Morningstar’s Second Annual Assessment of the 10 Largest Health Savings Account Plans Finds Investment Quality Has Improved but High Fees and Lack of Transparency Remain Hurdles

CHICAGO,/PRNewswire/ -- Morningstar, Inc. (Nasdaq: MORN), a leading provider of independent investment research, today published its second annual study assessing plans from 10 of the largest Health Savings Account (HSA) plan providers. 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 study found that The HSA Authority is the best plan both as an investment for future needs and as a spending vehicle for current costs. More generally, Morningstar found that the quality of investment options has improved across HSAs, but high fees and low transparency remain hurdles.

“Thanks to increased use of high-deductible health insurance plans, which are often paired with an HSA, and unrivaled tax advantages, HSA plans are more popular than ever,” said Leo Acheson, associate director of multi-asset and alternative strategies team at Morningstar. “We’re encouraged by the improvement in the quality of HSA investment options since last year, but the industry can raise its game by providing greater transparency on fees, investment options, and interest rates and further reducing high plan expenses. Out of the 10 plans we’ve evaluated, Morningstar considers The HSA Authority to be the best HSA plan for spenders and investors due to its low fees, strong investment options, and the absence of an investment threshold.”

Morningstar’s manager research group evaluated HSA plans available to individuals, as opposed to those offered through employers, where fees can vary based on a number of factors. The group assigned Positive, Neutral, and Negative scores to various criteria, and aggregated those scores to reach an overall assessment for each plan as both an investing vehicle and spending vehicle. When evaluating HSAs as a spending vehicle, Morningstar considered three main components: maintenance fees, additional fees, and the interest rates offered on investors’ checking accounts. When assessing the merits as investment vehicles, Morningstar considered five components of HSA plans: investment menu design, quality of investments, price, investment threshold, or the amount investors must keep in the checking account before investing, and performance.

Morningstar found that the quality of investments across the 10 largest HSA plans remains strong and has improved since last year, with at least half of each plan’s investment options earning Morningstar Analyst Ratings™ of Gold, Silver, or Bronze. Investment menu designs have also gotten better, with several plans taking steps to reduce menu overlap or add core investment options. Still, a number of plans haven’t made the same improvements to their investment choices and many suffer from high fees, explaining why only three receive Positive assessments as an investing vehicle, and just one earns a Positive assessment as a spending vehicle.

The overall assessment for each plan is listed below. To view the report, including the complete assessment for the 10 plans, please click here. An article on Morningstar.com summarizing the report’s findings is available here.

Morningstar has approximately 115 manager research analysts worldwide who cover approximately 4,315 funds. The company provided data on approximately 240,940 open-end mutual funds, 12,200 closed-end funds, and 16,150 exchange-traded product listings as of Sept. 30, 2018.

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 $207 billion in assets under advisement and management as of Sept. 30, 2018. The company has operations in 27 countries. For more information, visit www.morningstar.com/company. Follow Morningstar on Twitter @MorningstarInc.

Morningstar’s Manager Research Group consists of various wholly owned subsidiaries of Morningstar, Inc. including, but not limited to, Morningstar Research Services LLC. Analyst Ratings are subjective in nature and should not be used as the sole basis for investment decisions. Analyst Ratings are based on Morningstar’s Manager Research Group’s current expectations about future events and therefore involve unknown risks and uncertainties that may cause such expectations not to occur or to differ significantly from what was expected. Analyst Ratings are not guarantees nor should they be viewed as an assessment of a fund’s or a fund’s or separately managed account’s underlying securities’ creditworthiness. This press release is for informational purposes only; references to securities or a separately managed account investment strategy in this press release should not be considered an offer or solicitation to buy or sell the securities or to invest in accordance with that strategy.

©2018 Morningstar, Inc. All Rights Reserved.

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Media Contact:

Rebecca Rogalski, +1 312 244-7771 or rebecca.rogalski@morningstar.com

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SOURCE Morningstar, Inc.