Subscribe to Devenir’s monthly newsletter and stay up to date with the latest HSA news! Each month Devenir highlights a selection of articles to keep you abreast of the latest trends and developments in the HSA marketplace.
A summary of the articles included in the August 2021 edition:
- VC and PE Investments in HSA and CDH Administrators and TPAs
- HSA Deposit Rate Update – July 2021
- Getting the Most Value From HSAs
- Since the Start of the Pandemic, Plan Sponsors Are Increasingly Focused on Ways to Support Employees; Heightened Demand for Advisor Expertise, According to Fidelity
- Is This Student Disqualified from Funding a Health Savings Account?
- Podcast: The Health of Savings in HSAs
VC and PE Investments in HSA and CDH Administrators and TPAs
The benefits accounts market, namely HSAs, FSAs, and HRAs has been growing and getting plenty of attention in the recent years, driven primarily due to the growth in HSAs. According to Devenir, one of the largest HSA investment solutions providers, there are now over 30 million HSAs; that number is expected to double in the next 3-5 years. The majority of the funds in these accounts are held in bank deposit accounts, although the amount of HSA funds being invested is growing rapidly. This growth has attracted investments from private equity, as well as stimulated M&A activity within the industry, creating consolidation and further opportunities in the market.
HSA Deposit Rate Update – July 2021
Over the past couple months, a lot of attention has been given to economy as it starts to recover from the COVID-19 pandemic. On Tuesday, July 14th, the U.S. Bureau of Labor Statistics reported an increase in the consumer price index (CPI) of 5.4%, from June 2020 to June 2021. These higher-than-average inflation rates has led to increased pressure on the Federal Reserve to respond. So far, without any change in activity from the Federal Reserve, Devenir has not seen any dramatic impact on deposit rates offered in HSAs. Since our last update in February, we have observed a market average decline of two-basis points for accounts with $1,000 and a four-basis point decrease for accounts with $10,000.
Getting the Most Value From HSAs
Research shows that employees overwhelmingly use their health savings accounts (HSAs) for current medical expenses. But being able to invest and carry forward the account balance can help the account holder establish better retirement security. It’s important for employers to understand how they can educate their workers on HSA’s as a financial wellness tool and provide information on how to use them. In the 15 months since the start of the coronavirus pandemic, MetLife has discovered further reasons to offer HSAs: They have a positive impact on workers shaken by the pandemic’s resulting financial uncertainties.
Since the Start of the Pandemic, Plan Sponsors Are Increasingly Focused on Ways to Support Employees; Heightened Demand for Advisor Expertise, According to Fidelity
Plan sponsors and plan advisors continue to look at programs beyond the retirement plan recognizing the importance of these benefits for employees. In fact, advisors who discuss topics such as financial wellness and HSAs with plan sponsors appear to earn higher satisfaction scores. 76% of plan sponsors who have discussed financial wellness programs with their advisors reported being very satisfied with their advisors (versus 65% who have not had those discussions). More than three-quarters (78%) of plan sponsors stated they were very satisfied with their advisors who raised the topic of HSAs (versus 62% who have not had HSA discussions).
Is This Student Disqualified from Funding a Health Savings Account?
My old boss called last week to pick my brain about Health Savings Accounts. He now sells student insurance plans, and one of his clients faced a sticky situation. A husband and his wife, a graduate student, are covered on the husband’s HSA-qualified medical plan. The wife is required to purchase a student health insurance plan (SHIP) that begins to reimburse non-preventive care before a deductible of at least $1,400. That coverage disqualifies her from opening and funding a Health Savings Account. But that’s not the end of the story. And the principle is applicable in other situations that may not seem similar at first glance.
Podcast: The Health of Savings in HSAs
More and more Americans are embracing health savings accounts, especially younger and middle-aged adults. On the latest episode of the ABA Banking Journal Podcast Eric Remjeske of Devenir Research and Kevin McKechnie of the ABA HSA Council discuss new research findings showing that 63 million Americans are now covered by an HSA, with total assets over $82 billion, and that Americans in their 30s are disproportionately likely to be HSA account-holders.