What are my investment options?
Investing HSA funds can be a powerful way for accountholders to increase the earning potential of their savings. When evaluating an HSA as a long-term savings option, investments are typically an important consideration. Many HSA providers offer access to investments of some kind, but the fees and investment platforms can vary significantly. Employers who offer HSAs through a provider with a well-designed investment option can benefit from stronger employee engagement.
HSA investors: A significant minority
Devenir Research recently reported that, as of the end of 2016, investors (which make up just 3% of accountholders) held almost 22% of HSA assets in the market overall. Investing accountholders had an average balance of $14,971, which is 7 times more than non-investors.1
These accountholders have significant savings balances which could to translate to higher benefits satisfaction and engagement. They are also at lower risk for financial hardship during a medical crisis. As HSAs continue to grow in popularity, this group of accountholders could help show the value of the account to their fellow employees via testimonials and word-of-mouth.
Morningstar findings for top HSA providers
In a Morningstar Manager Research report from June 27, 2017, the group evaluated some of the top HSA providers in the country to help investors navigate their options.2 They reviewed 10 providers overall.
Among the providers Morningstar evaluated, HealthEquity was the only one to receive positive marks in all categories for investments: Menu design, quality of investments, price and performance. HealthEquity was recognized as having the highest quality of investments score and for having the lowest underlying fund expense ratio in every asset class (by a large relative margin).2
Investment options are one feature that employers should consider when reviewing potential HSA providers as a part of their benefits offering. The HSA market is still growing annually and HSA investors have a significant role to play in their ongoing success. An HSA partner with a well-designed investment offering provides an opportunity not only for accountholders to increase earning potential, but also to foster positive engagement among employees.
1Devenir Research, 2016 Year-End HSA Market Statistics & Trends, February 22, 2017
2Morningstar, Inc. Data as of 6/27/17 Full report available at: http://corporate1.morningstar.com/ResearchLibrary/article/813893/2017-health-savings-account-landscape/
Investments available to HSA holders are subject to risk, including the possible loss of the principal invested and are not FDIC insured or guaranteed by HealthEquity Advisors, LLC or any of its affiliates. HealthEquity Advisors, LLC™, a wholly owned subsidiary of HealthEquity, Inc. and an SEC-registered investment adviser, provides web-based investment advice to HSA holders that subscribe for its services (minimum thresholds and additional fees apply).Registration does not imply endorsement by any state or agency and does not imply a level of skill, education, or training. HealthEquity Advisors, LLC also selects the mutual funds offered to HSA holders through the HealthEquity, Inc. platform. HSA holders making investments should review the applicable fund’s prospectus. Investment options and thresholds may vary and are subject to change.
Nothing in this communication is intended as legal, tax, financial or medical advice. Always consult a professional when making life changing decisions.