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, but also offer account holders a concrete strategy for saving on everyday, planned, and emergency health expenses.
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. This data 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.
Average account balances, withdrawals, and percentage of assets retained
Industry averages are based on Devenir’s 2023 year-end report and Lively’s averages are calculated from anonymous account holder data from the same time period.
Average annual account balance
excludes unfunded accounts
Industry average account balance:
Lively average account balance:
Average employer contributions
Industry average total annual employer contributions:
Lively average total annual employer contributions:
Average annual withdrawals
Industry average withdrawals:
Lively average withdrawals:
Percent change in Lively account holder activity.
average Lively account balance increase Up 10% from $4,431 in 2022 to $4,885 in 2023.
higher Lively account balance than industry average.
Lively's average funded account balance was $4,885 compared to the industry average of $4,177.
increase in annual withdrawals Up 23% from $943 in 2022 to $1,162 in 2023.
Percentage of assets retained
Industry average percentage assets retained
Lively account holders percentage assets retained
HSA account balances and withdrawals increased in 2023.
Since HSAs offer a vehicle for tax savings, account holders could be contributing more to their HSAs in order to reduce their taxable income and as a cushion against inflation. Higher withdrawals could be due to the fact that, as prices on prescription drugs and over-the-counter items increase, account holders are using their HSAs to help counteract these higher prices with tax-advantaged spending. Account balance growth both at Lively and industry-wide was mostly driven by higher investment returns, as the stock market grew steadily throughout 2023. As HSAs are increasingly incorporated into account holders' overall budgeting, spending and savings habits, are still ample opportunities to address misconceptions about HSAs and enable account holders to utilize their accounts to maximum advantage.
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.
Both industry-wide and Lively saw growth in investment assets in 2023. After a shaky stock market in 2022, investments garnered steady growth in 2023.
Industry average Devenir reports that in 2023 8% 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, nearly twice the industry average.
Investing enables HSA account balances to grow faster.
Lively average HSA account balance without investment:
Lively average HSA account balance with investment:
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.