HealthEquity, Inc. (HealthEquity) provides technology-enabled services that empower consumers to make healthcare saving and spending decisions. The company’s sole geographic market is the U.S.
The company uses its innovative technology to manage consumers' tax-advantaged health savings accounts (HSAs), and other consumer-directed benefits (CDBs) offered by employers, including flexible spending accounts, and health reimbursement arrangements (FSAs and HRAs), and to administer Consolidated Omnib...
HealthEquity, Inc. (HealthEquity) provides technology-enabled services that empower consumers to make healthcare saving and spending decisions. The company’s sole geographic market is the U.S.
The company uses its innovative technology to manage consumers' tax-advantaged health savings accounts (HSAs), and other consumer-directed benefits (CDBs) offered by employers, including flexible spending accounts, and health reimbursement arrangements (FSAs and HRAs), and to administer Consolidated Omnibus Budget Reconciliation Act (COBRA), commuter, and other benefits. As part of the company's services, it provides consumers with payment processing services, personalized benefit information, the ability to earn wellness incentives, and investment advice to grow their tax-advantaged healthcare savings.
The core of the company’s offerings is the HSA, a financial account through which consumers spend and save long-term for healthcare expenses on a tax-advantaged basis. As of January 31, 2025, the company administered 9.9 million HSAs, which it calls HSA Assets, as well as 7.1 million complementary CDBs. The company refers to the aggregate number of HSAs and other CDBs that it administers as Total Accounts, of which it had 17.0 million as of January 31, 2025.
The company reaches consumers primarily through relationships with their employers, which it calls Clients. The company reaches Clients primarily through relationships with benefits brokers and advisors, integrated partnerships with a network of health plans, benefits administrators, benefits brokers and consultants, and retirement plan recordkeepers, which it calls Network Partners, and a sales force that calls on Clients directly. As of January 31, 2025, the company’s platforms were integrated with more than 200 Network Partners.
The company’s ability to assist consumers is enhanced by its capacity to securely share data in both directions with others in the health, benefits, and retirement ecosystems. The company’s commuter benefits offering also leverages connectivity to an ecosystem of mass transit, ride hailing, and parking providers.
The company earns revenue primarily from three sources: service, custodial, and interchange. It earns service revenue mainly from fees paid by its Network Partners, Clients, and members for the administration services it provides in connection with the HSAs, and other CDBs the company offers. The company earns custodial revenue primarily from HSA cash held by its federally insured bank and credit union partners, which it collectively calls its Depository Partners, HSA cash held by its insurance company partners, and Client-held funds deposited with its Depository Partners. The company earns interchange revenue mainly from fees paid by merchants on payments that its members make using its physical payment cards, and on its virtual payment system.
Acquisitions
BenefitWallet HSA Portfolio Acquisition: In fiscal 2025, the company acquired the BenefitWallet HSA portfolio, comprises approximately 616,000 HSAs plus other accounts from Conduent Business Services, LLC (Conduent).
Products and Services
Health Savings Accounts: The Medicare Modernization Act of 2003 created HSAs, a tax-exempt trust or custodial account managed by a custodian that is a bank, an insurance company, or a non-bank custodian specifically authorized by the Internal Revenue Service, or IRS, as meeting certain ownership, capitalization, expertise, and governance requirements. The company is an IRS-approved non-bank custodian of its members' HSAs, designated to serve as both a passive and non-passive non-bank custodian of HSAs.
To be eligible to contribute to an HSA, an individual must be covered under a high deductible healthcare plan, or HDHP, have no additional health coverage, not be enrolled in Medicare, and not be claimed as a dependent on someone else’s tax return. HSAs have several tax-advantaged benefits, which the company calls the triple tax savings: individuals can claim a tax deduction for contributions they make to their HSAs, and contributions that their employers make to their HSAs may be excluded from their gross income for purposes of federal and most state income and employment tax; the interest or earnings on the assets in the account, including reinvestment, accumulate without being subject to tax; and distributions may be tax free if they are used to pay qualified medical expenses. There is no requirement to provide receipts to the company to substantiate HSA distributions to members, whether made through its payment card or directly from its online HSA platform. Additionally, taxable distributions other than for qualified medical expenses are permitted without penalty (although subject to income tax) after age 65. Balances remain in the account until used, i.e., there is no ‘use or lose’ requirement. An HSA is owned by the account holder; it remains the account holder’s property upon a change of employment, health plan or retirement.
Investment Platform and Advisory Services: The company offers an investment platform and access to an online-only automated investment advisory service to all of its members whose account balances exceed a stated threshold. These services are entirely elective to the member. The advisory service is delivered through a web-based tool, Advisor, which is offered and managed by HealthEquity Advisors, LLC, the company’s SEC-registered investment adviser subsidiary. HealthEquity Advisors, LLC provides investment advice to its clients exclusively through the Advisor tool on an interactive website.
