$116 billion saved in HSAs, Devenir finds

When it comes to saving up for health care costs, 36 million people are thinking about their medical expenses.

That’s according to Devenir, a provider of investment solutions for health savings accounts, which released the findings of its semiannual study last week.

Its health savings account survey found that HSA assets saw strong growth during the first half of the year, with help from the stock market rally.

As of June 30, there was roughly $116 billion saved in almost 36 million HSAs, according to the study, which marks a year-over-year increase of 17% for assets and a 6% rise in the number of accounts.

Jon Robb, senior vice president of research and technology at Devenir, said people aren’t always aware that HSAs can be used for other things too — like investing.

“The longer someone's had an account, the more likely they are to invest,” Robb said. “Those that are investing, their balances are growing faster. They've been realizing some of these market gains that we've been seeing in this kind of bull market over the last decade or so.”

Eric Remjeske, president of Devenir, said that sometimes it takes a few years for people to have that aha moment because initially they don’t realize they can invest or don't understand how to use their HSAs.

“As people get more and more accustomed to retirement plans and different benefits, HSAs fit right into that. So it takes a little bit of time,” he said.

However, the growth in HSA accounts was weaker than anticipated during the first six months of 2023, largely as a result of broader economic trends and an increase in closed accounts.

Remjeske said the results reflect what’s currently going on in the economy.

“The U.S. has got pretty flat employment right now,” he said. “We really haven't had a lot of major employment. There've been layoffs and there've been hires, so those have kind of equaled each other.”

Remjeske added most of the accounts are driven through employer groups. “If employers aren't hiring at a more robust pace as they were over the past several years, you're not going to see as much account growth as a result.”

When individuals know they can invest their HSAs, their account balance reflects that.

“Those that are investing become a greater share of HSA accounts,” Robb said. “When it comes to assets, that's becoming a greater share, with about 35% of all assets invested. We think that'll creep up to about 40% by the end of 2025. That's a trend that's going to continue.”

Similarly, Devenir currently projects that the HSA market will exceed 40 million accounts by the end of 2025 and hold over $150 billion in assets.

Top HSA providers like banks, credit unions, health insurance plan administrators and technology providers participated in the survey.