88% a year ago.
- While HSAs offer more substantial tax benefits than 401(k)s,
IRAs, and 529 plans, the study shows not enough participants are
taking advantage. According to Morningstar surveys, a median 18% of
participants are using their HSA as an investment account.
- HealthEquity ($22.3 billion in
assets) surpassed Optum ($20.6
billion) as the largest HSA provider in 2021 and continues
to lead. Fidelity has gained ground on both in the past 12 months
with $19.8 billion in total
assets.
The overall assessment of each HSA provider is listed below.
HSA
Provider
|
Overall Assessment
as
Investing Account
|
Overall Assessment
as
Spending Account
|
Associated
Bank
|
Above
Average
|
Average
|
Bank of
America
|
Average
|
Below
Average
|
Fidelity
|
High
|
High
|
First American
Bank
|
Average
|
Above
Average
|
HealthEquity
|
Above
Average
|
Above
Average
|
HSA Bank*
|
Average
|
Above
Average
|
Lively
|
Average
|
Above
Average
|
Optum
|
Average
|
Above
Average
|
Saturna
|
Average
|
Below
Average
|
UMB
|
Above
Average
|
Above
Average
|
*HSA Bank is Morningstar, Inc.'s HSA plan provider.
The sole addition to this year's study was Saturna, an asset
manager that recently introduced a new HSA offering. HSA Authority,
a staple of the report in previous years, was acquired in 2022 by
UMB.
Click here to read the HSA Landscape Report, which includes
complete assessments for the 10 providers and methodology. An
article on Morningstar.com summarizing the report's findings is available here.
About
Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment insights in North
America, Europe,
Australia, and Asia. The Company offers an extensive line of
products and services for individual investors, financial advisors,
asset managers and owners, retirement plan providers and sponsors,
and institutional investors in the debt and private capital
markets. Morningstar provides data and research insights on a wide
range of investment offerings, including managed investment
products, publicly listed companies, private capital markets, debt
securities, and real-time global market data. Morningstar also
offers investment management services through its investment
advisory subsidiaries, with approximately $264 billion in assets under advisement and
management as of Sept. 30, 2023. The
Company operates through wholly- or majority-owned subsidiaries in
32 countries. For more information, visit
www.morningstar.com/company. Follow Morningstar on Twitter
@MorningstarInc.
Morningstar's Manager Research
Group
Morningstar's Manager Research Group consists of various wholly
owned subsidiaries of Morningstar, Inc. including, but not limited
to, Morningstar Research Services LLC. Morningstar Manager Research
provides independent, fundamental analysis on managed investment
strategies. Morningstar views are expressed in the form of
Morningstar Medalist Ratings, which are derived through research of
three key pillars—People, Process, and Parent. The Morningstar
Medalist Rating is the summary expression of Morningstar's
forward-looking analysis of investment strategies as offered via
specific vehicles using a rating scale of Gold, Silver, Bronze,
Neutral, and Negative. A global research team issues detailed
research reports on strategies that span vehicle, asset class, and
geography.
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.
©2023 Morningstar, Inc. All Rights Reserved.
MORN-R
Morningstar Media
Contact:
Michael Claussen, +1 312 696-6037
or newsroom@morningstar.com
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