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Top 10 HSA Providers: Our 2018 Assessment
A few are healthy, but most need attention
Health savings accounts have become more popular thanks to trends
in health benefit plans and the tax advantages they can offer. Assets
deposited in HSAs have grown about 10-fold since 2008, reaching $51
billion as of mid-2018, according to Devenir Group LLC. While the
majority of HSA assets are in checking accounts, investing accounts
are playing catch-up and more recently have been growing at a faster rate. In our 2018 Health Savings Account Landscape report, we
evaluated and ranked 10 of the largest HSA plans available to
individuals. We did not assess HSAs available through employers, as
fees in those types of plans can vary substantially, based on a number
of factors. We gathered the information needed to make our evaluations
from plan websites and (when necessary) call centers. This gave us a
good look at transparency across the HSA landscape, which remains low.
We evaluated the availability of information in four broad areas: Ideally, HSA providers would disclose all this information on their
websites, but most do not. Of the 10 plan websites we surveyed, only
four provided all the information we sought. The chart below shows the
full results for each HSA provider.
The industry’s inconsistent disclosure, along with frequent,
significant changes to fees and investment lineups, creates a burden
for accountholders looking to select a well-managed plan. We believe
there’s much room for improvement. We evaluated the plans and assumed two distinct use cases: HSAs as
a spending vehicle to cover current
medical costs, and HSAs as an investment vehicle to save for future
medical expenses. The HSA spending account is typically used by
individuals with high healthcare costs who lack the means to pay out
of pocket. The HSA investment account appeals to individuals who will
pay for medical costs out of pocket and intend to invest their HSA
contributions to achieve long-term growth. Investing HSA dollars
allows individuals to maximize the unrivaled tax benefits offered by
HSAs. Often known as the triple tax advantage, contributions into HSAs
are tax-deductible, investment growth and interest are tax-exempt, and
withdrawals avoid taxes as long as they’re spent on qualified medical
expenditures. The tax benefits outweigh what’s offered by a 401(k), a
traditional IRA, a Roth IRA, or a 529 college savings plan. Overall, while some of the HSA plans we evaluated last year have
made improvements to their quality of investments and investment menu
designs, there’s much room for continued progress. Fees vary
significantly across plans, and most require individuals to keep money
in the checking account before they can invest. Here are our key takeaways on where we’ve seen signs of progress
and where there’s still room for improvement: In our next post in this series on HSAs, we'll take a closer look
at our evaluation of the spending vehicles these top
HSA providers offer.
To get a behind-the-scenes look at the development of the 2018
Health Savings Account Landscape, watch our webinar with Leo
Acheson, Morningstar's associate director of multi-asset and
alternative strategies. Watch Now.
Please see below for important disclosure information.
Important Disclosure Information
The information, data, analyses and opinions presented herein do
not constitute investment advice; are provided solely for
informational purposes and therefore are not an offer to buy or sell
a security; and are not warranted to be correct, complete or
accurate. The opinions expressed are as of the date written and are
subject to change without notice. Except as otherwise required by
law, Morningstar shall not be responsible for any trading decisions,
damages or other losses resulting from, or related to, the
information, data, analyses or opinions or their use. The
information contained herein is the proprietary property of
Morningstar and may not be reproduced, in whole or in part, or used
in any manner, without the prior written consent of Morningstar.
Investment research is produced and issued by subsidiaries of
Morningstar, Inc. including, but not limited to, Morningstar
Research Services LLC, registered with and governed by the U.S.
Securities and Exchange Commission.Leo Acheson, Morningstar Research
Services LLC
Transparency remains low for many of the top HSA providers
Evaluating the top HSA providers as spending and investment
vehicles
5 key takeaways from our 2018 Health Savings Account Landscape report
Download the full 2018 Health Savings Account
Landscape.