Healthcare just keeps getting more expensive.
Insurance premiums shoot up year after year, employers are willing to cover less and less of the cost, and there’s no sign of anything changing anytime soon.
Americans are increasingly turning to high-deductible plans to save money on premiums, but they don’t call it a high deductible health plan for nothing.
Millions of Americans are just one illness or injury away from thousands of dollars of out-of-pocket expenses that could push them off a financial cliff.
So far no solution has been found to our healthcare system’s outrageous affordability problem, but at least one has emerged as a relatively efficient way to prevent unexpected health events from completely wiping out people with high-deductible health plans: the health savings account (HSA).
Health savings accounts are essentially savings accounts designed to help people with high-deductible insurance plans reduce their out-of-pocket costs. An HSA is more or less like a bank account that provides tax advantages and helps specifically with healthcare costs.
A health savings account owner can contribute a certain amount of pre-tax income to their account each year—$3,850 for individuals and $7,750 for families as of 2023—and can use those funds to pay for eligible medical expenses tax-free.
Individuals and families are eligible for HSA accounts if they select health plans with deductibles of at least $1,500 or $3,000, respectively.
There are a few more conditions and caveats that come with a health savings account, but that’s the gist of it.
Now to the important part: Even though HSAs come with your health plan, they aren’t actually provided or administered by health insurance companies. Instead, insurance companies partner with third-party trustees to manage their HSAs, and those trustees can vary greatly in terms of the services they provide, fees they charge, investment options they offer, and so on.
Your experience can differ greatly depending on the health savings account and HSA provider you pick. It’s important to give this some thought before you pull the trigger, so here are a few suggestions to get you started.
5. HSA Bank
HSA Bank doesn’t have that many fancy features or physical locations. What it does have is HSA expertise, a 10-minute signup process, and a pretty decent array of investment options.
– Incredibly easy to sign up
– Investment account options from TD Ameritrade and Devenir
– No fees…IF you keep your balance above $3,000
– 24/7 client assistant center
– Can also opt for standard savings account interest rates if investing isn’t your thing
– $2.25/month account management fee if your balance is below $3,000
– Some investment options have associated fees
– Can be charged an investment fee if your balance is below $5,000
– Charges $25 to close your account
Fidelity offers two different HSAs: the Fidelity HSA and the Fidelity Go HSA. Both are excellent choices, though for slightly different reasons.
– No minimum balance required to open an account
– Self-directed investments with commission-free trades for US stock and ETFs
– Includes investment tool and professionally curated list of mutual funds
– Can set up automatic investments
– Can spend funds with Fidelity HSA debit card or Fidelity BillPay
– Simple reimbursement process for qualified medical expenses paid out of pocket
– Some investment options have underlying fees
– Fees can range up to 1.33% or higher
– Can charge your employer up to $48/year for “recordkeeping” fee; employer will probably pass that on to you
Fidelity Go HSA
– No minimum balance to open an account
– Fidelity manages your investments
– Investments go to Fidelity Flex mutual funds that don’t charge management fees
– Similar reimbursement process as Fidelity HSA
– Easily transfer money to Fidelity HSA account for paying medical expenses
– Annual 0.35% fee for accounts with more than $25,000
– Can take up to 10 days to receive withdrawn funds
HealthEquity doesn’t find its way onto so many “best HSA” lists because of bribery (that said, we are open to it). Employers and individuals alike choose HealthEquity HSAs because they offer a great product, good service, and pretty decent number of investment options.
Employers like HealthEquity because of their fast onboarding process, easy HSA transfers, and streamlined administration features, but we aren’t really here to talk about how employers feel. The features individuals care about are:
– Well-designed mobile app with spending tracking and simple dashboard
– 24/7 support and extensive FAQ/help guides
– Wide range of low-fee Vanguard mutual funds
– Includes investment advisory tools
– Robo-advisor available for hands-off investing
– Debit card provided for spending on medical expenses
– Some annual maintenance fees, may be as much as $36/year
– Annual investment fees of 0.25%
2. Bank of America
Bank of America’s HSAs are as good or better than the rest of the services they offer. The sheer scale of the bank opens up a lot of doors, and their physical footprint means you can go talk to them in person if you need to, which can be comforting for some people.
– Access and manage account via mobile app or web portal
– 24/7 customer support online or on the phone
– Debit card included for paying medical bills
– Long list of Merril Lynch mutual funds available for investing
– Can set up automatic investments/cash transfers
– $1,000 minimum investment threshold
– Low savings account interest
– Small account management fees (about $2.50/month)
– Some mutual funds carry additional fees
Lively is fairly new to the scene, but what they lack in experience they make up for with a customer-first 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.
– No account fees
– No management fees
– No fees period
– Simple online portal and mobile app
– Debit card included
– Streamlined money transferring, reimbursement, investing, etc processes
– Only two investment options
– Some small associated investment account fees
– Not as established as other companies
If you’d like to learn more about Lively, check out our Lively HSA Review!
There are a lot of options out there when it comes to picking an HSA. Some are great, some are okay, and some aren’t even worth mentioning.
If you aren’t convinced by any of the five HSA providers listed here, hopefully they’ll at least be a good place to start.
Just remember to do your own research and take your time—though you can always transfer one HSA account to another provider if you feel like it, so the stakes aren’t that high.
But seriously, go with Lively. They really know what they’re doing over there.