Devenir Research Year-End HSA Market Statistics & Trends Executive Summary Year-End Devenir HSA Research Report

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1 Devenir Research 2018 Year-End HSA Market Statistics & Trends Executive Summary r e p o r t r e l e a s e d a t e : Year-End Devenir HSA Research Report

2 Table of Contents Key Findings... 3 HSA Industry Level Account Data... 4 Industry Contributions and Withdrawals... 5 HSA Investments... 7 HSA Marketplace Projections January HSA Supplement... 9 About Devenir...10 Report Methodology The majority of this report was derived from the 2018 Year-End Devenir HSA Market Survey. This survey was conducted to shed light on the rapidly growing and evolving health savings account market. The survey was carried out in January, 2019 and primarily consisted of top 100 HSA providers in the health savings account market. All data was requested for the period ending on December 31st, All estimates and projections reflect the current environment surrounding health savings accounts and are barring any regulatory changes to the market. Certain data points from the survey were omitted from this report due to inconclusive data or an incomplete sample set. All statistics are produced using the best available data set, which may at times leave certain statistics unreconciled with others, both within this report and with previous reports. Survey responses were self-reported by each HSA provider. Devenir attempts to verify responses when possible through a variety of channels including but not limited to press releases, annual reports, prior research, and FDIC filings Year-End Devenir HSA Research Report

3 Key Findings HSA accounts exceed 25 million. The number of HSA accounts surpassed 25 million, holding $53.8 billion in assets, a year-over-year increase of 13% for accounts and 19% for HSA assets for the period ended December 31st, HSA investment assets surpass the $10 billion mark. Despite strong market headwinds, HSA investment assets reached an estimated $10.2 billion at the end of December, up 23% year-overyear. On average, investment account holders hold a $14,617 total balance (deposit and investment account). Fewer unfunded accounts. Less HSAs (16%) were unfunded at the end of 2018 compared to 20% at the same time in HSA contributions jump. HSA account holders contributed almost $33.7 billion to their accounts in 2018, up 22% from the year before. Increase in employer contributions. For accounts receiving an employer contribution in 2018, the average contribution amount rose to $839 (up from $604 in 2017). $75.0 Total HSA Assets (in billions) $64.0 $16.7 $53.8 $13.6 $45.2 $10.2 $37.0 $8.3 $1.7 Investments Deposits $3.4 $1.6 $3.2 $5.5 $7.2 $5.3 $6.8 $9.9 $9.0 $12.2 $11.1 $15.5 $1.7 $ (est) $19.3 $2.3 $17.1 $24.2 $3.2 $21.0 $30.2 $4.2 $26.0 $5.5 $31.5 $36.9 $43.5 $50.4 $ (est) Source: Estimates derived from 2018 Year-End Devenir HSA Market Survey, press releases, previous market research and market growth rates Year-End Devenir HSA Research Report

4 HSA Industry Level Account Data We continue to see seasonality in the percentage of accounts that are unfunded. Accounts are often opened during the fall open enrollment season, but remain unfunded until early the following year. At the end of 2018, about 16% of all accounts were unfunded, down from almost 20% a year ago. The reduction in the percentage of unfunded accounts can be largely attributed to the continued up-tick in account closures. 6.32M 6.76M 7.09M 8.23M 9.14M 10.70M 11.79M Total HSA Accounts 13.77M 14.53M 18.17M 16.75M 22.21M 21.03M 20.03M 25.08M 23.38M Funded Accounts Non-Funded Accounts Average Balance By Year The Account Opened 12/31/ /31/ /31/ /31/ /31/ /31/ /31/2012 $10,000 $8,920 $8,384 $8,000 $6,000 $4,000 $2,000 $6,720 $5,952 $5,412 $4,990 $4,130 $3,440 $2,962 $2,537 $2,183 $2,110 $1,498 $906 $ Year Account Opened Year-End Devenir HSA Research Report

5 Industry Contributions and Withdrawals $40 $35 $34 Industry Contributions & Withdrawals (in billions) $30 $25 $28 $25 $23 $26 $23 $20 $19 $16 $20 $17 $15 $10 $5 $13 $11 $8 $12 $13 $10 $3 $3 $4 $6 $6 $6 $5 $8 $- Contributions Withdrawals Carry Forward Below is an industry estimate of total contributions and withdrawals for the period 1/1/18-12/31/ Activity Contributions Withdrawals Retained Assets % Retained Estimated Industry Totals $33,656,000,000 $25,624,000,000 $8,032,000,000 24% 2018 Employer Contributions 26% of all HSA dollars contributed to an account came from an employer. The average employer contribution was $839 (for those making contributions) Employee Contributions 57% of all HSA dollars contributed to an account came from an employee. The average employee contribution was $1,872 (for those making contributions) Individual Contributions 13% of all HSA dollars contributed to an account came from an individual account not associated with an employer. The average individual contribution was $1,723 (for those making contributions). The remaining contributions in 2018 came from IRA Rollovers & other sources Year-End Devenir HSA Research Report

