By Dr. James M. Dahle, WCI Founder
[Update December 2018: Fidelity came out with a new HSA this year, with no fees. Lively is also charging no fees starting January 2019. That puts those two HSAs at the top of my list.
Update: January 2019: I just opened a new HSA at Fidelity for my 2019 contribution and initiated a rollover from HSA Bank/TD Ameritrade. More details in an upcoming post.]
I get asked a lot for recommendations on things like individual 401(k)s, IRAs, financial advisors, crowdfunding firms, and Health Savings Account (HSA) providers. Every time I get one, I think to myself, “You really need to get around to doing the research so you can write that sort of a post.” But it's hard work to do research, especially when I'm perfectly happy with the providers I'm currently using and when I have zero affiliate relationships with any of the firms doing it. See the problem? If I can just pull it out of my brain and type it, great! If I actually have to do work, I want to be paid for it. Greedy capitalist!
[Update just prior to publication: Want to know how greedy? I actually checked to see if any of these companies had an affiliate program after finishing the article. None do, which isn't surprising given how cheap an HSA is. There just isn't much money there to pay an affiliate for a lead when your annual fees are under $100.]
However, I've overcome my greedy ways today and I'm going to write a review about which HSA you should be using. As I write this paragraph, I haven't done a lick of research. I have no idea who is going to come out on top in this little comparison. And it really doesn't matter much to me personally, since I won't make a dime from any of these companies and I probably won't switch from the one I have.
I'm NOT going to explain what an HSA is or why you should be using one. I've done that many times before and if you still don't know, click on that link and learn about the first investing account I fund each year.
In this post, we're going to discuss which HSA is best for those who use it as an investing account, a Stealth IRA if you will. [Yup, still using that term, despite being threatened with a painful death if I continue to use it.] Maybe a follow-up post will discuss which HSA is best if you're actually using it all year long to pay for health care expenses. Be aware that if your employer puts money into an HSA for you, or pulls it out of your paycheck and puts it in, then let them keep doing that. There is some free money there or at least a little savings on payroll taxes. But if your employer's chosen HSA stinks, you can do a rollover into a better one once a year.
Best HSAs for Investing
If you, like me, mostly just use your HSA as another IRA (although one mostly intended to pay for health care in retirement), you will have a laser focus on the investing features of the account. That means the lowest possible fees and the best possible investments. Good customer service and lack of hassle are important too, but honestly, I only touch my HSA once a year. I can deal with some minor hassles once a year so I don't put too much stock on that stuff. I just want someone to charge me nothing and let me buy Vanguard index funds. Is that too much to ask?
Okay, here we go. I looked through a few similar articles on the internet and then went to each company's site. I wrote up a little paragraph about each one, and then AFTER I had collected all the information, I put them in this rank order. Bear in mind this is all subject to change at the whims of these companies. As they change fees and offer new investments, this rank order could change.
# 1 Lively
The savings account only pays 0.05%-0.55%, but they have no investing threshold, so you can invest your first dollar. Lively allows you to invest at TD Ameritrade, with a $2.50 monthly ($30/year) investing fee. Adding in the once a year $6.95 trading fee I would pay for what I'm doing, that's only $36.95, which makes Lively the second cheapest on this list. The only downside? They're pretty new. But frankly, none of these companies are all that old. Even the concept of an HSA isn't very old. The Bogleheads had a big discussion about them if you want more details, but the first mention of this company there was only 6 months ago.
# 2 HSA Bank
I have had an HSA with HSA Bank for about 6 years, so I know it well. I think my HSA is pushing $60K, as I've maxed it out each year and never taken anything out of it. The entire thing is invested in the Vanguard Total Stock Market Index ETF. With HSA Bank, you basically split your money between two accounts- the savings account at HSA Bank (pays 0.05%-0.45% depending on balance) and a linked investing account at TD Ameritrade. You have two options with fees. You can either leave at least $5K in the savings account and pay no fees to HSA Bank, or you can pay $5.50 a month ($66/year) and invest the whole thing at TD Ameritrade. Once you get over to TD Ameritrade, they have a list of ETFs that you can trade commission-free. Unfortunately, they recently removed the Vanguard ETFs, including the one I was using, from the list. So that means every time I buy and sell, I've got to pay $6.95. There are similar ETFs (such as SPTM) that trade commission-free, but I'd rather pay $7 a year to get the real thing and a much more liquid ETF with thinner bid:ask spreads. Maybe that's right, maybe that's wrong, but I'm not going to argue about it for $7. So total annual fees for what I want to do? $72.95 and I get exactly the investment I want. HSA Bank offers one other investment option. Instead of going to the brokerage window at TD Ameritrade, you can also buy mutual funds from “Devenir,” whoever they are. The mutual funds include the usual assortment of high-priced, actively managed funds found in bad 401(k)s- Goldman Sachs, JP Morgan, American Funds etc. Don't do that.
