NAFCU Services Blog

Mar 15, 2018

HSA Usage Continues to Evolve as Account Balances Grow

By Dennis Zuehlke, Compliance Manager, Ascensus.

Credit unions experienced double-digit growth in health savings account (HSA) deposits last year, with a 17.6 percent increase in assets from 2015 to 2016. Credit unions now hold $1.38 billion in HSA assets, based on data analyzed by Devenir.

Devenir provides customized investment solutions for HSAs and the consumer-directed health care market. Ascensus partners with Devenir to offer the Devenir myHSAinvestments solution and private-label HSA investment platform to banks and credit unions.

As the number of HSAs and the dollars held in them continue to increase, so does the average account balance. And, as high-deductible health plan enrollees become more familiar with the advantages of an HSA, their usage of the account begins to evolve.

Unlike flexible spending accounts, HSAs do not have a “use-it-or-lose-it” rule that requires the participant to use the money in the account to pay for qualified medical expenses incurred during the plan year or forfeit the unused portion. HSAs are instead designed to provide tax incentives to save for current and future qualified medical expenses.

Many HSA owners still use their HSA primarily as a transactional account to pay for qualified medical expenses. However, not all HSA owners withdraw from their accounts or deplete their HSA balances by year-end.

The Employee Benefits Research Institute (EBRI) analyzed HSA transaction activity in its database of 5.5 million accounts and found that only 63 percent of HSA owners withdrew from their account in 2016. The average amount distributed in 2016 was $1,771. Based on EBRI’s research showing an average total contribution amount of $2,922 in 2016, EBRI surmised that the average amount carried over at year-end was $1,151.

EBRI’s analysis also found that average year-end balances in HSAs increase for each year that the account has been open, as HSA owners withdraw less than they contribute. Accounts opened in 2004 had an average year-end balance of $14,873, compared to an average year-end balance of $1,027 for accounts opened in 2016.

As HSA balances grow, more HSA owners are starting to treat their HSA as an investment account to pay for future medical expenses. These HSA owners increasing look to invest a portion of their HSA assets in stocks, bonds, and mutual funds. More than 15 percent of all HSA assets are now held in investments—rather than traditional deposit products—and with an average total account balance of $14,971 (deposits and investments); an HSA investment holder’s average account balance is seven times larger than a non-investment holder’s average account balance, according to the 2016 Year-End Devenir HSA Market Survey.

This evolving trend presents both opportunities and challenges for credit unions offering HSAs to their members. Credit unions are benefitting from strong HSA deposit growth, but as account balances grow, credit unions need to recognize that offering a transaction account linked to an HSA savings vehicle may not meet the needs of members seeking to invest some or all of their HSA assets.

Learn more about this topic by listening to our recent podcast: “Not Offering HSAs? Your Credit Union is Missing a Chance to Grow”


Ascensus Logo NewAscensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting. To learn more about our partner, visit

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