Morningstar’s ninth annual Health Savings Account Landscape Report published this week offers analysis of industry trends and assessments of the top HSA providers available to individuals. The report evaluates 11 providers on two use cases: as spending accounts for current medical costs and as long-term investment accounts.
HSA assets grew to $146 billion in 2024, an 18% year-over-year increase. The accounts’ attractive tax benefits and widespread adoption of high-deductible health plans continue to drive growth, according to the report.
Contributions to HSA accounts are tax-deductible, and growth, dividends and interest are tax-exempt. So too are withdrawals for qualified medical expenses.
The report said the July enactment of the tax and spending megabill will broaden the accessibility of HSAs and could expand the number of participants by 3 to 4 million. Rising contribution limits are also strengthening the appeal of HSAs, it said.
In a new blog post, Greg Carlson, an equity strategies research analyst at Morningstar, and Margaret Giles, a senior editor of content development for the firm, note that the abundance of HSA providers, with differing account features and characteristics, can make it daunting for shoppers to sort through all options.
For investors who want to use an HSA as an investment account to cover future health care expenses, they outline practices that the best HSAs follow.
For one, they offer investment strategies in all core assets classes while limiting overlap. They provide strong investment strategies that earn Morningstar Medalist Ratings of Gold, Silver or Bronze.
The best HSAs charge low fees for active and passive strategies, and they do not require investors to keep money in spending accounts before investing.
See the accompanying gallery for the 11 best HSAs for investing.
Images: Chris Nicholls/Touchpoint Markets
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