HSAs as long-term assets
Why Lively HSA account holders beat industry averages for saving and investing and what industry trends tell us about driving HSA adoption and enabling account holders to maximize the potential of HSAs.
HSAs are designed to be long-term savings accounts. Tax-free growth and investment returns are a major, and unique, advantage of HSAs. As such, HSA spending just provides one part of the picture for understanding how account holders use their HSAs and how employers and brokers can better support HSA adoption and utilization.
Looking at average saving and investing balances, as well as the percentage of assets retained for Lively account holders and industry-wide helps understand the full picture and potential for HSAs. It also highlights opportunities for employers and benefits brokers to find a provider that emphasizes account holder education and makes investing HSAs balance easy so that account holders better understand the long-term advantages that HSAs provide. There are still ample opportunities to address misconceptions about HSAs and enable account holders to utilize their accounts to maximum advantage.
Average account contributions, withdrawals, and percentage of assets retained
Industry averages are based on Devenir’s 2022 year-end report and Lively’s averages are calculated from anonymous account holder data from the same time period.
Average annual account balance
Industry average account balance:
Lively average account balance:
Average annual contributions
Industry average contributions:
Lively average contributions:
Average annual withdrawals
Industry average withdrawals:
Lively average withdrawals:
Percentage of assets retained
Industry average percentage assets retained
Lively account holders percentage assets retained
Overall, Lively account holders are contributing more, and withdrawing less, from their HSAs than the average account holder. This enables them to build their HSA balance and set aside money to invest for the long term or to cover a major medical expense. Saving more enables Lively account holders to reap the long term tax savings and safety net that an HSA can provide.
To encourage account holders to save more, employers and brokers should ensure that they are working with an HSA provider that enables easy account holder education, including in the product. Employers not already offering a matching contribution could consider it, as it both incentivizes employees to contribute to their HSA and drives FICA tax savings for employers. Employers should also consider supplementing an HSA with other saving and spending accounts, such as a Lifestyle or Medical Travel Account, to enable great flexibility and to ease account holders’ financial stress.
HSAs and investing
One of the biggest advantages that HSAs offer is the ability to invest HSA dollars tax-free.
Industry average Devenir reports that in 2022 7% of all HSA accounts had at least a portion of their HSA dollars invested.
Lively account holders At Lively, about 15% of accounts invested their HSA dollars, over twice the industry average.
Lively account holders may invest at higher rates because Lively offers easy access to investing and the option for no cash minimums, meaning that HSA account holders can start investing right away if they so choose.
In addition, Lively offers both guided portfolio and self-directed investment options, automated transfers, and the ability to easily manage accounts online, enabling account holders to choose the investment strategy that works best for them. Investing provides an additional advantage that enables HSA balances to grow tax-free. This is especially significant because after an account holder turns 65 they can continue to use their HSA funds tax-free for qualified medical expenses or spend their funds on whatever they want, like a regular retirement account, which will be taxed at their current tax rate. Because the ability to invest in an HSA is an important way to get the most out of what these accounts have to offer and to build a financial safety net for the future, offering easy access to investing is a key differentiating feature for an HSA provider.