Thanks to positive stock market gains, health savings account (HSA) assets saw strong growth during the first half of 2023.
HSA assets increased to $116 billion in almost 36 million accounts by the midyear point of 2023, a year-over-year increase of 17% for assets and 6% for accounts, according to a report by HSA data consultant Devenir.
The survey was conducted in mid-2023 and features the top 100 providers in the HSA market.
Devenir’s survey spotlights rapid growth among HSAs, noting that in the first half of 2023, HSA investment assets grew 20%, totaling $40 billion by the end of June for an increase of 30% since 2022.
The average total balance for HSA investment accounts came in at $18,362, and 7.3 times larger than an average funded non-investment holder’s account balance.
While assets increased, growth among HSA investing has slowed over the past few years due to the impact of a decelerating economy on employment, reports Devenir. Currently, nearly 2.7 million HSAs, representing over 7% of all accounts, have at least a portion of their HSA dollars invested. Additionally, about 18% of all accounts were unfunded, down from 19% in 2022.
HSAs that opened in the first half of 2023 had an average balance of $1,143 at the midyear point, compared to a $1,464 average balance in the middle of 2022. Devenir cites higher levels of mergers and acquisition (M&A) activity for the larger average balances in the year prior. “We believe that a contributing factor to the higher balance of new accounts in recent years was the reporting of M&A or account transfers from existing accounts as new accounts,” the report stated. “In the first half of 2023 we have seen less M&A activity that would result in that new balance being higher.”
Industry contributions and withdrawals
Devenir’s research finds that account holders contributed 11% more to their accounts in the first six months of 2023 to total $29 billion, while withdrawing $21 billion.
Fifty-seven percent of all HSA dollars contributed to an account came from an employee, with the average contribution being $1,327.
On the flip side, 31% of all HSA dollars contributed to an account came from an employer, with the average employer contribution being $726.
Last, 11% of HSA dollars derived from an individual account not associated with an employer, where the average individual contribution was $1,957.
Looking forward, HSA providers project an HSA industry asset growth of 15% in 2023 (up from 13% at the end of 2022), while anticipating their own business will grow by 23% during the same period (up from 17%) at the end of 2022, states Devenir. The company currently projects that the HSA market will exceed 40 million accounts by the end of 2025, holding over $150 billion in assets.
SEE ALSO:
- HSA Contribution Limits Get Biggest-Ever Boost for 2024
- HSA Balances Have Grown Since 2020
- 2023 Changes to 401k, HSA Contribution Limits and a Historic Social Security COLA
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
