7 stakeholders changing the HSA landscape
Aite Group study identifies threats and opportunities to HSA competitors
Health savings accounts are a valuable tool to help employees meet their long-term financial objectives, and stakeholders across the industry are catching on to the opportunity that offering HSAs provides. Meanwhile, as the economy recovers from the historic unemployment tof last year, workers are looking for new jobs or shifting to self-employment.
Related: HSA balances increase, with owners socking away almost $42B: Devenir
Aite Group found that the competitive landscape for HSAs is getting more crowded, as new players “step into the HSA market, raising the visibility of these accounts. In doing so, they are redrawing old borders and claiming land away from traditional players,” according to a new report, “HSA Competitive Landscape: Redrawing the Battle Lines.”
Aite identified six interlinking stakeholders that are already working together to service HSAs, but may increasingly be competing with each other to offer them. “Given the close linkage to this rich cast of characters, it is not surprising that alliances, partnerships, and mergers have already formed, and lines blurred in its wake,” according to the report.
A seventh group of new entrants are positioned to increase competition in new ways, Aite found.
1. Health plans
The requirement that HSA owners be covered by a high-deductible health plan means the accounts are inextricably linked with health plan providers. Intense scrutiny of the cost of health care means providers are often seen as providing a commodity, not a strategic partner for employers, according to the report.
Health benefit accounts have been one tool to overcome this perception, but Aite found health plans’ financial infrastructure is better suited to support health reimbursement accounts, not HSAs.
2. Banks and nonbank custodians
Some large banks have actually exited the HSA business over the last few years, according to the report, and there are significant challenges to expanding this business.
The current low-rate environment means HSAs are less appealing to banks at the moment, and few banks have the expertise or relationships with health providers or employers to easily cross-sell the products. However, firms that can help employers offer integrated benefits, or can position themselves as a source of education and financial literacy, have an opportunity to capture more of the HSA market.
3. Tech platforms
Tech providers “are a pivotal part of the health benefit accounts world,” according to the report, but they must continually offer new capabilities to compete with disruptors, including automated claims processing, integrated user portals, streamlined enrollment and onboarding processes, and other digital or mobile tools, all while keeping up with security and compliance issues.
Tech providers have an opportunity to expand their reach through their current providers, by offering telehealth, budgeting or health and fitness benefits, Aite noted.
4. Third-party administrators
Despite being at the center of enrollments, onboarding, administration, claims settlements, service and compliance, TPAs have been “slow to capture the market demand stemming from employers’ interest in HDHPs, particularly in HSAs.”
TPAs’ relationships with tech platforms has forced them to rely on others for digital and mobile offerings, but companies that successfully implement these tools in a seamless user experience can differentiate themselves.
5. Financial advisors
Advisors and retirement planners already have established relationships with plan sponsors, positioning them to introduce HSAs as an additional offering. The tax and investment benefits of HSAs give financial advisors opportunities to expand the objectives they’re helping clients address.
However, Aite found advisors and retirement planners are less familiar with the tools and those who are have been unimpressed by their potential for generating revenue. Furthermore, the accounts aren’t ERISA-compliant, adding a layer of complexity and risk that some advisors may not want to take on.
Related: The importance of HSAs in saving for future health care needs can’t be underestimated
6. Benefits brokers
Brokers are top-of-mind for employers looking to expand their benefits offering, including HSAs, the report found. However, they don’t have much incentive to offer these products on their own, and Aite found they may not fully realize how much competition they have from other stakeholders, especially retirement advisors and financial planners.
The report suggested brokers who partner with investment managers can expand their HSA business and access new sources of revenue.
7. New entrants
Aite anticipates a new class of competitors that are adjacent to but not explicitly a part of the health benefits space will become more visible.
These future HSA partners include life insurance carriers, financial wellness or software providers, brokerage platforms, and education or consulting providers.
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