HSA growth rate high, but investment assets lag behind

by Rob Kozlowski | Originally posted on Pensions and Investments

While health savings account assets have grown at a more than 30% annualized rate over the past 15 years, only 9% of accounts have investment assets, according to Morningstar.

The growth of health savings accounts is a positive, and many of the 10 most prominent HSA providers have improved their offerings over that time span, but there is room for improvement, according to Morningstar's Sixth Annual Health Savings Account Landscape report.

The four largest HSA providers are HealthEquity, Optum, Fidelity Investments and HSA Bank and they account for 64% of the overall HSA market, and Morningstar rates Fidelity as the most attractive provider for both spenders and investors, as the only one among the 10 providers to receive high overall investment account and spending account assessments.

While overall, offerings have improved since Morningstar's first study in 2017, the new study said more needs to be done to overcome the low percentage of account holders who hold investment accounts. The study says fee schedules remain too high and vary across providers, investment lineups remain too complicated and offer too many redundant options, and most investment accounts still require spending account minimums before account holders are permitted to invest.