HSAs at the midpoint of 2024

Devenir Research recently released its 2024 mid-year report on Health Savings Accounts (HSAs).¹ This semi-annual survey measures key HSA variables and is based on market data through June 30, 2024.

Both HSA assets and the number of accounts continued to grow in the first half of 2024. Devenir reported $137 billion in HSA assets holding nearly 38 million accounts at the mid-year point. The pace of account growth has continued to moderate, growing about 5% year-over-year. Accounts are typically opened during fall open enrollment but remain unfunded until early the following year. Halfway through 2024, about 19% of all accounts were unfunded, up from 18% from a year ago.

Here are three other top headlines about the current HSA environment: 1) HSA investment assets are growing rapidly; 2) the number of HSA accounts that are investing is increasing; and 3) account withdrawal activity is slowing down. Let’s take a closer look at these three takeaways — and how employers can encourage employee saving and optimize their HSA program design.

1. HSA investment assets growing

HSA investment assets saw continued rapid growth, driven by significant market returns during the first half of the year. During the first half of 2024, HSA investment assets grew 21%, totaling $56 billion at the midyear point.

• 41% of all HSA assets are in investments (as of 6/30/24)
• $20,677 average total balance for HSA investment accounts (including deposits and investments), which is eight times larger than an average funded non-investment holder’s account balance**

**Past performance does not guarantee of future results. Investment return and principal value of an investment will fluctuate, and shares when redeemed may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

2. Increase in HSA accounts investing

The number of HSAs investing continued to grow. About 3.2 million HSAs, representing almost 9% of all accounts, had at least a portion of their HSA dollars invested.

• $15,382 is the average investor balance by year the account opened (including investments and deposits)
• 5% of accounts investing by year opened

3. Slowing withdrawal activity

Account holders contributed $31 billion to their accounts in the first half of 2024 (up 6% from 2023) and withdrew $20 billion from their accounts during the same period (down 2% from 2023).

• 90% of total withdrawals are via debit card (check, online bill pay and ATM are other withdrawal types)
• $116 is the average withdrawal transaction using a debit card

Ways to boost employee saving, optimize program design

An HSA program is a financial wellness tool employers can offer as part of a comprehensive benefits program to help employees pay for health expenses now and in retirement.

There are 4 HSA funding strategies employers can use to help boost employee saving that may make their HSA offering more attractive: providing annual lump sum deposits, offering periodic payments, making matching contributions, and automatically enrolling employees with a default election. Whether your organization is looking to create a new HSA program or modify an existing one, consider taking these five key actions to optimize your HSA program design:

1. Choose a long-term administrator
2. Consider making contributions
3. Educate employees about benefits
4. Separate HSA education from open enrollment
5. Offer a diversified investment menu

To learn more about Voya’s Health Account Solutions, contact your Voya representative.