7 insights from 20 years of HSAs

by Steve Neeleman | Originally posted on BenefitsPro

HSAs and other CDBs will continue to play a positive role in the American health care system.

In the runup to the creation of Health Savings Accounts (HSAs), consumer-directed benefits (CDBs) had just started making inroads in American health care. Many consumers and employers were looking forward to HSAs, the latest output from this growing trend. The accounts were anticipated to slow rising health care costs and encourage individuals to be more engaged with their health care choices.

It was in this environment that I founded HealthEquity, which opened its doors 20 years ago in 2002. In the years since, HSAs have become a prominent fixture in the nation’s health care system. According to the latest figures from Devenir Research, Americans now hold more than $100 billion in nearly 34 million accounts. Those savings benefit from the HSA’s unique triple tax advantage: funds are tax-free going into the account, grow tax-free in the HSA, and are not subject to taxation when spent on qualified medical expenses.

I am proud of the success of both HealthEquity and HSAs. As we celebrate this remarkable journey, I’ve been reflecting on everything we’ve learned over the past 20 years: the lessons that apply today and the insights we have on the future. Entering our second decade, I’d like to share some of those insights with you.

The HSA experiment is working

The core reason HealthEquity entered the market is as true today as ever. The opportunity to build equity in health insurance and health savings has made a great deal of difference to Americans. The $100 billion Americans have saved for health care has been accumulated with millions in tax savings.

We know these savings have helped create peace of mind for consumers in uncertain times. According to a 2021 survey from HealthEquity, 77% of those with an HSA say the account helped give them peace of mind over the past year of the COVID-19 pandemic.

HSAs have also given rise to positive consumer behaviors. People with an HSA price shop for health care products and services more often than those without an account (65% of those with an HSA versus 58% of those without an HSA). And those with an HSA also feel more confident about their savings with regard to retirement: 63% of people with an HSA say they have a good idea of how much money they’ll need to afford health care in retirement, compared with just 48% of those without an HSA.

All of these trends show us HSAs are having a positive impact on employers and individuals. They underline the value that adding or maximizing an HSA program can have on employee benefits programs.