# 3 HSA Authority
Update after publication: I had an appallingly bad customer service experience on the phone with these guys just trying to get information about the HSA, and ended up with some wrong information (i.e. I thought $1,000 had to be left in the savings account paying literally 0.01%, but it turn sout you just have to have $1,000 to start investing and can invest every dollar. So I've moved them up from # 8 to # 3 in this list.]
Devenir runs their investments, like the second option at HSA Bank. Unlike with HSA Bank, HSA Authority has apparently gotten Devenir to offer Vanguard Admiral Share Index fund, without commissions. You do have to have $1,000 in the account before you are allowed to invest anything, but that shouldn't be a significant hurdle for readers of this blog.
# 4 Elements Financial
The savings account pays 0.25-1%, but once you have $2,500 in it, you can invest at TD Ameritrade like with HSA Bank where you could buy Vanguard ETFs inexpensively. Fees are $4/month ($48/year) if you have less than $2,500 in the savings account. Not a bad deal, right? However, they charge $24 to wire money from the HSA to TD Ameritrade. What's that about? Why would they need to wire it when everyone else does an ACH transfer? So if I want to invest it all like at HSA Bank and buy the Vanguard ETF once a year, my annual fees would be $48 + 24 + $6.95, for a total of $78.95, just slightly more than HSA Bank. That gets them third on my list.
# 5 Saturna
Saturna could be the cheapest option on the list for what I want to do. Saturna doesn't charge an annual fee, but I did notice they have a $75 fee to close the account, which is higher than the usual $20-25 I see. The problem I have with Saturna is their investments. They offer their own selection of funds, none of which I recognized including some random Idaho tax-exempt bond fund, as well as their own brokerage window, with $14.95 commissions. Actually, that's not entirely true. I have heard of some of their funds, the Amana ones. These are funds that invest in accordance with the principles of Islam. I've had a reader or two ask about them in the past, so if you want an HSA where you can invest in Islamic-compliant mutual funds, maybe Saturna is for you. The brokerage also charges you $25 a year if you haven't made any trades in 365 days. I wonder if I could get hit with that given my once a year trading frequency, but I think I could work around it with one trade per calendar year. I couldn't find anywhere that they pay any sort of interest on uninvested money other than some Dreyfus money market funds in the brokerage area. Potentially, I could buy that Vanguard ETF through Saturna brokerage once a year for $14.95, making this perhaps the cheapest possible option out there for me. Still hard to feel comfortable recommending this one to readers though. I guess I just don't like that there isn't a household name involved here anywhere. Idaho tax-exempt fund. Proprietary mutual funds. A little-known brokerage. Why won't Vanguard just start offering HSAs? It would make things so much easier.
# 6 Bank of Cashton
The Bank of Cashton offers relatively high interest rates on cash, ranging from 0.4%-1.65%. Their fees are also low at $25/year. There is no threshhold to invest, but investments seem to only be done through a “Cetera” brokerage account, which charges $14.95 commission. Adding the $25 annual fee to the $14.95 commission, gets me to $39.95, one of the cheapest options on the page. That said, I prefer a big household name brokerage (i.e. TD Ameritrade) to one I've never heard of before this review and if for some reason you needed to do more than one transaction a year, the commisions could add up quickly at $14.95. Similar issues to Saturna, but with an extra $25/year fee, puts them at # 6 on the list. That said, Saturna and Bank of Cashton became more attractive when TD Ameritrade took Vanguard ETFs off their commission-free list.
