By Dr. James M. Dahle, WCI Founder
I wrote the post, Best Health Savings Accounts (HSAs) for those, like myself, using an HSA as another retirement investing account. I was looking for the lowest possible fees and the best possible investments. I ranked and reviewed the twelve best HSAs. Lively came out on top, but not by much. At that time, I was with the second choice on my list, HSA Bank, and the difference in my case was only about $35 a year. That wasn't quite enough money for me to overcome my inertia and switch.
I Moved My Health Savings Account to Fidelity
Then, a new development came on scene. Mutual fund giant Fidelity came out with an HSA. Even better, their HSA charges NO ANNUAL FEES AT ALL.
That was enough of a difference for me to get off my butt and actually make some changes. Even more motivating than lower fees was the opportunity to eliminate two financial accounts from my life. When I was at HSA Bank, I had an HSA Bank account and a TD Ameritrade account. By switching to Fidelity, I eliminated both of those two accounts from my life. I already had a Fidelity account (for the Fidelity 2% back card). Simplification is great.
I was worried I'd have to liquidate my account and move it over as cash. It doesn't make sense to move in order to save $75 a year in fees if you're out of the market for a few days and your HSA misses a $1,000 run up in the market. It turned out that was not an issue. I could just transfer my securities (100% VTI) in kind from TD Ameritrade to Fidelity. No big deal. There was a little bit of cash at TD Ameritrade and a little at HSA Bank and that came over as well. I combined the cash with my 2019 contribution ($7,000 for our family) and invested it into a similar Fidelity Index Fund. Not only does that mean I didn't pay any commissions, but I don't even pay an expense ratio since I went with Fidelity's fancy new Zero TSM Fund.
How to Open a Health Savings Account at Fidelity
I attempted to do the entire rollover online but was stymied. However, a quick call to Fidelity got me a very friendly and competent representative who took care of it so fast I considered moving all my money from Vanguard to Fidelity. I took a few screenshots of the process you may enjoy seeing.
No big deal, right. Just hit next.
Then you just have to choose your sweep account. No big deal. There's obviously only one button to hit.
There's all the fine print if you want to read it.
See how easy this is? Click click click click.
Now all you have to do is transfer money from your bank (mine was already linked since I already had a Fidelity account) and buy an investment.
So I put my 2019 contribution in. Now there were a few more screens in there somewhere, but they were no more complicated than these. I just left them out because they showed my account numbers. It really was super easy to do this online, especially if you already have a Fidelity account. The rollover was a little trickier and I had to call customer service, but it happened very quickly and flawlessly. Now when I go into my HSA account, I can see my investments.
I log into Fidelity, click on the HSA account, and this is what I see:
Easy peasy. I have yet to pay any fee or commission whatsoever to Fidelity and I don't have to do a thing with it until next January when I contribute again. Could I simplify things a little by paying $4.95 to sell VTI and buy FZROX with it? I suppose I could but….inertia. Maybe one of these days I'll get around to it. The funds really are nearly identical.
The Lively Response
Right after I moved my account, Lively decided to match Fidelity by eliminating their already rock bottom fees in order to compete. By now my inertia had kicked in again and I really didn't want to switch again just to go to Lively. Seriously, if they had made that change the week before I might have a Lively HSA. The downside of Lively for me is that I would still have that TD Ameritrade account to worry about and I would just be exchanging an HSA Bank account for a Lively account. But the fees would be almost the same. I would pay Lively nothing and I would pay TD Ameritrade $6.95 once a year to buy $7K of VTI. Super cheap.
Fidelity vs. Lively Health Savings Account Review
As far as I know, no other HSA providers have eliminated their fees. So today we're going to go head to head comparing Lively to Fidelity. I will try to be as unbiased as I can be in my review, but that is going to be a little tricky for two reasons. First, I have a Fidelity account and second I am an affiliate partner with Lively. If you sign up for a Lively account through the links on this page, I make $10. Don't worry, it doesn't cost you any extra. We'll compare them in a handful of ways and you can draw your own conclusions.
HSA Fees
This one is almost a straight up draw. They both charge $0 for the typical fees. However, Fidelity has one fee Lively doesn't–a $25 account closing fee. Most HSAs have this, but Lively doesn't.
Advantage Lively.
