Morningstar's Health Savings Account Landscape Shows Continued Industry Improvement

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[{"type":"text","content":"Assets continue to climb as the space matures, yet issues in transparency and fees persist\nCHICAGO, Oct. 26, 2023 /PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment insights, today published its seventh annual landscape study on health savings accounts (HSAs) available to individuals. The study evaluated 10 of the top HSA providers on two different use cases: as investment accounts to save for future medical expenses and as spending accounts to cover current medical costs. This year, Fidelity remained the industry leader as the only provider to earn a High overall assessment for both its Investing Account and Spending Account.\nOverall, the study found HSA features have improved in the past year with several plans cutting fees and offering higher quality investment menus. However, the industry is still maturing and falls short on several issues like transparency, ease of use, and costs.\n\"Despite market volatility over the past year, investors in HSAs showed resiliency and continued to put money into their accounts. Assets have climbed since our study last year as HSA offerings continue to improve—a reflection of the industry maturing,\" said Greg Carlson, lead author of the study and senior manager research analyst. \"Even so, there are several ways for HSA providers to progress. Our study identifies areas that are key to making the industry more investor-friendly.\"\nHighlights from the study include:\nThrough mid-year 2023, total assets in HSA accounts reached roughly $116 billion—a 21-fold increase since 2006. The growth has been fueled by the increasing use of high-deductible health insurance plans, the only place in which participants can use HSAs, coupled with the accounts' strong tax benefits.While interest rates have risen substantially over the past year, most HSA providers continue to pay modest rates, signifying an area of improvement for the industry. For average spending account balances, only Fidelity pays an interest rate that significantly exceeds the average national FDIC-insured savings account rate of 0.46%.Providers' investment menus continue to improve. Among the 10 providers in the study, 96% of the mutual funds and ETFs offered earn a Morningstar Medalist Rating of Bronze or better, up from 88% a year ago.While HSAs offer more substantial tax benefits than 401...

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