Advisor provides investment education guidance and management, including maintaining HSA cash (liquidity) in amounts directed by the member, targeting risk appropriate portfolio diversification, and mutual fund selection.
The company offers investors access to three levels of service:
Self-driven: For members who do not subscribe for Advisor, the company provides an investment platform to invest HSA balances. Neither the company nor Advisor provides advice to members in respect of investments on the platform;
GPS powered by HealthEquity Advisors, LLC: Advisor provides guidance and advice, but the member makes the final investment decisions and implements portfolio allocation and investment advice through the HealthEquity platform; and
AutoPilot powered by HealthEquity Advisors, LLC: Advisor manages the account and implements portfolio allocation and investment advice automatically for the member.
Healthcare Flexible Spending Accounts: Healthcare FSAs are employer-sponsored CDBs that enable employees to set aside pre-tax dollars to pay for eligible healthcare expenses that are not generally covered by insurance, such as co-pays, deductibles and over-the-counter medical products, as well as vision expenses, orthodontia, and medical devices. Healthcare FSAs can be customized by employers so they have the freedom to determine what eligible expenses may be reimbursed under these arrangements. The company’s employer Clients also realize payroll tax (i.e., FICA and Medicare) savings on the pre-tax contributions made by their employees.
The IRS imposes a limit, indexed to inflation, on pre-tax dollar employee contributions made to healthcare FSAs. The IRS also allows a carryover of up to 20% of the indexed contribution limit that does not count against or otherwise affect the indexed salary reduction limit applicable to each plan year. Employers are able to contribute additional amounts in excess of this statutory limit and may choose to do so in an effort to mitigate the impact of rising healthcare costs on their employees.
Dependent care flexible spending accounts: The company also administer FSA programs for dependent care plans. These plans allow employees to set aside pre-tax dollars to pay for eligible dependent care expenses, which typically include child care or day care expenses but may also include expenses incurred from adult and elder care.
Health Reimbursement Arrangements: Under HRAs, employers provide their employees with a specified amount of reimbursement funds that are available to help employees defray their out-of-pocket healthcare expenses, such as deductibles, co-insurance and co-payments. HRAs may only be funded by employers and there is no limitation on how much employers may contribute; however, similar to other CDBs that are funded with pre-tax dollars, employers are required to establish the programs in such a way as to prevent discrimination in favor of highly compensated employees. HRAs must either be considered an excepted benefit (for example, a dental-only HRA or a vision-only HRA), a retiree HRA or be integrated with another group health plan. HRAs can be customized by employers so employers have the freedom to determine what expenses are eligible for reimbursement under these arrangements. At the end of the plan year, employers have the option to allow all or a portion of the unused funds to roll over and accumulate year-to-year if not spent. All amounts paid by employers into HRAs are deductible for tax purposes by the employer and tax-free to the employee.
COBRA: The company offers federal COBRA and state continuation services to employer clients to meet the employer’s obligation to make available continuation of coverage for participants who are no longer eligible for the employer’s COBRA covered benefits, which include medical, dental, vision, HRAs, and certain healthcare FSAs. COBRA requires employers to make health coverage available for qualified beneficiaries for a period of up to 36 months post-termination. As part of its COBRA program, the company offers a direct billing service where former employee participants pay it directly as opposed to their employers for coverage they elect to continue. The company handles the accounting and customer services for such terminated employees, as well as interfacing with the carrier regarding the employees’ eligibility for participation in the COBRA program.
Commuter Programs: The company administers pre-tax commuter benefit programs through which employers are permitted to provide employees with commuter benefits, including qualified transit and parking. The maximum monthly federal (and sometimes state) tax free exclusion is indexed for inflation. The company also offers various other commuter services, including access to real-time commute data, to help employers design and implement flexible return-to-office and hybrid-workplace strategies and benefits.
Competition
Some of the company’s direct competitors (including well-known retail investment companies, such as Fidelity Investments; and healthcare service companies, such as UnitedHealth Group's Optum and Webster Bank) are in a position to devote more resources to the development, sale and support of their products and services than it has at its disposal.
Strategy
The key elements of the company’s strategy are to focus on innovation and differentiated capabilities; seek to provide remarkable experiences for its members, Clients and Network Partners through what it calls its Purple service; tailor the content of its technology platforms and the guidance of its experts to be timely, personal, and relevant to each member; work directly with its Network Partners, Clients, and members to engage with consumers, educating them about the benefits of its HSAs and its other products and providing personalized guidance; bundled solution for HSAs and complementary CDBs; provide a competitive advantage by efficiently enabling it to reach a growing consumer market; complete solution for managing consumer healthcare saving and spending; purpose-built technology; create a unique solution for each of its Network Partners; increase member and client self-service capabilities, developing APIs, driving electronic communication rather than paper, increasing straight-through processing, improving overall process times utilizing both traditional robotic process automation, and increasingly through artificial intelligence (AI) tools, leveraging stacked cards, and mobile wallet; model is scalable because its services are accessed primarily through its cloud-based technology platforms; partner with large, highly rated insurance company partners to hold, through group annuity contracts or other similar arrangements, HSA cash; and continue this growth strategy, including through the BenefitWallet HSA portfolio acquisition, and are regularly engaged in evaluating different opportunities.
