2023 Midyear Devenir HSA Research Report

Key Findings

Robust asset growth

Aided by stock market tailwinds, HSA assets saw strong growth during the first half of 2023. Growth in the number of HSAs slowed. At the midyear point of 2023, there were $116 billion in HSA assets held in almost 36 million accounts, a year-over-year increase of 17% for assets and 6% for accounts.

HSA investment assets soar

After enduring one of the worst stock markets in decades during the first half of 2022, HSA investment assets have seen rapid growth. During the first half of 2023, HSA investment assets grew 20%, totaling $40 billion at the end of June (up 30% from the year prior).

Growth of HSA accounts investing slows

The number of HSAs investing continues to grow but the rapid growth seen over the last few years has slowed. Almost 2.7 million HSAs, representing over 7% of all accounts, have at least a portion of their HSA dollars invested.

Strong contribution and withdrawal activity

Accountholders contributed $29 billion to their accounts in the first half of 2023 (up 11% from the year prior) and withdrew $21 billion from their accounts during the first half of 2023 (up 16% from year prior).

Source: Devenir Research

HSA Industry Level Account Data

The pace of account growth slowed during the first half of 2023 as we saw the impact of a slowing economy on employment. We continue to see seasonality in the percentage of accounts that are unfunded. Accounts are often opened during the fall open enrollment season, but remain unfunded until early the following year. Halfway through 2023, about 18% of all accounts were unfunded, down from 19% a year ago.

Source: Devenir Research

HSAs opened during the first half of 2023 had an average balance of $1,143 at the midyear point, compared to a $1,464 average balance at the midyear point of 2022. 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. In the first half of 2023 we have seen less M&A activity that would result in that new balance being higher.

Source: Devenir Research

Industry Contributions & Withdrawals

Source: Devenir Research

Industry Contributions

The dominance of contributions made through employer channels in 2023 underscores the integral role of company-backed health benefits, while a smaller yet significant individual contribution segment suggests a growing awareness and personal responsibility in health savings.

Source: Devenir Research

Industry Withdrawals

Source: Devenir Research

Debit card transactions dominate HSA withdrawals in 2023, reflecting the preference for immediate access to funds, with checks and online payments also used for more planned healthcare expenditures.

Source: Devenir Research

First Half 2023 Withdrawal Methods Breakdown

Method	Average Number of Withdrawals Per Account	% Of Total Withdrawals (#)	Average Transaction Size
Debit Card	4.5	90%	$122
Check	0.1	2%	$376
Online Bill Pay	0.3	6%	$173
ATM	0.1	1%	$134
Unknown	0.1	2%	$337

Note: Due to rounding, the above table may not total 100%.

HSA Investments

$40.5 billion estimated in HSA investment assets as of June 30th, 2023, which is an increase of 30% year-over-year.
35% of all HSA assets are in investments as of June 30th, 2023.
$18,362 average total balance (deposits and investments combined) for HSA investment accounts, 7.3 times larger than an average funded non-investment holder's account balance.

Source: Devenir Research

Looking Forward

HSA providers project 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). Historically, HSA providers have been fairly accurate with their growth forecasts, demonstrating an impressive understanding of the outlook for their book of business. However, as a greater share of HSA assets are held in investments, market movement will make forward looking projections more difficult. Devenir currently projects that the HSA market will exceed 40 million accounts by the end of 2025, holding over $150 billion in assets.

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Report Methodology

The majority of this report was derived from the 2023 Midyear Devenir HSA Market Survey. The survey was carried out in mid-2023, and largely consisted of top 100 providers in the health savings account market. All data was requested for the period ending on June 30th, 2023.

All estimates and projections reflect the current environment surrounding health savings accounts and do not contemplate any future regulatory changes to the market. Certain data points from the survey were omitted from this report due to inconclusive data or an incomplete sample set. All statistics are produced using the best available data set, which may at times produce statistics which do not reconcile, either with other statistics in this report or with previous reports.

Survey responses were self-reported by each HSA provider. When possible Devenir attempts to verify responses through a variety of channels, including but not limited to, press releases, annual reports, prior research, and FDIC filings.

About Devenir

Devenir is a national leader in providing customized investment solutions for HSAs and the consumer directed health care market. When health savings accounts first emerged in 2004, Devenir built its expertise around delivering cutting-edge investment solutions. As the consumer driven health care industry grew, so did Devenir's reputation as a leading researcher and award-winning investment consultant. Today, Devenir continues to lead the way in the rapidly growing HSA market. A research driven perspective makes Devenir the go-to investment advisor, HSA investment platform and consultant to employers, banks, third party administrators, health plans, and technology providers. Learn more at devenir.com.

Devenir Research Team

Jon Robb — Senior Vice President, Research & Technology
Eric Remjeske — President
Blake Jouwstra, CFA — Investment Analyst

© Devenir Group, LLC (Devenir). All Rights Reserved. Reproduction or redistribution of this report by any means is strictly prohibited. The information, data, analyses, and opinions presented herein do not constitute business or investment advice; are provided solely for informational purposes; and is not warranted to be correct, complete, or accurate. The opinions are expressed as of the date written and are subject to change without notice. Except as otherwise required by law, Devenir, shall not be responsible for any decisions, damages, or other losses resulting from, or related to, the information, data, analyses, or opinions or their use. The information contained herein is the proprietary property of Devenir and may not be reproduced or redistributed, in whole or in part, or used in any manner, without the prior written consent of Devenir.

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