The Future of HSAs

By: Steve Christenson, Executive Vice President, Ascensus.

If there is one constant in American politics, it is that with every new administration comes change. One of the first questions that I received after the election was if I think that health savings accounts (HSAs) are at risk of being negatively affected or eliminated. My answer—absolutely not. Of all the issues discussed, it was one of the few issues both sides agreed on. Let’s take a look at why.

Momentum

HSAs became available in January 2004, at a time employers were actively seeking to lower health care expenses for their employees. Hence, the growth of high-deductible health plans (HDHPs) emerged. By the end of 2007, approximately 10 percent of employers offered an HDHP. The key driver clearly was economics. For early adopters, acceptance of these high deductible plans required education and support of HSAs. Learn more from an in-depth conversation with Steve in Using HSAs To Attract New Members-Part 1 podcast.

HSA Growth Continued

HSAs and the dollars invested continued to grow at an accelerate rate. At the end of 2007, there were an estimated 3 million HSAs holding approximately $3.4 billion in assets. By year-end 2012, HSAs grew to 8.2 million with $15.5 billion in assets, and year-end 2015, 16.7 million with $30.2 billion in assets. And at year-end 2015, $4.2 billion of that $30.2 billion was held in investment accounts.

In 2016, Ascensus witnessed an 18 percent growth rate in HSAs at the banks and credit unions that they support. Devenir estimates that at year-end 2016, HSA assets will reach $36 billion with $5.4 billion in investments.2 Regardless of the legislation, economics will drive employers and consumers to the most effective use of their dollars. That has been proven since the inception of HSAs and will remain so with the new administration. Steve shared his insights about challenges and opportunities facing credit unions that look to their HSA products as a benefit to retaining existing members and attracting new ones. Listen to the full conversation.

A Solid Future

For the first time in many years, consumers frequently will see health care and HSAs in the headlines in the foreseeable future. Consumers who have had HSAs and understand their benefits will continue to move HSA dollars into investments and see these as part of their retirement package. Consumers who have been shifted to an HDHP but are not educated on how to open and manage HSA will seek those answers on a larger scale than at any time before in history. Consumers of all generations will seek HSA information from sources they trust. So as a financial services organization, ask yourself if you can afford to not be that trusted source and not participate in the HSA market. Those that do will benefit from this renewed momentum.

 

Ascensus Logo NewAscensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting. More educational resources and contact information are available at nafcu.org/Ascensus.