Technology
Technology Platforms: The company provides multiple cloud-based platforms, accessed by its members online via a desktop or mobile device, through which its members can make health saving and spending decisions, pay healthcare bills, receive personalized benefit information, earn wellness incentives, grow their savings, and make investment choices. The platforms provide users with access to services the company provides, as well as services provided by third parties selected by it or by its Network Partners. The company’s delivery model for these platforms eliminates the need for its clients to install and maintain hardware and software in order to support HSA and other CDB programs and enables it to rapidly implement product enhancements across its entire user base.
Among other features, the company’s HSA platform includes the capability to present to users medical bills upon adjudication by a health plan, including details such as the amount paid by insurance, specific nature of the medical service provided, and diagnostic code. Users of its HSA platform can pay these bills from an account of the company’s or from any bank account, online, via a mobile device, or using its payment card. All users of the company’s HSA platform gain access to its healthcare consumer specialists, available every hour of every day, via a toll-free telephone number or email. The company’s specialists can assist users with such tasks as optimizing the use of tax-advantaged accounts to reduce medical spending or selecting from among medical plans offered by an employer or health plan.
The company’s commuter platform provides Clients with various commuter services, including access to real-time commute data, to help Client’s design and implement flexible return-to-office and hybrid-workplace strategies and benefits.
The company is working to phase out a technology platform that it acquired in the acquisition of Further, which requires it to migrate the associated Clients to one of its other technology platforms.
Cloud-Based Solution: The company’s proprietary technology is deployed as a cloud-based solution that is accessible to customers online and through its mobile app. The company utilizes a multi-tenant architecture that allows changes made for one Network Partner to be extended to all others.
The company’s solution is delivered via cloud-based services and hosted in third-party data centers or on a virtual private cloud with an ability to scale on demand. This allows it to quickly support its current and projected growth. The company utilizes regional cloud failover and multiple redundant third-party data centers to ensure continuous access and data availability.
Government Regulation
The company is subject to applicable IRS regulations, which lay the foundation for tax savings and eligible expenses under the HSAs, HRAs, and FSAs it administers the company is subject to conflict of interest and other prohibited transaction rules that are enforced through excise taxes under the Internal Revenue Code.
In February 2006, the company received designation by the U.S. Department of Treasury to act as a passive non-bank custodian, which allows it to hold custodial assets for individual account holders. In July 2017, the company received designation by the U.S. Department of Treasury to act as both a passive and non-passive non-bank custodian, which allows it to hold custodial assets for individual account holders and use discretion to direct investment of such assets held.
In the provision of HSA custodial services and directed third-party administration services for FSAs and HRAs, the company is subject to the Financial Services Modernization Act of 1999 (Gramm-Leach-Bliley Act or GLBA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act), and similar state laws.
Because part of the company’s business is the administration of financial products, such as HSAs, the company is required under GLBA to send a notice of its privacy practices to account holders and to comply with restrictions on the disclosure of nonpublic personal information to non-affiliated third parties. The company is required under GLBA to establish reasonable administrative, technical, and physical safeguards to protect the security, confidentiality, and integrity of nonpublic personal information pursuant to the Federal Trade Commission’s safeguards rule.
The two rules that most significantly affect the company’s business are the Standards for Privacy of Individually Identifiable Health Information, or the Privacy Rule; and the Security Standards for the Protection of Electronic Protected Health Information, or the Security Rule. The Privacy Rule restricts the use and disclosure of protected health information and requires the company to safeguard that information and provide certain rights to individuals with respect to that information.
The company’s private-sector clients’ FSAs, HRAs, COBRA continuation insurance, and other account-based retirement plans are covered by the Employee Retirement Income Security Act of 1974, as amended, or ERISA, which governs employee benefits plans.
The company’s subsidiary HealthEquity Advisors, LLC is an SEC-registered investment adviser that provides web-only automated investment advisory services to members. As an SEC-registered investment adviser, it must comply with the requirements of the Investment Advisers Act of 1940, or the Advisers Act, and related Securities and Exchange Commission, or SEC, regulations and is subject to periodic inspections by the SEC staff.
History
HealthEquity, Inc. was founded in 2002. The company was incorporated in 2002.
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