Investment Options
Both Fidelity and TD Ameritrade (linked to your Lively HSA) are full-service brokerage options. You can buy anything. TD Ameritrade charges slightly more ($6.95/trade) than Fidelity ($4.95/trade) but both have a robust offering of commission-free ETFs. Fidelity has over 500 ETFs on their list (including all the iShares and Fidelity ones you are likely interested in). TD Ameritrade has over 300 ETFs on their list including many iShares and SPDR ETFs. Fidelity also has its very low-cost index funds available commission free. Both brokerages will charge you a small commission to buy Vanguard ETFs.
The edge here has to go to Fidelity, but let's be honest, the edge is very small and could easily be outweighed by other factors.
Cash Options
Sometimes you don't want all of your HSA money invested. You want it sitting in cash waiting for you to spend it. At Fidelity, the usual place for cash is your CORE FDIC Insured account. Now I suppose you could buy a money market fund at either brokerage as well. Fidelity offers its Prime MMF for no commission. TD Ameritrade made it very difficult to figure out what their best-paying no transaction fee MMF was, but at a minimum, you could pay a commission and buy a Fidelity or Vanguard Prime MMF.
Fidelity vs Lively–you really can't go wrong with either.
The edge here again goes to Fidelity, although again, it is very small.
Convenience
This one is probably in the eye of the beholder. In my case, I already had a Fidelity account, so Fidelity is more convenient. If your employer uses Lively or if you already have a TD Ameritrade account, you may find Lively more convenient. Both are good companies with good customer service.
We'll call this one a draw.
HSA Features
Now that we've looked at the fees and the investing features, you can see that there is very little difference between these two stalwarts. So let's take a look at the HSA features. While these don't matter all that much to me right now, eventually I may actually start using HSA money for, you know, health care expenses or something.
Both companies offer debit cards. They both have useful websites. They both allow you to upload and store receipts from health care purchases. Fidelity offers online bill pay (Lively doesn't). Fidelity offers check writing (Lively doesn't.) Fidelity has an app (Lively doesn't.) Fidelity gets rated higher by HSA experts. Lively gets rated higher by actual HSA users.
However, at Fidelity, you can tell that HSAs are just one thing they do. It feels like a brokerage or a mutual fund company. At Lively, it's all HSA all the time. The company is clearly built from the ground up to do one thing and one thing only–HSAs. And it does a darn good job of it.
The edge here goes to Lively, although if you really want check writing or online bill pay capability, that might be enough to sway you to Fidelity.
Which Is the Best HSA, Fidelity, or Lively?
Overall, the differences between these two HSA juggernauts are slight. They are both head and shoulders over all of the other HSAs currently being offered. I don't think you can really go wrong with either one of them. If you do decide to open an HSA at Lively, I appreciate you going through the links on this page to help support this website.
Open a Lively HSA Today!
What do you think of my review? Which HSA provider do you use and why? Which one do you think is best? What do you like and dislike about the Fidelity and Lively HSAs? Comment below!
This post originally published in 2019
I was mid-way through opening Fidelity HSA account and movin my accounts from HSA Bank/ TD-Ameritrade. I have my kids college funds @ Fidelity. I came to check this website to check the search if my move was justified. I just finished opening my account @ Fidelty. Reason, similar to writer of this article, two less accounts to worry about.
Hope it works out well for you. I haven’t touched mine since I moved it but it’s having a good year in TSM.
Quick question. . .I’ve followed your advice and moved the majority of my HSA funds out of my bank’s holding account into a shiny new Fidelity HSA (my bank does not allow you to invest HSA funds). After reading “The Simple Path to Wealth” I am a big believer in Vanguard VTSAX. . .unfortunately, I can’t invest in VTSAX through Fidelity (correct?). So, my question is this: what Fidelity fund most closely resembles VTSAX (simply put – where should I invest the money that I just moved to Fidelity)?
Based on my brief research, I’m thinking about putting it all into Fidelity FSTVX.
Thanks for your help.
CMD
Two choices- Buy the Vanguard ETF VTI or just buy the Fidelity 0% ER Total Stock Market Fund. Both are fine holdings if you wish to have a similar asset allocation to my HSA.
Hi, I moved my HSA to Fidelity. I invested the balance in VTI. However, I called Fidelity and they said that they do not allow automatic investing (for my new monthly contributions from my job) in ETFs. Only mutual funds are allowed.
