Morningstar’s eighth annual landscape study on health savings accounts found meaningful improvements in HSA features—such as lower fees and better investment options—but also found substantial room for growth in the industry, with just four providers receiving an “Above Average” or better rating on both evaluated use cases.
The study assesses the current state of the HSA industry and releases Morningstar’s assessment of 11 of the top HSA providers on two different use cases: 1) as investment accounts to save for future medical expenses and 2) as spending accounts to cover current medical costs.
Once again, Fidelity was the only provider to earn “High” assessments for both its spending account and savings account features. Notably, it offers an interest rate of 2.69% on all balances, far surpassing other providers, none of which offer more than 1% on any balance level.
“We hear from employers and individuals alike that the rising cost of health care is a top concern, and Fidelity is committed to helping our customers build a stronger financial future,” said Karen Volo, Head of Health and Benefit Accounts at Fidelity. “Our health savings account offering is designed to help investors manage day-to-day health care expenses while also helping them prepare for the future.”
HealthEquity, HSA Bank and Saturna each earned “Above Average” assessments in both categories.
First American Bank, Lively and UMB each earned “Above Average” ratings in overall assessment as spending account, and “Average” ratings in overall assessment as investing account. Conversely, NueSynergy earned an “Above Average” as an investing account and “Average” as a spending account.
Associated Bank earned “Average” assessments in both categories while Bank of America and Optum each received “Below Average” assessments for spending accounts and “Average” for investing accounts.
“Efforts by providers to enhance HSA offerings have proven beneficial for investors,” said Greg Carlson, senior manager research analyst. “Nonetheless, transparency issues, including hidden costs, continue to pose challenges for investors as they navigate their healthcare finances. Our study underscores the progress made while highlighting the hurdles that need to be addressed for HSAs to achieve their full potential.”
The study found providers and regulators could improve participant awareness and simplify processes to increase engagement in HSA features. For instance, unlike retirement plans, automatic enrollment in HSAs is not permitted by the government. And many providers impose minimum account balance requirements before participants can invest.
Study highlights
Highlights from the study include:
- Total assets in HSAs soared to $123 billion in 2023, maintaining their strong growth trajectory. This growth is driven by the increased prevalence of high-deductible health plans (HDHPs) since HSAs were introduced. The previous report—through mid-year 2023, had total assets in HSA accounts at $116 billion, a 21-fold increase since 2006.
- HSA contribution limits are set to rise in 2025, bolstering their already outstanding tax advantages, which are superior to 401(k)s, IRAs, and 529 plans. Proposed legislation would also allow individuals to contribute to an HSA even if their spouse uses a flexible spending account (FSA) and enable certain fund rollovers from FSAs into HSAs.
- Providers and regulators could improve participant awareness and simplify processes to increase engagement in HSA features. For instance, unlike retirement plans, automatic enrollment in HSAs is not permitted by the government. Furthermore, many providers impose minimum account balance requirements before participants can invest.
- From 2019 to 2022, several acquisitions among key players in the space led to significant consolidation among HSA providers. Recently, the pace of such deals has slowed, marking a noteworthy shift in the industry landscape.
- Providers’ investment menus are strong, as evidenced by the Morningstar Medalist Rating. At least 89% of each lineup consists of funds with Gold, Silver, or Bronze ratings.
This year’s study included one new addition: NueSynergy, a business service provider that is expanding the reach of its HSA offerings to a national level. Morningstar does not assess HSAs offered by employers, as details can vary depending on relationships and headcount.
Click here to read the HSA Landscape Report, which includes complete assessments for the 11 providers and methodology.
EDITOR’S NOTE: This article was updated to include a quote from Fidelity.
SEE ALSO:
• HSA Contribution Limits Increased Slightly for 2025
• Health Savings Accounts: By the Numbers
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
