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Sarah Pellegrinosarah.pellegrino@morningstar.com
Morningstar Publishes First Study Evaluating 10 of the Largest Health Savings Account Plans as Spending and Investment Vehicles

With the recent introduction of U.S. House of Representatives and Senate healthcare reform bills increasing HSA contribution limits, new Morningstar research helps investors and policymakers navigate the HSA landscape

CHICAGO, June 27, 2017—Morningstar, Inc. (NASDAQ: MORN), a leading provider of independent investment research, today published a new study assessing plans from 10 of the largest Health Savings Account (HSA) plan providers: Alliant Credit Union, Bank of America, BenefitWallet, HealthEquity, HealthSavings Administrators, HSA Bank, Optum Bank, SelectAccount, The HSA Authority, and UMB Bank. Morningstar evaluated the plans through two different lenses: as an investment vehicle to save for future medical expenses and as a spending vehicle to cover current medical costs. The results of the study show there’s room for improvement across the board; Morningstar positively assessed only four of the 10 plans as an investment vehicle and three of the plans for use as a spending vehicle. Moreover, only one plan received a positive assessment on both fronts.

To view the report, including the complete assessment for the 10 plans, please click here. Morningstar assigned each plan an overall assessment of positive, neutral, and negative. For accountholders looking to invest their HSA assets, the study analyzed the quality and cost of mutual funds offered as part of the plan’s “investment menu.” The evaluation of HSAs as a spending vehicle focused primarily on the maintenance fees charged by each plan.

“HSAs are becoming increasingly popular, but investors have few resources at their disposal to navigate the hundreds of plans available to them. Our study establishes metrics that investors should consider when choosing an HSA,” said Leo Acheson, Morningstar’s lead research analyst for health savings accounts. “Participants using HSAs to invest and save for future medical expenses should seek plans that offer a well-designed investment menu of cheap, high-quality funds. HSA plans from four providers—Bank of America, Health Equity, Optum, and The HSA Authority—came closest to attaining that high standard.”

“Now that the U.S. House of Representatives and Senate have introduced healthcare reform bills that would double HSA contribution limits, analysis of HSA plans will become crucial as investors and policymakers strive to better understand the provider marketplace. This report provides key context to understanding the HSA as an investment vehicle but also utilizing it as a spending vehicle,” said Jake Spiegel, senior analyst for policy research. “Investors using HSAs to cover current medical expenses should pay attention to maintenance fees, which vary by provider and can eat into savings account balances over time.”

The overall assessment for each plan is listed below:

HSA Plan Provider / Overall Assessment as Investment Vehicle / Overall Assessment as Spending Vehicle

Alliant Credit Union / Negative / Positive
Bank of America / Neutral / Negative
BenefitWallet / Neutral / Neutral
HealthEquity / Positive / Neutral
HealthSavings Administrators / Neutral / Negative
HSA Bank* / Neutral / Neutral
Optum / Positive / Neutral
SelectAccount / Neutral / Positive
The HSA Authority / Positive / Positive
UMB Bank** / N/A / Neutral

*HSA Bank is Morningstar, Inc.’s HSA plan provider.
**UMB Bank did not provide an investment menu and is therefore excluded from the investment vehicle evaluations.

Morningstar’s manager research group evaluated HSA plans by assigning positive, neutral, and negative scores to various criteria, and aggregating those scores to reach an overall assessment for each plan as both an investment vehicle and spending vehicle. As an investment vehicle, a plan must earn two positive scores and no negative scores for menu design, quality of investments, and price to earn an overall positive assessment. An overall negative assessment means a plan would have scored negative in two of the three areas. As a spending vehicle, an HSA plan with no maintenance fee received an overall positive assessment, while a plan that charged fees regardless of the balance received a negative assessment.

The full research report is available here. An article summarizing the report’s findings is available here.

Morningstar has approximately 130 manager research analysts worldwide who cover approximately 4,270 funds. The company provides data on approximately 217,000 open-end mutual funds, 11,600 closed-end funds, and 14,100 exchange-traded product listings as of March 31, 2017.

About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offers an extensive line of products and services for individual investors, financial advisors, asset managers, retirement plan providers and sponsors, and institutional investors in the private capital markets. Morningstar provides data and research insights on a wide range of investment offerings, including managed investment products, publicly listed companies, private capital markets, and real-time global market data. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $200 billion in assets under advisement and management as of March 31, 2017. The company has operations in 27 countries.

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 various ratings including the Morningstar Analyst Rating for funds and the Morningstar Quantitative Rating for funds. The Analyst Rating is derived from a qualitative assessment process performed by a manager research analyst, whereas the Morningstar Quantitative Rating uses a machine-learning model based on the decision-making processes of Morningstar’s analysts, their past ratings decisions, and the data used to support those decisions. In both cases, the ratings are forward-looking assessments and include assumptions of future events, which may or may not occur or may differ significantly from what was assumed. The Analyst Ratings and Quantitative Ratings are statements of opinions, subject to change, are not to be considered 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 considered an offer or solicitation to buy or sell the securities.

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©2017 Morningstar, Inc. All Rights Reserved.

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