Ideally, I would like to find something similar to VTI that can be automatically invested with no fees for the transaction.
Just curious what you are using for the new contributions and what the fee is?
They sent me this list of no fee mutual funds but I don’t see anything similar:
https://digital.fidelity.com/prgw/digital/ftoc
VTSAX is the mutual fund version of VTI. But, it is a Vanguard fund, and Fidelity may charge a fee for it. Fidelity version of total stock market is FZROX; you may want to consider investing in it instead.
I’ve been using FZROX for new contributions into my Fidelity HSA. It’s correlation with VTI has got to be 99.9%.
I love you WCI. Was reviewing my HSA statements, and not too happy with the fees (wife has an Optum account, and I have an HSA Bank one). Fidelity no fee is a game changer!!
Excellent article! Your comparative research is a real blessing to consumers who are making a decision about where to open an HSA. One important fact consumers should know is that Lively is NOT the holder of their HSA account or HSA funds. When a consumer opens an account with Lively, they are actually opening an account with a third-party bank called Choice Financial.
Here’s the explanation from the FAQ’s on Lively’s website.
Lively is not a bank. As a matter of fact, our bank partner is Choice Financial – one of the 50 fastest growing banks in America today! Because Choice Financial takes care of the depository responsibilities, this means the funds in your HSA are safely held by Choice Financial Group and insured to the FDIC maximum, which is currently $250,000.
I am not sure how this affects quality-of-service or ease-of-use for Lively customers, but I think it’s a point worth mentioning. With a Fidelity HSA, the consumer has a direct relationship with Fidelity, with no “middle man.”
Thanks again for a well-written, excellent article.
Does that really matter to you? I don’t think I care one way or another. Not FDIC at Fidelity. Held by someone else at Lively. Meh…not a big consideration for me.
I had researched HSAs and had it down to Lively with Fidelity 2nd. But before I opened the Lively account (the “open account” tab was open) I checked for reviews and read this one. Since I already have a TD account and no Vanguard, I like my choice. So I killed my “open account” tab and am signing up for Lively thru your link.
Thanks! I’m sure you’ll be happy with it.
This post was very helpful to me. I have an HSA at a bank with high fees. It’s liked to a TD Ameritrade account. I’ve had good results with my Fidelity IRA accounts. It’s good to know it’s easy to xfer from other HSA banks to Fidelity. I’ve never changed HSA accounts before. I’ve always used what my employer gave me 10 years ago.
I’m 60 y.o. and wife 59. We are retired Texas teachers with TRS Care health care, non-Medicare. Does it still make sense for us to open a HSA until age 65 when we are switched to TRS Medicare?
I think it can be. If your TRS Care is a high deductible plan and you are qualified to open or fund an existing HSA, and you don’t need the money from your HSA to reimburse yourself for now, then I think it could still make sense to open or fund a HSA. You can treat it as a savings+investment account, let it grow until you are 70’s or beyond, so it has 10+ years to grow. You can keep all your health care expense receipts, and then reimburse yourself, or pay for other medical expense at that time. You will have the tax savings of income deduction while you contribute to the HSA before switching to Medicare, plus no tax on gains when you withdraw at 70+.
If you are only covered under a HDHP, then sure, open an HSA. If you have to choose between a regular plan and a HDHP, then make that decision first.
I’d love to move my HSA to Fidelity, but don’t know if they’ll accept me. I kept a U.S. mailing address, which Fidelity requires, when I retired to Mexico last year, but many U.S. financial institutions are reluctant now to deal with expat Americans. I can’t conceal that I’m in Mexico, because any medical expenses I reimburse myself for from HSA will be incurred in Mexico.
I planned to leave my HSA at Payflex, and pay the $5/month account fee, because they don’t care that I’m in Mexico. But they just added a new ER fee based on account balance that is an extra $10/month. So total fees of $180/year rather than $60/year.
I’ll call Fidelity next week and see if they might let me open an HSA.
Please post back here what you learn. I don’t see what the big deal would be though.
Laurel- are your expenses covered no matter which country they are in? Would love to know this. I just went to Colombia last month where I got awesome quality dental work done for about 15% of what I was quoted in the US (and they used better equipment, and no pain at all). I plan to use medical tourism as much as possible in the future to save money and have another excuse to travel.