# 7 Select Account
The Select Account HSA charges anywhere from $0-4/month in fees, but the more you earn and the more you have in the account, the higher the interest rate. The interest rate ranges from 0-2%. It's like a choose your own adventure book or something. There are literally 45 combinations of fees/interest rates. You can't make this stuff up. If you want to invest the money, the fee for that is $18 a year but you have to leave $1000 in the regular account (earning 0-1.05% depending on how you solve the fee matrix.) Their mutual fund investments are also managed by Devenir. There are some Vanguard funds, but not even Total Stock Market Index fund. Could you make do with the 500 index fund admiral shares? Probably. Once you get $10K in there, you can go to a brokerage window at Charles Schwab where you could buy Vanguard ETFs or anything else you want with the usual $5 commissions. Bottom line, I think I could do my once a year ETF buy for $18 + $4.95 commission for a total annual cost of $22.95, minus whatever the cash drag on $1,000 would be. On a mutual fund earning 8%, that's another $80, so perhaps $102.95 total.
# 8 BenefitWallet
These guys have a $1,000 threshhold to invest, and offer a handful of good Institutional (even lower expense ratio than Admiral) Vanguard index funds. The checking account only pays 0.05%, and there is a $2.90/month ($35.80/year) fee to invest. There is also a $3.50/month fee for balances under $1,000, but that is relatively easily avoided for readers of this blog. So all in, perhaps $80 of cash drag + $35.80 = $115.80/year in fees. Not bad, but that cash drag is the biggest “fee” for many of these HSAs.
# 9 Optum Bank
There is some sort of monthly maintenance fee, but they won't tell me what it is without opening an account. They do pay some interest on the account, but they won't tell me what it is unless I open an account. There is an investing threshhold, but I can't seem to find it on their website. They do offer Vanguard index funds. I finally broke down and called them. It was an intricate phone tree, but I fought my way through by using a fake social security number to get to a real person. She wasn't able to answer any of my questions and wanted me to give her my insurance policy number. I didn't get the impression they get a lot of business like what mine would be- i.e somebody who just wants to open an HSA and invest the proceeds. The representative finally came back. My monthly maintenance fee would be $1 per month, the account pays no interest, there is a $2,000 threshold before you can invest, and there are no additional investing fees. $12 a year sounds great, but the cash drag on $2K is not insignificant. At 8%, that's $160 a year, quite a bit more than I'm paying now.
# 10 HSA Administrators
I love how HSA Administrators is always open about fees and investments. It was a hard decision between HSA Bank and HSA Administrators years ago when I had to decide. Back then, the fees at HSA Administrators were slightly higher, and that's why I'm at HSA Bank. Currently, their fees are $45 plus a 0.25% AUM fee. That's it. But in my case, with a $60K balance, that AUM fee is $150 and growing. So a grand total of $205 per year, almost three times the price of HSA Bank. Hard to get excited about that. The investments, however, are easy to get excited about. Vanguard admiral share index mutual funds plus some DFA funds for those who are into that sort of thing. But overall, it's cheaper for me to just buy the Vanguard ETFs at HSA Bank than pay the HSA Administrators AUM fee. However, if you were doing a lot of transactions every year, and had a much smaller HSA balance than I do, I could see where someone would choose HSA Administrators.
# 11 HealthEquity
HealthEquity made my research job pretty tough, but I think I found the information I was looking for eventually. They pay from 0.05-1.40%. There is some sort of an investment option, but you seem to have to open an account before they'll tell you what you can invest in. I did see something in a brochure that there was at least one Vanguard fund, but most were not. It bothers me that they spend most of the brochure trying to sell you some advisory services and a book. The account maintenance fee is $3.95 a month, or $47. 40/year. There is also a 0.4% AUM fee for invested money, and that's before the advisory fees if you choose to use an advisor. Between the fees, the lack of transparency, and the apparently limited investments, it's tough to place this one very high on the list.
