Morningstar’s Sixth Annual Health Savings Account Landscape Reveals Fidelity Remains Industry Leader

CHICAGOMorningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, has released its sixth annual survey of the landscape of health savings accounts (HSAs) available to individuals. The study finds that HSA assets have grown at an annualized growth rate of 31% over the past 15 years, and while the HSA industry has improved its offerings over this period, several participants still have room for improvement.

The study evaluated 10 of the largest offerings from HSA providers on two different use cases: as investment accounts to save for future medical expenses and as spending accounts to cover current medical expenses . New this year, the study also provides best practices for individual participants to take full advantage of HSAs’ investment features and flexible spending policies, and advocates for improvements to the onboarding process to facilitate greater adoption. wide of HSAs.

“HSAs are valuable tools for investors when used correctly, but the industry is still young and maturing. Its opaque structure needs to be improved,” said Nations Tomes, lead author of the study and associate director of research on managers. “Despite Morningstar’s advocacy, there is considerable variation in the quality of HSAs available to individuals, as some providers still have high costs and confusing features. As the space continues to grow, we’re looking to see more widespread improvement, especially among account investment menus, fees, and fund quality.

Highlights of the study include:

According to Morningstar surveys, only 9% of HSA accounts reviewed have investment assets, meaning HSA users are not taking full advantage of the accounts’ investment features or triple tax advantage. When used optimally, HSAs have more tax advantages than 401(k), 529 college and traditional savings plans and Roth IRA.

Fidelity offers the most attractive HSA for spenders and investors because it was the only provider with a high overall investment account rating and the only provider with a high overall spending account rating.

In general, HSA providers have improved their offerings since Morningstar’s first report in 2017; however, fee schedules remain high and vary between providers, most require individuals to meet spending account minimums before they can invest, and fund ranges still offer redundant and complicated options that can be difficult to use .

As interest rates have risen over the past year, interest paid to HSA holders has become increasingly important to analyst valuations. Top HSA providers pay interest rates that increase with market changes, and so far Fidelity is the only provider that offers higher interest rates than the average national savings account rate of 0.17%.

Using Morningstar Analyst Rating (Analyst Rating) and Morningstar Quantitative Rating for Funds (Quantitative Rating), each fund line supports an above-average investment quality rating for the 10 providers. Morningstar Medalists1 — a fund with an analyst or quantitative rating of gold, silver, or bronze — accounted for at least 88% of each range, up from 85% last year.

The Big Four HSA Providers – EquityHealthOptum, fidelity and HSA Bank – represent nearly two-thirds of the total HSA market with approximately $64 billion in combined assets. EquityHealth overtook Optum at the end of 2021 as the industry’s largest supplier and widened its lead in the first half of 2022.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australiaand Asia. The Company offers a broad range of products and services to individual investors, financial advisors, asset managers and owners, pension plan providers and sponsors, and institutional investors in the private debt and capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly traded companies, private capital markets, debt securities and market data world in real time. Morningstar also offers investment management services through its investment advisory subsidiaries, with approximately $253 billion of assets under advice and under management June 30, 2022. The Company operates in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

of the morning star Research group leader consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. of the morning star Research group leader produces various ratings and ratings, including the Morningstar Analyst Rating and the Morningstar Quantitative Rating. The Morningstar Analyst Rating is derived from a qualitative assessment process performed by a manager research analyst, while the Morningstar Quantitative Rating uses a machine learning model based on Morningstar’s analyst decision-making processes, their past rating decisions and the data used to support those decisions. In either case, the ratings are forward-looking assessments and include assumptions of future events, which may or may not occur or may differ materially from what has been assumed. Morningstar Analyst Ratings and Quantitative Morningstar Ratings are statements of opinion, subject to change, should not be relied upon as guarantees, and should not be relied upon as the sole basis for investment decisions. This press release is for informational purposes only; references to securities should not be considered an offer or solicitation to buy or sell the securities.

1 Morningstar recently announced the merger of its two forward-looking rating systems into one, the Morningstar Medalist Rating, which is expected to take place in the second quarter of 2023.

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Email: newsroom@morningstar.com

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