Looking at my options for next year- TD Ameritrade is merging with Schwab, so I’m unsure who to go with. I already have an IRA at Schwab and have been happy with them (bonus points for having the lowest amount of money to deposit to get a sign-up bonus, and dropping their fees before everyone else followed). Any guesses (or actual info) on what will happen with the Lively account options? Can’t wait to start my first HSA account in 2020, woo.
I’d guess they’d be at the new TDA/Schwab brokerage. Both of which are fine now so I assume will still be fine afterward.
I just came across this as I was researching whether to open at Lively. I have all my other accounts at Fidelity but have HSA at HSA Bank/TDA. The reason I was going to move to Lively is I believe they have a self directed option that would allow for investments in private companies or other private assets. Do you know if Fidelity offers this? It would be great for me to have everything at Fidelity because I also have solo 401k and other accounts with Fidelity. But I don’t know that they will act as a custodian for a self directed HSA.
That’s news to me that Lively offers that, but I don’t think Fidelity does. I see literature online where Lively talks about it being “self-directed”:
https://livelyme.com/overview-of-self-directed-hsa
but I don’t think they’re using that term the way it usually is. Here’s what they say:
I don’t think they’re going to let you buy a syndicated real estate investment there. But if a private real estate fund has a CUSIP at Fidelity or TDA, then maybe you can.
Thanks for the response. I followed up with Lively and you are correct on this. They are not using “self-directed” with the meaning that I normally I understand. I am in the process of opening at Fidelity.
Very informative post. Really like the screenshots Jim!
Newbie here.
Another blog said that managing an HSA is not as easy as a 401k, but did not provide further details. Do you happen to know what they could have meant by that? They strangely do not allow comments on their posts so dunno lol.
What’s so hard about it? I find it boringly easy. I buy a total stock market fund with $7100 in January and then forget about it for the year.
Can Fidelity or Lively change to increase their ER anytime they want?
Also, I read HSA withdrawals are taxable in CA and NJ? What should we do if we have an HSA and plan to relocate there? (I know you’re thoughts on living there and geo arbitrage, but I’m moving for personal reasons) Thanks Jim!
Yes.
Yes.
I’d still use it, just realize it is less valuable and more hassle there.
Apparently Fidelity HSA does NOT offer a receipt storage tool. Is there another way for a Fidelity HSA user to store HSA receipts (other than in a shoebox)?
Best is probably scan them in electronically because receipts fade quickly.
Do one’s annual health insurance plan statements not suffice to track medical expenses? Obviously other eligible out of pocket expenses not billed through insurance would have to be tracked via receipts, but the big ticket expenses should be on the insurance statements, no?
I think you actually need the receipts in an audit, not just the bill/statement.
I need some feedback for my current situation.
I have BCBS PPO insurance through my employer, but they only offer a FSA at this time. Even though the policy is through my employer I meet the deductible and maximum out of pocket as defined in the eligibility criteria for an HSA.
Can I apply for HSA on my own? Even though my health plan is through my employer is it still considered a HDHP? Any piece of advice will be very helpful. Thanks
If the plan is considered a high deductible plan by the government, then yes, you can open an HSA on your own. Check with HR and they should be able to tell you.
I am getting hsa account on my own and not through my employer. Currently my employer offers simple ira through fidelity so I am interested in getting hsa through fidelity. My question is, what is the benefit of going through the hassel of requesting my employer to deduct a certain amount from my paycheck and contribute it to my hsa? Is that even possible if my employer does not offer it?
The differences are in SS and FICA tax. HSA contributions taken out by payroll are not subjected to SS and FICA tax, just like your health insurance premiums.
Are you getting your high deductible insurance plan through your employer? I think the high deductible plan always comes with a HSA account, and allow you to make contributions through payroll deductions. If your employer didn’t offer a high deductible plan, I doubt your employer can or will make a payroll deduction for your HSA contributions, but you can always ask them to find out.