[Update after publication: A number of readers wrote in or commented that HealthEquity offers a bunch of Vanguard funds. They also all claimed all kinds of varying amounts of fees that HealthEquity charges from nothing 3 basis points. In fact, even in HealthEquity's own brochures I found different levels of fees. No wonder everyone is so confused. As of the day of publication of this post, this is what was found on HealthEquity's site:
I really don't like AUM fees on these. When you combine that with an administrative fee and the fact that you can't invest your first $2,000, I'm not sure why this particular HSA has any fans at all. Nice to see the Vanguard funds though.]
# 12 Bank of America
BOA HSAs pay 0.1-0.3%. There is a $1,000 investment threshold. There are two reasonable iShares investment options (500 index and a developed markets fund.) The fees are $4.50 a month ($54.) Add another $80 worth of cash drag from that threshold, and you're at $134/year. Between the fees, the low interest rate, the thresh hold, and the poor investment options, this one is low on the list. Bank of America might be the only household name on this list (outside of TD Ameritrade), but their reputation isn't so hot. It's not Wells Fargo, but I wouldn't open a bank account there, so it is hard to recommend their HSA.
Conclusions
Well, you can see my biases when you look at how I made the rank list. I don't like annual fees, I really don't like AUM fees, I dislike having an investment threshhold, and I prefer a big name brokerage with lower commissions or being able to directly purchase Vanguard Funds. If you prefer the absolutely lowest annual fee, you may wish to go with Saturna instead of Lively. If you actually plan to make a bunch of trades each year, it may be worthwhile getting an HSA without commissions, such as Select Account, BenefitWallet, or HSA Authority. If you have a tiny account where the AUM fees won't add up to much, you might consider HSA Administrators. If you plan to leave a significant chunk of money in cash, Select Account or Bank of Cashton may be attractive to you.
The bottom line is that the HSA market is now very competitive. Fees are low across the board and you should be able to easily limit fees and commissions to less than $150/year. On the investing side, the differences between the top companies are not great, so if you are actually spending from the account, it may be best to make your final decision based on the non-investing features of the account. Since our account is currently with the firm I ranked second on this list, we considered changing from HSA Bank (# 2) to Lively (#1). I figure this could save us about $36 per year. However, then I got to thinking about the costs of closing the HSA Bank Account ($25.00), the cost of selling our shares ($6.95), the potential market losses of having the money out of the market during the transfer (just a 1% market change could be $600), and the cost of buying the shares back ($6.95) and it didn't seem so wise. But I figured, hey, both accounts would be at TD Ameritrade, why would I have to liquidate the investment at all? I called TD Ameritrade and they confirmed that I would not have to liquidate the investment or pay them any fees or commissions to switch. So it would only cost $25 to start saving $36 per year. It's not quite enough money for me to justify the hassle unless Lively's HSA is easier to use for spending and keeping receipts, especially since fees can change so quickly. I called HSA Bank to give them a chance to keep my business by lowering their fees, but they refused, so we may have a new HSA provider by the time you read this. [Update just prior to publication: Inertia is a powerful thing, still at HSA Bank. We're too busy getting ready for the WCI conference in Park City this week to take care of our own finances!]
What do you think? Which HSA provider do you use? Are you considering changing? Why or why not? Comment below!
Anyone who is hesitant to move monies because of a large closure fee-read your disclosures. If they allow your account to go to zero balance, and they don’t charge for that zero balance at any time, then why can’t you just write a check out of the account and take it to another HSA custodian as a rollover? You would have to make sure that they can’t take your monthly fee out of the account and allow it to go negative. My provider will not take a fee if the account sits at zero. It will only take it out once there is enough money for them to debit it. They also will close the account after 12 months of zero balance. They close it, not my directive, they won’t charge me the closure fee. It is an option, but read carefully! Same with the whole transfer issue taking too long on some posts above. Write a check/send an online bill pay to your intended custodian and they get the funds immediately. You can always leave a negligible amount in the other account to close up with, but at least it cuts your transfer time in half. I have heard of some institutions taking over 6 weeks to release funds to another custodian.
We just signed up for HSA. My wife started at my future employer before me so we are doing the family plan. It is through Avida
You can’t invest until $1000 is in the savings account. It is a $2.50 monthly investing fee. If you keep $3000 in the savings the investing fees are waived. Seems nice. I don’t yet have a list of the investments though…
Thanks for the post. Started my HSA about 9 years ago with Health Savings Administrators since that were the only company at the time that allowed for investing in Vanguard. My account is now 130K plus and didn’t realize they were billing AUM. Time to look at other options.
