Products June 13, 2023

Benefits Aggregator Hub Adds In-House HSA

The proprietary health savings account will put participant savings into Hub-selected investment funds.

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Hub Retirement and Private Wealth, a division of Chicago-based Hub International Ltd., announced Tuesday the launch of an in-house health savings account for plan sponsors to offer participants.

The Hub HSA Investment Account will give Hub clients an HSA to save pre-tax dollars for medical expenses while keeping those funds invested in Hub-selected funds, the insurance and workplace benefits aggregator announced.

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“There is a growing imbalance between the number of individuals saving for future healthcare expenses and the rising cost of healthcare in retirement,” Joe DeNoyior, president of Hub RPW, said in a statement. “With HUB HSA Investment Account, we are helping individuals, employers and partners simplify health and financial wellness decisions and drive stronger retirement outcomes.”

Workplace HSAs have seen rapid growth in recent years, as participants use them as tax-advantaged savings vehicles that can go toward qualified medical expenses. At the end of 2022, there were $104 billion in HSA assets held among 35.5 million accounts, a year-over-year increase of 6% for assets and 9% for accounts, according to the most recent data from Minneapolis-based HSA investment firm Devenir.

In the announcement, Hub positioned its HSA as helping to “bridge the retirement health care savings gap” for participants.

The investment account will work in partnership with HSA Bank, a health savings account administrator based in Milwaukee. The Hub RPW team will provide employers and employees access to the HSA and customized fund lineups, according to the announcement.

The four largest HSA providers, as of 2022, are HealthEquity, Optum, Fidelity Investments and HSA Bank, together accounting for two-thirds of the total HSA market, according to data from Morningstar.

Compliance June 12, 2023

Legislation to Expand Accredited Investor Definition Moves to Senate

Two bills seeking to widen the pool of investors who can invest in private equity passed the House last week by voice vote.

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The Fair Investment Opportunities for Professional Experts Act, H.R. 835, and the Accredited Investor Definition Review Act, H.R. 1579, both passed the House of Representatives on June 5 by voice vote.

The bills would expand the definition of an accredited investor, someone who may invest in private securities. Currently, accredited investors must have a net worth of at least $1 million or an annual income of at least $200,000. Some financial professionals can also qualify.

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During a markup hearing for the bills held in April, restricting private securities to only the wealthiest was criticized by more than one representative as being unfair. The ostensible justification for the rule is to protect lower-income households from losing a significant portion of their wealth on one bad investment.

H.R. 835 would permit brokers and investment advisers registered with the Securities and Exchange Commission, Financial Industry Regulatory Authority or a state securities authority to qualify as an accredited investor. It would also allow “any natural person the Commission determines, by regulation, to have demonstrable education or job experience to qualify such person as having professional knowledge of a subject related to a particular investment.”

The second qualification is intended to permit specialized experts to invest in private securities related to their area of expertise, such as a medical professional investing in a medical device.

Representative Brad Sherman, D-California, proposed adding other expert qualifications, such as an MBA, to the bill, but these qualifications were not added to the version that passed the House.

H.R. 1579 requires the SEC to review the definition of accredited investor every five years, starting 18 months after the bill’s passage. The bill requires the SEC to consider qualifications and credentials that could expand investment without compromising investor protections.

Both bills are now with the Senate Committee on Banking, Housing, and Urban Affairs, which does not yet have a timeline for acting on the legislation.

A third bill which passed the House Committee on Financial Services is the Expanding Access to Capital Act, H.R. 2799. This bill would add clients of registered advisers to the definition of accredited investors, provided they do not invest more than 10% of their net worth or gross income into private securities. This bill has not yet passed the House.

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