Morningstar finds health savings account providers have improved their offerings, but transparency and fees remain hurdles

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CHICAGO, October 7, 2021 / PRNewswire / – Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today released its fifth annual health savings accounts (HSA) status report accessible to individuals. Morningstar rated 11 of the top HSA providers’ offerings for two different use cases: as an investment account to save for future medical expenses and as an expense account to cover current medical expenses. This year’s study reveals that the best HSA provider for investors is Fidelity, and the best HSA providers for spenders are Fidelity and Lively.

Providers have made strides over the past year in reducing fees, streamlining investment menus and delivering higher quality funds, but there is still room for improvement. Despite the discounts, fees vary by provider and account balance; most require individuals to keep money in spending accounts before they can invest; and fund lines always contain redundant and niche options that can be difficult to understand.

“Transparency about HSAs and their associated fees is limited, especially when investors are looking to open an account that is not through their employer. Our HSA Provider Assessment helps investors understand and navigate the HSAs available to them, ”said Megan pacholok, lead author of the study and management research analyst. “Since we introduced our HSA assessments five years ago, we’ve seen vendors improve their offerings by reducing fees and simplifying investment menus. As HSAs continue to evolve, it is important that providers continue to be more transparent and include strong investment options. , and keep costs down. “

Highlights of the study include:

  • Fidelity continues to perform well above its peers, with a high overall investment account rating, including high ratings in the price and investment threshold and above average ratings in menu design and the quality of investments.
  • No HSA has achieved universally top marks, or a high rating, on the factors underlying HSA quality, such as attractive interest rates for expense accounts or a sound investment menu design for investment accounts.
  • The fees continue to fall; however, they vary among vendors. For example, Fidelity offers the cheapest 60/40 passive wallet at 0.02% and is the only provider that does not charge maintenance and investment fees. Fees from other providers for a similar portfolio range from 0.22% to 0.68%.
  • Providers continue to fill their investment menus with high quality funds based on the Morningstar Analyst ™ Rating and the Morningstar Quantitative Rating ™. HealthEquity is the leading provider with almost 60% of its investments made up of Gold-rated funds. About 85% of funds in each line were Morningstar Medalists – a fund with an analyst rating or a gold quantitative rating, from silver or bronze – and five vendors offer fully medal-winning ranges, nearly double last year’s total. It is still possible to rationalize the investment menus and avoid redundancies.
  • Funds that integrate environmental, social and corporate governance (ESG) criteria into their investment processes are increasingly common in HSA ranges. Currently, five providers include ESG equity options in their investment ranges. For example, the Fidelity and Bend ranges offer the Parnassus Core Equity Fund, an actively managed large-cap blended fund that achieves a leading Morningstar ESG engagement level. Morningstar’s ESG Engagement Level summarizes the opinions of Morningstar analysts on the strength of the ESG investment program at the strategy and asset manager level and is expressed on a four-point scale from best to worst: Leader, Advanced, Basic and Low.
  • Optum, HealthEquity, Fidelity and HSA Bank continue to dominate the HSA market with more than $ 51 billion in combined assets. This represents more than 60% of the total assets of the HSA, which amounted to $ 82.2 billion at the end of 2020 according to Devenir.

The overall rating of each HSA provider is listed below.

HSA Provider

Overall assessment as
Investment account

Overall assessment as
Expense account

Associated bank

Above average

Mean

Bank of America

Above average

Below average

Bend

Mean

Mean

loyalty

High

High

Health Equity

Mean

High

Health Savings

Mean

Below average

HSA Bank *

Mean

High

Living

Mean

High

Optum

Below average

Mean

PayFlex

Below average

Below average

HSA Authority

Mean

High

* HSA Bank is Morningstar, Inc’s provider of HSA plans.

Additions under consideration this year include HSA offerings from Associated Bank and PayFlex. Fifth thirds and more are not included in this year’s report because they are acquired by HealthEquity.

Read the HSA Landscape report, including the full 11 vendor assessments and methodology, here https://www.morningstar.com/lp/hsa-landscape. An article on Morningstar.com summarizing the report’s findings is available here.

About Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The Company offers a wide range of products and services to individual investors, financial advisers, asset managers and owners, pension providers and sponsors, and institutional investors in the debt and private equity markets. Morningstar provides data and research on a wide range of investment offerings, including managed investment products, publicly traded companies, private capital markets, debt securities and global time market data. real. Morningstar also provides investment management services through its investment advisory subsidiaries, with approximately $ 251 billion in consulting and management assets from June 30, 2021. The Company operates in 29 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar’s Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc., including, but not limited to Morningstar Research Services LLC. Morningstar’s Manager Research Group produces a variety of ratings, including the Morningstar Analyst Rating and the Morningstar Quantitative Rating. The Morningstar Analyst Rating is derived from a qualitative review process performed by a Manager Research Analyst, while the Morningstar Quantitative Rating uses a machine learning model based on Morningstar Analyst Decision Making Processes, their past rating decisions and the data used to support those decisions. In both cases, ratings are forward-looking assessments and include assumptions about future events, which may or may not occur or may differ materially from what was assumed. Morningstar Analyst Ratings and Morningstar Quantitative Ratings are statements of opinion, subject to change, should not be taken as guarantees and should not be used as the sole basis for investment decisions. This press release is for informational purposes only; references to securities should not be construed as an offer or a solicitation to buy or sell the securities.

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SOURCE Morningstar, Inc.

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