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Fidelity Reports Record Growth in Health Savings Account (HSA) Business; Launches Industry’s First Funds Designed Specifically for Investing in HSAS
Issued by: Fidelity Investments
Date: Mar. 5, 2020
BOSTON, March 5, 2020 – Fidelity Investments®, one of the industry’s most diversified financial services firms, today announced record growth of its health savings account (HSA) business. Since the beginning of 2019, Fidelity has added 295 new employers that now provide HSAs to their employees (a 52% year-over-year increase). The firm has more than doubled the number of HSAs under administration in the past three years, which now includes 1,476,000 individual funded account holders representing $6.68 billion in assets (a 62% increase since the beginning of 2019) /1/.
This significant growth reflects the firm’s ongoing efforts to broaden access to the value and benefit of these triple tax-advantaged /2/ accounts in new ways.
“As health care expenses continue to rise and are a leading concern for both employers and individuals, the ability of an HSA to help grow and stretch savings dollars is invaluable in planning for both current and future health care needs,” said Begonya Klumb, head of HSA at Fidelity. “Our goal is to provide clear education, simplified options and decision support that enables our customers to maximize account benefits, grow their savings and feel confident they’re on track for the future.”
Over the past year, Fidelity also continued to introduce new enhancements and guidance resources to help HSA owners make the most of every savings dollar, adding:
New Fidelity Health Savings Funds, the Industry’s First Designed Specifically for Investing in HSAs Offer Simple, Low-Cost Investment Options
While the ability to invest contributions for potential growth, tax-free, is one of the most valuable aspects of an HSA, it is also one of the most underutilized. In fact, more than half of HSA owners don’t even realize they can invest their contributions. /7/ At the end of 2019, just 12.4 percent of Fidelity HSAs were invested. Though this figure is more than double the industry average /8/, and an increase from 8.8 percent at the end of 2018, this still represents a significant missed opportunity for those with cash balances intended to be used for future health expenses.
To encourage more HSA owners to get invested, Fidelity has launched two health savings mutual funds, the first in the industry that are specifically designed for those looking to grow their HSA savings to meet future medical expenses. The Fidelity Health Savings Fund (available both in a retail share class, FHLSX, and K share class, FHLKX) and Fidelity Health Savings Index Fund (FHSNX) both leverage the deep expertise of the firm’s Global Asset Allocation Team to deliver an innovative strategy designed to balance growth and downside market protection through different market environments to address the inherently uncertain timing of future medical expenses. The funds are competitively priced, as shown in the table below, with annual expenses that compare favorably with the industry average net prospectus expense ratio of 79 basis points for similar asset allocation funds, according to Morningstar /9/.
Fund (Ticker) Annual Expenses /10/ (in basis points) Class
The funds are exclusively available for purchase by those with a Fidelity HSA, including individual investors, employees in workplace savings plans for which Fidelity is the recordkeeper, and clients of financial intermediaries that are Fidelity Custody and Clearing clients.
“The Fidelity Health Savings Funds build on our decades of experience and expertise in asset allocation, as well as the cost efficiencies of our extraordinary scale, to offer our HSA customers innovative, low-cost investment options that simplify the complexity of investing their savings to meet uncertain future medical expenses,” said Vadim Zlotnikov, president of Global Asset Allocation at Fidelity. “Our goal with these new funds is to encourage more savers to take that next step and invest the HSA assets they intend to use for future healthcare expenses, and by doing so, more fully benefit from the great advantages of their accounts, which include the potential for tax-free growth.”
The new funds are both co-managed by Avishek Hazrachoudhury and Geoff Stein and are available now to all Fidelity HSA clients.
Other HSA Investment Options
In addition to its new Fidelity Health Savings Funds, Fidelity offers an unparalleled menu of investment options to meet the needs of different types of investors, including access to its brokerage platform which offers more than 10,000 investment options.
For those who want a “do-it-myself” approach, but seek a simplified set of options, Fidelity offers the Fidelity HSA Funds to Consider, a curated list of 22 active and passive fund options, with zero account minimums.
For additional decision support, Fidelity offers both digital investment review tools and professionals available 24/7 online or by phone to provide guidance. Regardless of the investment path an account holder chooses, there are no account transaction fees /11/ or minimum balance to start investing /12/.
More Resources to Understand and Plan for Health Care Expenses
Even among those who are enrolled in an HSA, there are still knowledge gaps and opportunities to educate people on contributing, spending, and saving in an HSA. To help address this, Fidelity’s new online hub answers the most frequently asked questions and prevalent misconceptions about HSAs and HSA-eligible health plans. Also available are interactive tools including a health care costs calculator and an HSA “worksheet” to help jump start planning.
To help individual savers and employers learn more about planning and saving for health care, Fidelity has a library of additional resources, including: 3 healthy habits for health care savings accounts; How to plan for rising health care costs; 5 ways HSAs can fortify your retirement; How to talk to your doctor – and save money; Your bridge to Medicare; 6 key Medicare questions; Fidelity’s Pulse on Health Care; A Year in the Life of an HSA.
For more insights on how Fidelity workplace HSA clients utilize their accounts, see the 2020 HSA Fact Sheet.
About the Fidelity Health Savings Funds
The Fidelity Health Savings Fund (FHLSX, FHLKX) and Fidelity Health Savings Index Fund (FHSNX) are both designed to assist investors in saving for future eligible medical expenses. Because the time horizon of such expenses is inherently uncertain, the funds pursue an asset allocation strategy that is designed to balance growth and downside market protection through different market environments.
Fidelity Health Savings Fund
Fidelity Health Savings Index Fund
About Fidelity Investments
Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
Stock markets are volatile and can fluctuate significantly in response to company, industry, political, regulatory, market, or economic developments. Investing in stock involves risks, including the loss of principal.
Investing in bonds involves risk, including interest rate risk, inflation risk, credit and default risk, call risk, and liquidity risk.
You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1.00 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Fidelity Investments and its affiliates, the fund’s sponsor, have no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time. The fund will not impose a fee upon the sale of your shares or temporarily suspend your ability to sell shares if the fund’s weekly liquid assets fall below 30% of its total assets because of market conditions or other factors.
In identifying investment options to include in this material, Fidelity only considered Fidelity open-end mutual funds and open-end mutual funds offered by a limited universe of third-party fund companies that participate in an exclusive marketing, engagement and analytics program with Fidelity for which they pay Fidelity an annual fee. The only third-party fund companies whose funds were eligible for this program were companies that generally have a track record of generating the strongest customer demand for their products from across Fidelity's customer channels and have been paying Fidelity a sufficient level of compensation for the shareholder servicing performed by Fidelity.
Fidelity applied the following process when selecting among the considered funds:
/1/ Fidelity record kept data of HSAs through January 31, 2020
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