Yes, it probably is for you.
Perfect timing on this thread! I’ve been researching HSA’s and narrowed down to similar results. I’ve been leaning toward using Lively, but there is so little info on them as a company, it has me nervous. There website and customer service seems great, and their cost structure is very low. They seem hard to beat. Has anyone else actually used them for a while? If so, I would greatly appreciate any feedback.
No, nobody has used them for a while. They’re brand new.
Use benefit wallet because my old company had it set up with them. I was happy that they offered Vanguard total stock market index fund, so all my money is in that. The only thing I dont get is that they will only invest the dividends automatically back into the account, not into a money market account if you want to. Granted dividends are only given out quarterly, but im hoping one doesnt cause a wash sale in the event of TLH with my taxable account (also hold total stock market there). Their fees seemed reasonable though (36/year), and they have a way to upload receipts on their website for future use.
TFB uses Fidelity
My HSA through my employer is through fidelity and I’ve been very happy. Can access all the fidelity low cost index funds.
Yes, but he notes an individual can’t get it unless through an employer:
https://thefinancebuff.com/best-hsa-provider-for-investing-hsa-money.html
Just opened an Optum HSA through my employer (a large University). Here is the cut and paste of fees (excluded debit card usage fee) after I logged in for the first time. Only have $1600 in it at this point.
Monthly Maintenance Fee
$0.00* (* $2.75 OF THE $2.75 FEE IS BEING PAID ON YOUR BEHALF. IF FEE PAYMENT ARRANGEMENTS CHANGE FOR YOUR ACCOUNT, THE $2.75 FEE WILL BECOME YOUR RESPONSIBILITY AND WILL BE ASSESSED TO YOUR ACCOUNT FOR AVERAGE BALANCES BELOW $3,000. THE AVERAGE BALANCE TO WAIVE THE MONTHLY MAINTENANCE FEE DOES NOT INCLUDE INVESTMENT FUNDS.)
Includes use of:
Health Savings Account Debit MasterCard® – to pay charges directly Online Bill Payment and Mobile Access
Receipt Vault – allows you to upload and store images of receipts online
Monthly Investment Fee
0.0300% of your average daily investment balance, not to exceed $10.00 in any given month.
Investment Threshold
$2,000 – The balance in your HSA must remain at or exceed the Investment Threshold each time a new
investment is made.
† INVESTMENTS ARE NOT FDIC-INSURED, ARE NOT GUARANTEED BY OPTUM BANK, AND MAY
We use HSA Authority for our investments (we also have a small HSA at the local credit union we use for current spending, only pays 1.5 percent but not worth moving so we’re just spending it down.)
I am not thrilled with the wrap fee on top of the annual fee, but in our situation it is worth it because it’s only a couple of years’ worth of money. First-dollar investing, everything handled online, easy interface, wide variety of funds, and no commissions are good for us, since we can;t really lump-sum a one-time payment every year.
Another advantage is you get Vanguard admiral share rates with first-dollar investing. Some of the others have only investor-share rates, so that helps out on the total AUM fee a bit. But I’ll probably start one at Lively next year and see how it goes. I was going to try HSA Authority but I’m totally turned off by any company that requires you to postal mail documents or make phone calls to move money in 2018. Thanks for the info.
Also worth noting is the Lively fee of $2.50/month comes from your linked checking and not your HSA funds. That seems to be unique to them.
Upsides and downsides to that. You don’t get to pay with pre-tax dollars, but you also get to maximize the amount in the tax-protected account.
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Not clear what this commenter means by a wrap fee at HSA Authority? I’m thinking about moving my HSA to HSA Authority from previous employer’s Payflex, but I understood from their site and posts like yours that the only charge is $36 annual fee. I’d be using Vanguard index funds, and first dollar investing, so not sure where a wrap fee would come in. Thank you!
Another option not mentioned is investing directly with the fund company, in this case the Bruce Fund. You can make contributions easily through your banks bill pay service. You are always 100% invested in BRUFX which has had a stellar long term performance. This approach and this single fund choice may not meet everyone’s invesment criteria. The fund’s embedded expense ratio (.71) and a $15 maintenance account fee / year are the only expenses.
