The health savings account market seems to be cooling, according to Aite Group.
Here are 7 things to know about the looming HSA winter....
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7. Just 8% of employers began offering HSAs in the last year.
This is a substantial drop. The lack of new cases suggests that enrollment could start to plateau, or drop.
6. About 42% of employer benefits decisionmakers say they are not planning to offer high-deductible health plans over the next three years.
While 40% say they are considering HDHPs during that period, there are a lot of resisters out there.
5. As of Q1 2019, only 32% of employees had enrolled in HSAs.
According to the report, 244 out of the 303 benefits professionals surveyed said that their employers currently offer HDHPs to employees, but not all of those employees are eligible for HSAs. Some employees who are eligible don't enroll.
4. The focus of discussion is moving from high deductibles — a turnoff for prospective enrollees — to financial wellness.
That may be because employers are seeking alternative benefits; a lack of promotional support for HDHPs; and employees feeling too much of a financial squeeze to consider the high-deductible options that would make them eligible to contribute to HSAs.
3. Young people are too strapped financially to be eager to fund HSAs.
Between student debt and other financial demands, younger workers have a tough time setting aside extra money, whether it be for HSAs or 401(k)s plans. One illness or accident could wipe out all available cash.
2. Only about 23% of HSA account holders invest most or all of their contributions.
About 34% have balances at the end of the year, and 44% spend all of their contributions, and any contributions from their employers, by the end of the year.
1. The battle to come may be over winning accounts away from competitors.
Aite says, “Providing stellar customer service and competitive fee structures are the two leading factors that will help win that battle. Retaining existing accounts in an environment where turnover is inevitable is an imminent priority.”
(Related: HSA Plans Can Offer No-Deductible Blood Pressure Monitors: IRS)
The growth of the health savings account market appears to be slowing, and that means HSA providers may have to change their strategies, according to a new report from Aite Group.
According to Aite analysts, account growth is forecast at a compound annual growth rate of 14% from 2018 to 2022, compared with earlier estimates of an 18% compound annual growth rate from 2016 to 2021.
Through 2022, Aite says, growth in HSAs will keep the product mix in health benefit accounts changing. HSAs are expected to overtake flexible spending accounts (FSAs) and health reimbursement accounts (HRAs). HSA could account for 44 million of the 95 million personal health benefits accounts in use by 2022.
Of course, the 2020 elections could change everything and turn every health account-related prediction upside down.
For 7 key HSA market points for benefits advisors to think about now, drawn from the Aite report, see the idea cards in the slideshow above. Wiggle your pointer over the first slide to make control arrows show up.
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