From Healthcare to Retirement: The Expanding Role of HSAs
By Anna Johnson, Head of Retirement Products & Solutions (RPS) at Ascensus
Health savings accounts (HSAs) have steadily grown in popularity over the past two decades, but data shows they’ve entered a new era. HSAs are no longer just about paying for today’s doctor visit.
For financial organizations, HSAs represent both a client service opportunity and a business growth strategy that’s increasingly too significant to overlook.
According to Devenir’s 2024 Year-End HSA Research Report, the HSA market ended 2024 with $146.8 billion in assets across more than 39 million accounts. That marks a 19 percent increase in assets year over year, and a 5 percent increase in accounts (Devenir, 2024). That growth continues to be fueled by both contributions and a steady increase in investment balances—as opposed to short-term deposit accounts—which reached nearly $63.9 billion by year-end—a 38 percent jump from 2023, according to the report.
These numbers underscore a reality: HSAs are maturing. Clients are beginning to recognize their dual role as a healthcare spending tool and a long-term wealth-building vehicle. For financial organizations, that shift opens up new opportunities, provided they understand the rules and communicate the benefits effectively.
Devenir’s report highlights some compelling trends.
Account growth remains steady. Over 39 million accounts were open at the end of 2024, a 5 percent increase from 2023.
Contributions are strong. Account owners contributed nearly $55.8 billion in 2024, up 11 percent from 2023.
Withdrawals remain significant. About $42.3 billion was distributed, a 10 percent increase from 2023.
Investing is gaining momentum. Roughly 44 percent of all HSA assets were in investments as of December 31,2024, with an average total balance (deposits and investments combined) of $22,032.
Unfunded accounts remain common. Around 21 percent of all accounts held no funds at year-end, similar to 2023.
Why HSAs Matter to Savers
For your clients, the appeal of HSAs comes down to this phrase: triple tax advantage.
Contributions are tax deductible (or pretax through payroll deduction)
Earnings grow tax deferred
Withdrawals for qualified medical expenses are tax-free. And once HSA owners reach age 65, they can take HSA distributions for any reason without penalty (although they will pay taxes on those distributions that are not qualified medical expenses).
Few other financial tools offer this triple combination. Add in the fact that unused HSA balances roll over year after year, and HSAs become a flexible, portable account that clients can use throughout their lifetime.
As healthcare costs continue to rise, HSAs provide clients with a way to keep pace. They can cover today’s healthcare costs while also planning for the reality that healthcare in retirement can cost hundreds of thousands of dollars.
Why HSAs Matter to Financial Organizations
For financial organizations, HSAs represent a chance to strengthen relationships, deepen trust, and expand product offerings in a way that meets real client needs: Here’s why.
Clients are asking for them. With nearly 40 million accounts nationwide, HSAs are no longer niche products. Not offering them may cause clients to seek services elsewhere.
HSAs bridge health and wealth. Clients increasingly want integrated financial advice. HSAs sit at the intersection of healthcare spending and retirement saving, two of the most pressing financial challenges people face.
Education builds loyalty. HSAs can be confusing. Transfers vs. rollovers, qualified medical expense rules, and contribution limits are details that most clients may not understand on their own. Organizations that provide clear guidance become trusted advisors, not just account providers.
The Importance of Knowing the Rules
The benefits of HSAs are clear, but so are the potential pitfalls. Contribution limits change annually, nonqualified distributions can carry penalties, rollover rules can be confusing, and mistaken debit card withdrawals happen. Helping clients avoid these problems reinforces your role as a knowledgeable financial partner who protects their interests.
Looking Ahead
Devenir projects that by the end of 2027, HSA assets could reach nearly $199 billion across more than 45 million accounts. That kind of growth reflects a shift in how Americans approach both healthcare costs and retirement readiness.
For financial organizations, the message is clear: HSAs are no longer optional. They’re becoming an essential part of the financial services landscape. Organizations that embrace HSAs today position themselves to meet client needs now and into the future.
HSAs may have started as a way to manage out-of-pocket healthcare costs. But today, they’re evolving into one of the most versatile tools for building financial security. Clients see the value in these accounts, and the market data appears to confirm this, and the opportunities for financial organizations are growing.
By leaning into education, offering strong HSA programs, and staying ahead of regulations and compliance, financial organizations can do more than keep up with this trend. They can lead it. In doing so, they help clients manage one of life’s biggest expenses while strengthening long-term relationships built on trust.
In a financial landscape where healthcare and retirement loom large, HSAs are no longer just accounts. They are a strategy. And they’re one strategy financial organizations can’t afford to ignore.