It may be worth the extra effort to set this up through your employer payroll office, as you’ll avoid paying FICA payroll taxes on those contribution amounts if you do it this way, whereas if you write the contribution check to Fidelity, there is no mechanism for you to deduct those taxes. Having said that, it is quite likely that as a high income earner you already max out your annual Social Security taxes, so the benefit is minimal and only pertains to the Medicare portion of the FICA tax. In our family, my wife is the high income earner, and my salary does not meet the Social Security limit, so we use my employer’s HDHP, and have the automatic payroll contribution made by my employer to capture the maximum tax benefit. I should note, my employer offers only one HSA arrangement for HDHP participants, and it is through a local credit union with no stock market investment options…it is basically just a traditional bank account. However, my employer had no problem with me doing the leg-work to set up a Fidelity account. Once I provided them with the address to where they should mail the check, they are happy to cut Fidelity a check at each monthly payroll for that month’s contribution, and handle the FICA maths. The whole thing was very easy to setup, and I feel good that it just now happens on its own without requiring any intervention on my part, other than logging into my Fidelity account periodically to slide funds from the default money market fund into my investment allocations of choice. I aim to do this each quarter, but it usually ends up being twice per year that I actually remember.
You save the payroll taxes on it if they do. And it’s up to them as to whether they will do it or not.
Have things changed slightly with HealthSavings Administrators as the recommended HSA provider along with Lively by WCI. Have they recently changed to no minimums or transaction fees as advertised on their website, similar to Lively?
Am I overthinking this by trying to decide between the two recommended providers or are both essentially no cost…
I was also looking at Fidelity because I anticipate opening some other accounts with them but noticed an increased fee as the account balance passes 10k and then 50k.
Your comment made me nervous and I rushed back to the Fidelity website to see if they started charging investment or management fees.
I have “Fidelity HSA” which still says no account minimums or fees and allows you to direct your own investments.
They have a second offering, “Fidelity Go HSA” which offers “professional management” and has the rising fees with account balance. (because it obviously takes more work to manage more money in a set it and forget it HSA account…)🙄
Sorry for the panic. New to this and seems like a can’t go wrong as long as it’s with the top few recommendations.
Thanks!
Mine is at Fidelity. Lively also excellent. There are several other good ones including Health Savings Administrators.
I just initiated a transfer out of HealthEquity into Lively and was surprised to find out that I had to liquidate the investments. Now I am sitting out of the market for the next 6 to 8 weeks. I obviously didn’t do my due diligence before initiating, but certainly felt after reading the post that I wouldn’t have to liquidate. I’m not sure if it is Lively or HealthEquity that requires liquidation. Beware if this is important to you!
Might work out well or might not, depends on what the market does over the next two months I guess. You can adjust elsewhere in your asset allocation if it matters to you.
It’s nice to know upfront of course.
My HSA is at Elements Financial. Their current HSA investment platform is with TD Ameritrade, but due to TDA’s purchase by Schwab, Elements is moving their HSA investment platform to DriveWealth. Looks to me like there will be quarterly fees. I’m inclined to get rid of 2 accounts and simplify with one Fidelity HSA. Anyone have any idea if I can move my VTI (at TDA) in-kind to a new Fidelity HSA? My understanding was that I’d need to liquidate the VTI invested thru TDA, move it to the Elements HSA cash account, then move it to Fidelity or wherever…. Thanks for any help on this.
Lively now charges $24/year to invest in your brokerage account (now through Schwab) if you have less than $3,000 sitting in cash in your account.
You can see this on https://livelyme.com/pricing/ . They actually hide this fee behind the “Show Full List” link, which is pretty scummy IMO.
This takes Lively from best-in-class to meh and makes choosing Fidelity a no-brainer.
That’s unfortunate.
I’m trying to link my business checking account to my newly opened Fidelity HSA. Fidelity makes it very difficult. If you link to a personal bank account, you only need to provide routing numbers, etc. But if you use a business checking account (I’m running my health insurance and HSA through my S corp so it’s a business checking account), they make you jump through a bunch of hoops … must mail them paperwork, cancelled check from your account, etc. Their customer rep claims it’s an IRA requirement to distinguish pre from post tax dollar contributions. Anyone else have these problems? Is there a good work around? Can you just call your business account a personal checking account to save time?
Interesting. First I’ve heard of this, but I guess I’m not surprised. You would certainly save time and hassle with your work around. No idea of what the odds of it coming back to bite you would be. Not 0.
Update: FWIW, after several conversations with Fidelity, they claim the IRS prevents them from linking a business bank account directly with an HSA account. They claim the funds have to go through a payroll intermediary before hitting the HSA account. However, they say I can write a check from the business account to myself and deposit that into the HSA. Doesn’t make sense to me, but I guess that’s what I’ll do.
That’s not too bad to do that once a year.