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Health Savings Accounts (HSA): An Untapped Opportunity for Investment Firms

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The Health Savings Account, or HSA, has become an effective way for employees with high deductible health plans to manage their healthcare spending while allowing employers the opportunity to contribute a more controllable amount to employee healthcare.

Since the passing of the Affordable Care Act, these plans have grown in popularity, and will continue to do so in the wake of the 2020 Cadillac Tax.

With nearly 19.7 Million Americans participating in a high-deductible health plan, and an estimated 30 Million participants by 2018, HSA assets will grow with it, reaching an estimated $38 billion by the end of 2016, and over $45 billion by the end of 2017.

This exponential growth over the last decade (HSA Assets totaled $1.7B in 2006) has created an undeniable opportunity for account holders to invest their HSA contributions for future use and for investment banks to manage these investments (HSA providers collectively generate $750-850MM in HSA Revenue per year).

Pitching these opportunities to potential account holders should be easy, as the HSA is the most tax-advantaged option for employees, whose contributions reduce taxable income, whose earnings accrue tax free, and whose withdrawals (for qualified expenses) are not subject to taxation.

For investment banks, the opportunities exist for your organization to extend its product offering, grow revenue (and influence), and establish your role as a trusted partner through availability and education. Learn more from this infographic.

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Health Savings Accounts (HSA): An Untapped Opportunity for Investment Firms

  1. 1. $ AN INVESTMENT FIRM’S GUIDE HSA OPPORTUNITIES INCREASEBUSINESS New customers New business from existing customers More assets under management $54B 3% Only 3%of all HSA account holders invest1 Over the last 3 years HSA investors enjoyed an avg annualized return of $4.2B 1 In December 2015 HSA investment assets reached $9.7B 1 11.3% 1 By the end of 2018 the HSA market will have estimated investment assets nearing $14,035 1 HSA Investment account holders have an average total balance of HSA providers collectively generated $750-$850M in HSA revenue per year1 By the end of 2018 the HSA market will reach $54 billion in HSA assets1+27% HSA providers are projecting HSA asset growth of 27% in 20161 Nearly 19.7 million Americans had a high-deductible health plan with an HSA in 2015.6 The number of HSA account holders is projected to almost double by 2018 to 30M accounts.1 17.4 Million 19.7 Million 30 Million (Est.) 2014 2018 2015 Interest on AUM, Account Fee Income & Interchange 34% - of American workers have no savings set aside for retirement2 4 in 10 people do not have access to retirement plan at work3 Only 22% are very confident that they will have enough money for a comfortable retirement3 X10 59% Individuals need to save 10x their salary to retire comfortable at age 674 245K A 65 year old couple who retired in 2015 needs nearly $245,000 to cover medical bills in retirement4 34% 22% % Visit today to learn more about how Healthcare Trends Institute can help you simplify the business of healthcare. www.healthcaretrendsinstitute.org © Copyright 2016 Healthcare Trends Institute Sources: EXTENDPRODUCTOFFERING GROWREVENUE ESTABLISHTHOUGHTLEADERSHIP Through offering the most tax-advantaged retirement product - An HSA HSAs more popular than ever for supplementing retirement savings Administering interest-bearing HSAs as a new revenue opportunity Untapped growth opportunity through HSA availability and education Few people with an HSA are aware of the ability to fund their healthcare in retirement3 Most tax-advantaged vehicle out there for saving: contributions are pretaxed tax free, money grows tax free, and if it is used for qualified medical expenses, the withdrawal is also tax free.5 TAX INFLUENCEASSETGROWTH HSAs quickly becoming the standard for healthcare savings 1.DevenirGroup 2.SocialSecurityAdministration 3.ThePEWCharitableTrusts 4.Fidelity 5.AvidiaHSAConsultingWhitePaper 6.AHIP2015CensusofHealthSavingsAccount

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