HSA assets continue to grow
Health savings account asset growth remained strong in 2020, with $82.2 billion in assets held in over 30 million accounts, a year-over-year increase of 25% for assets and 6% for accounts. HSAs can include both deposit and investments assets. Deposits are low-interest savings accounts where individuals have easy access to their assets. Individuals also can invest in mutual funds and stocks, similar to retirement plans.
Total HSA Assets (in Billions)
HSA enrollment slowed due to COVID-19
Due in part to headwinds created by the COVID-19 pandemic and the related impacts to the employment market, health savings account growth slowed in 2020. However, the three-year growth rate remains impressive. Devenir reports that more than half of all HSAs, or 54%, have been opened in the last three years. Many HSAs are opened during fall open enrollment season and remain unfunded until the following year, so we continue to see seasonality in the percentage of overall accounts that are unfunded.
54%of HSAs have been opened in the last 3 years
38%of assets are held by HSAs opened in the last 3 years
Total Health Savings Accounts (in Millions)
Employers contribute to HSA market growth
As reported in a recent EBRI and Greenwald Research survey, enrollment in health HSA-eligible health plans and health reimbursement arrangements reached a record high in 2020, with 19% of survey respondents enrolled in such a plan.1 Employers continue to be a leading driver of new account growth, accounting for 26% of all HSA contributions in 2020 according to Devenir.2
%of all HSA contributions came from an employer
%of all HSA contributions came from an employee
%of all HSA contributions came from an individual not associated with an employer
2 2020 Year-End HSA Market Statistics & Trends Executive Summary. Devenir Research. March 3, 2021.
Young savers becoming more active within HSA market
As we’ve highlighted, more employers are bundling health savings accounts into their employee benefits packages to help employees manage high deductible healthcare plans. As a result, younger generations of employees are becoming a major piece of the health savings account market.
Data from Chard Snyder, an Ascensus company, shows that savers ages 25 to 34 represent 29% of all HSA owners on our platform. Individuals ages 35 to 44 represent the second largest segment of savers, at about 26% of the total population of HSA owners.
How much health savings progress have Americans made?
Chard Snyder data suggests that younger savers tend to have smaller average HSA balances relative to older generations. However, the year-over-year carryover potential for these savings offers these younger savers the opportunity to continue to build these balances as they progress in their career. This carryover potential, along with triple tax advantages, is a distinct benefit of the health savings account.
Average HSA Balance
HSA contributions outpace withdrawals
HSAs are an important part of a saver’s overall retirement strategy as healthcare expenses continue to rise. With no "use-it-or-lose-it" rule and the ability to carry over balances from employer to employer, savers are becoming savvy on how to maximize their savings and growth potential. In 2020, 49% of HSA owners contributed more than they withdrew.
Our State of Savings report highlights a notable shift in when savers tapped into their health savings, as the COVID-19 pandemic caused temporary business closures and access to preventative and non-emergency healthcare services became limited. In March through May of 2020, Chard Snyder reported a 21.1% decrease in debit card transactions from consumer-directed healthcare accounts (including HSAs). Debit card activity linked to healthcare accounts soared 28.3% above projected levels as of year-end, as savers acted on pent-up demand .
contributed more than they withdrew in 2020
HSAs provide growth opportunity
Future projections continue to show steady HSA market growth. Devenir estimates that by the end of 2022, total HSA assets will exceed $111 billion.
Estimated Total HSA Assets (in Billions)
Investing for future healthcare needs
Fueled by strong market gains in the second half of 2020, HSA investment assets soared to more than $23 billion at year-end, up 52% year-over-year.
The average total balance for an HSA investment account is $17,975, over 6 times larger than a noninvestment account owner's balance.
52%year-over-year increase in HSA investment assets
$17,975average account balance of HSA investment account
Interest in HSA investing grows
About 29% of all HSA assets are invested. As more account owners learn about the opportunity to invest their health savings, the overall percentage of invested HSA assets is expected to increase.