2023 was boom year for health savings accounts

Health savings account assets saw significant growth across the US in 2023, and there’s more to come in the years ahead, according to a new report from Devenir.

The latest analysis from the company, a leading provider of HSA investment solutions, draws from data primarily collected at the start of 2024.

Devenir’s 27th semi-annual review of the HSA sector shows that by the end of last year, assets in the space surged to approximately $123 billion – up from $104 billion at the close of 2022 – spread over 37 million accounts.

"Our latest survey results not only show robust growth in HSA assets but also projects a strong, upward trajectory for the future, indicating a steady and significant expansion of the HSA market,” Jon Robb, senior vice president of research and technology at Devenir, said in a statement.

Notwithstanding a slowdown in the creation of new accounts, last year witnessed a 19 percent increase in HSA assets and a 5 percent growth in the number of accounts.

The report highlighted the resilience of HSA investment assets which, after facing one of the most brutal stock markets in history during the first half of 2022, rebounded impressively in 2023, with a 37 percent gain.

The comeback brought total investment assets in HSAs to $46 billion, accounting for 38 percent of the money held in those accounts by year-end.

Investment activity in HSAs showed remarkable consistency, with nearly 8 percent of all account holders – representing 2.9 million HSAs – having at least some of their dollars invested even as the pace of growth moderated compared to previous years.

The report also detailed a rise in transactional activity within the accounts. HSA contributions increased by 7 percent to $50 billion, and withdrawals escalated by 13 percent, amounting to $39 billion over the year.

Looking at the breakdown of contributions, Devenir estimates 26 percent of dollars going into HSAs in 2023 originated from employers while 64 percent came from employees’ wallets, with the balance coming from other sources.

Looking ahead, Devenir forecasts a promising outlook for HSAs. By the end of 2026, it projects the market will expand to 44 million accounts holding $168 billion, with investment assets potentially reaching $71.4 billion.

“HSA providers project HSA industry asset growth of 14% in 2024, while anticipating their own business will grow by 23% during the same period,” the report said.