Modern Health Savings Accounts (HSAs) | Lively

Personal Experiences Sparked the Creation of Lively

Alex Cyriac remembers his mother being forced to discontinue her medication due to financial constraints related to co-pay costs. A similar situation was experienced by Cyriac’s friend, Shobin Uralil, and his wife with their newborn child.

These shared experiences concerning the financial burden of healthcare prompted Cyriac and Uralil to contemplate potential solutions. They identified health savings accounts (HSAs) as a valuable tool for reducing healthcare expenses.

Recognizing a Gap in the Market

However, they believed the existing HSA administration, primarily offered by banks as a secondary service, didn’t prioritize the needs of the consumer. Cyriac noted this was a key area for improvement.

“Our goal was to create a different approach, one that genuinely centers on the consumer,” he explained.

Building a Modern HSA Platform

In 2016, Cyriac and Uralil launched Lively with the intention of modernizing the HSA experience for both employers and individuals.

A crucial early decision was to develop their own proprietary record-keeping technology. This allowed Lively to offer its services to individuals without charging fees.

Users can easily establish recurring or one-time transactions and avoid the need for claim forms.

Securing $80 Million in Series C Funding

The San Francisco-based company recently announced an $80 million Series C funding round, spearheaded by B Capital Group.

Telstra Ventures and existing investor Costanoa Ventures also participated in this round, bringing Lively’s total funding to over $120 million.

Plans for Expansion and Innovation

This new capital will be used to develop additional consumer-focused tools, expand the company’s team, and broaden its services to financial institutions and employers.

Lively initially focused on direct-to-consumer offerings and is now strategically expanding into the business-to-business sector.

Over the last 18 to 24 months, the company has significantly increased its focus on B2B, resulting in a doubling of users last year and more than a doubling again this year, according to Cyriac.

A recent partnership with BMO Harris designates Lively as the HSA provider for its members.

Rapid Growth in a Growing Market

Data from market research firm Devenir indicates that HSA assets reached $77.8 billion in 2020, held across more than 30 million accounts.

This represents a doubling of assets in just three years.

Lively has experienced parallel growth, now managing $500 million in assets.

The company has consistently doubled its assets under management (AUM) every 11 months for the past several years and anticipates exceeding $1 billion in AUM early in 2022.

This milestone would establish Lively as the fastest HSA provider to achieve this level of AUM.

The Increasing Relevance of HSAs

As healthcare costs continue to rise, options for long-term healthcare savings are becoming limited.

To qualify for and contribute to an HSA, individuals must be enrolled in a high-deductible health plan.

Uralil points out that the average deductible across all health plans—nearly $5,000 annually—now surpasses the Internal Revenue Service’s definition of a high-deductible plan.

Empowering Consumers with Financial Tools

“This shift reflects the growing trend of consumer-driven healthcare, where individuals assume greater financial responsibility for their care,” Cyriac stated.

“Each year, a larger number of people become eligible for HSAs due to rising costs and the increasing adoption of high-deductible health plans.

Lively is dedicated to providing the tools necessary for making well-informed decisions regarding healthcare spending.”