HSA Benchmarking Analysis: Market Trends and Economics

June 17, 2008


San Francisco, CA, USA June 17, 2008

On the surface, the HSA market appears to be highly appealing for banks: from December 2006 to January 2008, accounts grew by 73%, while total balances grew by 140%. However, from a bank internal perspective, the picture is not so clear, as income per account ranges from $60 to $100. Banks' varying revenue and cost structures indicate that the HSA market is still in a "pre-shakeout" stage, awaiting the bifurcation of market players into "manufacturers" and "distributors."

Despite considerable industry and press coverage since the introduction of health savings accounts in 2004, there has been a general lack of quantitative HSA performance data. Rather, most published information has been limited to marketwide HSA account numbers and balance levels. Given this lack of relevant data, Celent recognized that HSA custodial banks require a more granular level of research, enabling meaningful performance measurement vis-à-vis industry peers.

With its groundbreaking healthcare banking report, , Celent crowns the inaugural round of its semiannual HSA Benchmarking Survey. Covering the period from December to 2005 to January 2008, this study provides a highly revealing view of how banks' HSA programs are performing. Fourteen banks participated in this study, sharing internal data related to accounts, balances, deposits, withdrawals, investments, pricing, revenue, costs, functionality, and distribution. 

Findings included the following:

  • Average account balances hit $1,400, up from $1,028 in Dec. 2006. Although deposits tend to be lower than IRS allowable amounts, they are accelerating over previous years' levels.
  • There is no correlation between deposit levels and bank scale (total balances). Similarly, there is no correlation between withdrawal levels and bank scale -- an indication that market factors have a greater impact on consumer behavior than banks' activities.
  • There is already considerable pressure on fee structures. At least half of all banks surveyed do not charge set-up fees and monthly fees are dropping compared to previous years.
  •  Average revenue per account ranges widely from slightly over $12 to $120. DDA (demand deposit account) spread and monthly fees are the main revenue drivers.
  • The average cost per account ranges broadly from $22 to $110.

Source: Celent HSA Benchmarking Survey, Volume I 1. Other includes overdraft, return item, and check order fees.

"The HSA market is relatively immature and will experience steady growth, along with heightened competition and attendant quests for cost improvements, customer acquisi­tion and retention. The race for customers will be fierce, leading to increased investment in remote customer support and price wars," says Red Gillen, senior analyst with Celent’s banking group and co-author of the report.

Co-author and Celent senior vice president Alenka Grealish adds, "The long-run battleground will be in customer retention. Similar to the credit card industry, in which scale and retention are critical to perfor­mance, the HSA market will be concentrated in the hands of a small number of ‘manufacturers,’ while distribution will be fragmented across a large number of banks and third parties."

This report measures bank categories’ most relevant HSA performance criteria and provides an analysis of underlying factors and trends. It is a high-level summary of the extensively detailed Celent HSA Benchmarking Survey, Volume I. For more information about the HSA Benchmarking Survey, please click here.

Celent is currently inviting banks to participate in the second round of the HSA Benchmarking Survey, to take place in August 2008. Participants will benefit by receiving extensive analysis at the individual bank level, delivered via a "give back" session with Celent analysts. If interested, please contact Steve Nawrocki (snawrocki@celent.com) for more information.

The report contains 33 pages and 21 figures. A table of contents is available online.

On July 9, Celent will conduct a webinar covering this research. For more details or to register, please click here.


Members of Celent's Healthcare Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.


Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

Table of Contents

San Francisco, CA, USA June 17, 2008


Executive Summary 3
A Need for Meaningful Information 6
Growth Across the Board 8
  Accounts: A Barometer of Healthcare Market Change 8
  Rising Total Balances: A Foreshadowing of Revenue Growth 9
  Account Balances: Continued Net Gains 10
  Customers Are Wary of Investing Their Healthcare Dollars 14
  Cards Dominate Access 16
Fees Under Pressure 17
  Setup Fees Falling by the Wayside 17
  Monthly Fees Slowly Losing Altitude 19
HSA Economics: Divergent Revenues and Costs 23
  Revenues: Like a DDA, Circa 1995 23
  Costs: Greatest Disparities 25
  Income: Specialists Excel 27
The Front Office: Sales and Customer Service Differences 29
  Distribution: Partnerships Rule 29
  Product Features and Online Support: Behind the Curve 31
Conclusions 33
Appendix 34
  HSA Account Features and Online Support 34


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