introduction
Healthcare is getting more and more expensive.
Insurance premiums are skyrocketing year after year, employers are willing to pay fewer and fewer of the costs, and there are no signs of changing anytime soon.
Americans are increasingly turning to high-deductible plans to save on premium money, but they don’t call them high-deductible plans for nothing.
Millions of Americans are just one illness or injury away from thousands of dollars in expenses that could throw them off a financial cliff.
So far, no solution has been found to our healthcare system’s egregious affordability problem, but at least one has emerged as a relatively efficient way to prevent unexpected healthcare events from completely wiping out those with high-deductible plans: health savings accounts (HSAs).
HSAs are essentially savings accounts designed to help people with high-deductible insurance plans reduce their out-of-pocket expenses.
An HSA owner can deposit a certain amount of pre-tax income into their account each year — $3,850 for individuals and $7,750 for families as of 2023 — and can use those funds to pay eligible medical expenses tax-free.
Individuals and families are eligible for HSAs when selecting health plans with deductibles of at least $1,500 and $3,000, respectively.
There are a few other conditions and restrictions that come with HSAs, but that’s the gist.
Now for the important part: Although HSAs come with your health plan, they are not actually provided or managed by health insurance companies. Instead, insurance companies work with outside trustees to manage their HSAs, and these trustees can vary widely in terms of the services they provide, the fees they charge, the investment options they offer, and so on.
Your experience can vary greatly depending on the HSA and HSA provider you choose. It’s important to think about this before you pull the trigger, so here are a few suggestions to get you started.
5. HSA Bank
HSA Bank doesn’t have as many fancy features or physical locations. What it has is HSA expertise, a 10-minute signup process, and a pretty decent range of investment options.
Advantages:
– Incredibly easy to sign up
– Investment options from TD Ameritrade and Devenir
– No Fees… IF you keep your balance over $3,000
– 24/7 customer support center
– Can also opt for standard savings account interest rates if investing is not your thing
Disadvantages:
– $2.25/month maintenance fee if your balance is less than $3,000
– Some investment options involve fees
– An investment fee may be charged if your balance is less than $5,000
– Fees of $25 to close your account
4. Loyalty
loyalty offers two different HSAs: the Fidelity HSA and the Fidelity Go HSA. Both are excellent choices, albeit for slightly different reasons.
Loyalty HSA
Advantages:
– No minimum amount required to open an account
– Self-directed investing with commission-free trades for US stocks and ETFs
– Includes an investment tool and a professionally curated list of mutual funds
– Can set up automatic investments
– Can spend money with Fidelity HSA debit card or Fidelity BillPay
– Simple reimbursement process for qualifying out-of-pocket medical expenses
Disadvantages:
– Some investment options have underlying fees
– Fees can be as high as 1.33% or more
– May charge your employer up to $48/year for the “recording fee”; The employer will likely pass this on to you
Fidelity Go HSA
Advantages:
– No minimum amount to open an account
– Fidelity manages your investments
– Investments are made in Fidelity Flex mutual funds, which do not charge management fees
– Similar reimbursement process as Fidelity HSA
– Easily transfer money to the Fidelity HSA account to pay for medical expenses
Disadvantages:
– Annual fee of 0.35% for accounts over $25,000
– It may take up to 10 days to receive withdrawn funds
3. HealthJustice
HealthEquity Doesn’t make as many Best HSA lists because of bribery (but we’re open to that). Employers and individuals alike choose HealthEquity HSAs because they offer a great product, good service, and a fairly decent number of investment options.
Employers like HealthEquity for their fast onboarding process, easy HSA transfers, and streamlined administration features, but we’re not really here to talk about how employers feel. The features that individuals care about are:
Advantages:
– Well-designed mobile app with expense tracking and simple dashboard
– 24/7 support and extensive FAQ/help guides
– Large selection of Vanguard funds with low fees
– Includes investment advice tools
– Robo-Advisor available for auto investing
– Debit card provided for medical expenses
Disadvantages:
– Some annual maintenance fees can be as high as $36/year
– Annual investment fees of 0.25%
2. Bank of America
Bank of AmericaHSA’s are as good or better than the other services offered. The sheer size of the bank opens many doors, and their physical presence means you can speak to them in person if you need to, which can be reassuring for some people.
Advantages:
– Access and management of the account via a mobile app or web portal
– 24/7 customer support online or on the phone
– Includes debit card to pay medical bills
– Long list of Merrill Lynch mutual funds available for investment
– Can set up automatic investments/money transfers
Disadvantages:
– Minimum investment threshold of $1,000
– Low savings account interest rates
– Low account maintenance fees (approx. $2.50/month)
– Additional fees apply to some mutual funds
lively is fairly new to the scene, but what they lack in experience they make up for with a customer-centric ethos and an HSA experience designed to make everything as easy and painless as possible. And while they may not have as many investment options as some of the bigger players, they have literally everything else you need in an HSA.
Advantages:
– No account opening fees
– No administration fees
– Period without fees
– Simple online portal and app
– Debit card included
– Streamlined processes for money transfers, refunds, investments, etc
Disadvantages:
– Only two investment options
– Some small associated investment fees
– Not as established as other companies
If you want to learn more about Lively, visit our Lively HSA report!
Conclusion
There are many choices when it comes to choosing an HSA. Some are great, some are okay, and some aren’t even worth mentioning.
If you’re not convinced by any of the five HSAs listed here, hopefully they’re at least a good place to start.
Just remember to do your own research and take your time – although you can always transfer an HSA to another provider if you feel like it, so nothing is at stake the high.
But seriously, go with Lively. They really know what they’re doing over there.
