HealthEquity's Fraud Woes: A Wake-Up Call for the HSA Industry

HealthEquity, the leading provider of health savings accounts (HSAs), has found itself in a precarious position. The company's stock has taken a nosedive, erasing the gains it made following the November 2024 election, which had raised hopes for expanded HSA access under a potential Trump administration. The culprit? A surge in fraud-related costs that has left the company reeling and investors questioning the long-term viability of its business model.

The numbers tell a stark story. HealthEquity reported a $17 million reduction in gross profit for the fourth quarter of 2025, primarily due to increased cyber threats and fraud attacks. These "bad actors," as CEO Scott Cutler described them, have forced the company to invest heavily in fraud prevention and detection, as well as reimbursement for affected members. The result? A 20% drop in shares, wiping out the gains made in the wake of the election.

But this isn't just about HealthEquity. It's a wake-up call for the entire HSA industry. HSAs have long been touted as a tool for increasing healthcare access and conscious spending. But as the fraud costs mount, it's clear that the industry needs to take a hard look at its security measures and business models.

The irony is that HSAs were once seen as a panacea for the healthcare system's ills. They allow high-deductible health plan enrollees to use tax-free dollars on certain medical expenses, with the money rolling over annually and potentially being invested for higher returns. But as the fraud costs mount, it's clear that the industry needs to take a hard look at its security measures and business models.

The question is, what can be done to prevent this from happening again? One solution is for the industry to invest in advanced cybersecurity measures, such as machine learning algorithms to detect fraudulent activities and enhanced encryption methods. Another is for companies to partner with each other to share information and best practices on fraud prevention.

But the real solution lies in a fundamental shift in how we think about HSAs. They can't just be a tool for the wealthy to save on taxes. They need to be a tool for everyone to access affordable healthcare. And that means addressing the systemic issues that make HSAs less accessible to low-income individuals, such as high fees and low interest rates.

The incoming administration has a chance to make a real difference here. They could expand HSA access, codify ICHRA rules into statute, and eliminate the ACA employer mandate penalties. But they also need to address the fraud-related challenges that are plaguing the industry.

In the end, the future of HSAs—and the companies that manage them—depends on their ability to adapt to these challenges. It's a test of their resilience, their innovation, and their commitment to providing affordable healthcare for all. And as HealthEquity's recent struggles show, it's a test that the industry can't afford to fail.