6 Industry Contributions and Withdrawals - Details Contributions 2018 ($) 1% 3% Contribution Sources 2018 vs % Individual 26% Employee Employer Employer 5.0% IRA Rollovers 57% Unknown Unknown 1.4% Withdrawals 2018 ($) IRA Rollover 0.5% 2% 6% 6% 6% Debit Card Check Online Bill Payment -0.8% Individual ATM Unknown -6.1% Employee 79% -10.0% -5.0% 0.0% 5.0% 10.0% 2018 Average Number of Withdrawals Per Account % Of Total Withdrawals (#) Average Transaction Size Debit Card % $104 Check 0.2 2% $322 Online Bill Pay 0.3 3% $260 ATM 0.9 4% $68 Unknown 0.5 3% $ Year-End Devenir HSA Research Report

7 HSA Investments -- $10.2 billion estimated in HSA investment assets as of December 31st, 2018, an estimated 23% year-over-year increase. -- $14,617 average total balance (deposit and investment account) for HSA investment accounts, almost 9 times larger than a non-investment holder s average account balance % of all HSA assets are in investments as of December 31st, $16.7 $13.6 HSA Investment Assets (in billions) $10.2 $8.3 $5.5 $0.1 $0.2 $0.2 $0.4 $0.9 $1.1 $1.7 $2.3 $3.2 $ Year (est) 2020 (est) 7% 5% 4% 5% 7% 8% 11% 12% 13% 14% 15% 18% 19% 21% 22% % HSA Assets in Investments Average Investment Balance $8,920 $10,851 $11,696 $11,836 $12,186 $10,948 $9,248 $9,690 $10,149 $10,227 $10,272 $4,956 $5,248 $5,441 $6,505 $7,117 Note: Average investment balance only, does not include an investor s deposit assets Year-End Devenir HSA Research Report

8 HSA Marketplace Projections HSA providers project HSA industry asset growth of 16% in 2019, while anticipating their own businesses will grow by 23% during the same period. In previous surveys, HSA providers have been fairly accurate with their growth forecasts, demonstrating an impressive understanding of the outlook for their book of business. Devenir currently projects that the HSA market will approach $75 billion in HSA assets by the end of 2020, held among roughly 30 million accounts Year-End Devenir HSA Research Report

9 2019 January HSA Supplement This section draws data primarily from the January 2019 Supplemental Survey. All year-end survey participants were invited to participate in the January 2019 supplement, with participation varying from small community banks and credit unions to the largest HSA providers. HSA assets approach $60 billion. HSA assets grew by over $5.8 billion in January 2019 to reach $59.6 billion, up 11% since the end of Accounts grew by almost 5%, with the total number of HSA accounts rising to an estimated 26.3 million. Employers drive January growth. 38% of HSA accounts received an employer contribution in January. Employers contributed almost 60% of all HSA dollars to HSA accounts during the month of January, with an average contribution of $515. Fewer unfunded accounts. At the end of 2018, unfunded accounts represented about 16% of all accounts, but by the end of January 2019 that number was back down to about 13% of all accounts. This data point continues to reaffirm our belief that a significant portion of the non-funded accounts found during the year-end survey are attributed to accounts being opened during the fall enrollment season, but not being funded until early the following year. Average Balance by Year the Account Opened $10,000 $9,840 $9,075 12/31/2018 1/31/2019 $8,000 $7,346 $6,579 $6,000 $5,797 $5,328 $4,400 $4,000 $2,000 $3,665 $3,125 $2,705 $2,352 $2,299 $1,692 $1,073 $571 $ Year Account Opened Year-End Devenir HSA Research Report

10 About Devenir Devenir is a national leader in providing customized investment solutions for HSAs and the consumer directed health care market. When health savings accounts first emerged in 2004, Devenir built its expertise around delivering cutting-edge investment solutions. As the consumer driven health care industry grew, so did Devenir s reputation as a leading researcher and award-winning investment consultant. Today, Devenir continues to lead the way in the rapidly growing HSA market. A research driven perspective makes Devenir the go-to investment advisor, HSA investment platform and consultant to employers, banks, third party administrators, health plans and technology providers. Learn more at devenir.com. Devenir Research as mentioned in: Devenir Research Team Jon Robb Senior Vice President, Research & Technology Eric Remjeske President Thank you for your participation! 2019 by Devenir Group, LLC For further information, please contact Devenir Research at or research@devenir.com Year-End Devenir HSA Research Report