General questions regarding contributions. My high deductible health plan started in Mid 2017 but I didn’t set up the account until 2018. Can I make contributions in 2018 but classify them as 2017 contributions? If so is there anything I need to do tax-wise in addition to just transferring the funds? I don’t think it makes a difference but my account is at HSA Bank per your recommendations.
Side note: I truly appreciate everything you’ve done for the medical community. You’ve made a significant positive impact on my financial life and I recommend your book, website, and now podcast to every student and resident that rotates through my service.
Thank you,
Billy
Pulmonary/Critical Care
Saint Petersburg , FL
Yes, until April 15.
Report it accurately on your taxes. I’m not entirely sure which year you get the deduction as an individual making a contribution. As a business, if you make a 2017 contribution in 2018, you take the deduction on your 2018 taxes as per page 10:
https://www.irs.gov/pub/irs-pdf/p969.pdf
I think that’s the case for individuals too.
Thanks for your kind words.
I have an HSA with optum bank from a previous employer. I recently used the funds for a medical emergency, so essentially starting from scratch. my current employer does not have an hsa. is it worth switching to one of your top 3 or using what i have with optum due to ease and convenience? thanks for all of your great information.
If you’re starting over, sure, why not?
My experience with Elements Financial has been atrocious. Their online systems are unreliable, they don’t connect to each other well and they are constantly having outages. There are 3 separate websites used to manage your HSA, Savings and TD Ameritrade account. Very confusing. They launched a bill pay service but it has been unreliable. I get bills months after I’ve “paid them” online only to find the transaction didn’t go through. The same is true with internal transfers. I always have to check because they sometimes don’t work. The IRS allows you to make contributions for the prior year up until the April income tax deadline of the following year. Elements HSA cannot accommodate this online. You must fill out a form, mail it in and hope that someone finds it. As of this morning, they cannot find my account because their systems are down. Customer Service asked me to call back in two hours! A financial institution???? I do NOT recommend Elements Financial.
Thanks for sharing your experience. If you’re getting bills “months” after paying them, you must be one of their first customers. Still working out kinks perhaps? At any rate, lots of other great options out there if you don’t like elements.
Yes I had similarly bad problems with Elements Financial
Optum is $3/month. I’m pretty happy with them, they have a good selection of Vanguard funds and the website and app are easy to use. Downside is the investing threshold of $2100.
Thoughts on Further?
Further is the new name for Select Account… Despite the name change, it appears the relevant terms remain the same as when the article was originally written.
Thanks for that update!
When we did our taxes this year, we were prompted to use X amount of dollars in our HSA account by April to avoid paying taxes on the dollars. I can’t find a reason why we would be taxed on the dollars, is it because of our employer contributions that were not used that same year?
That’s weird. What prompted you? HSA dollars aren’t use/lose.
When we did our taxes Turbo tax prompted it. Luckily we had medical expenses to apply to it so we didn’t end up paying it but I just can’t figure out what we did to prompt it.
Hello Dr Dahle,
I have read several of your articles/posts on HSAs and I still have a few questions on how to get started.
From what I understand, you lump sum contribute the max to your HSA on January 2nd and therefore only pay one $6.95 fee for the single purchase of Vanguard Total StockMarket Index ETF. (And the $66/year to HSA Bank).
In my case, our HSA is through my wife’s employer and she contributes about $500/month to HSA Bank ($250 each paycheck). We now have over $2000 for this year (She started the job in April) and we are eligible to invest it. So we opened a TD Ameritrade account.
I have several options to transfer funds to TD Ameritrade. I can do a one time transfer or AutoSweep and Recurring Transfers.
How should I set this up to minimize fees?
Manually transfer $6750 once a year and invest in lump sum into Vanguard Total Stock Market ETF?
Twice a year $3375??
Am I missing something here? Auto sweep seems like I would be racking up fees if I purchase the ETF every time I transfer money to TD Ameritrade.
I can set a limit on how much money is needed at HSA Bank before it transfers over to TD Ameritrade.
I guess I just haven’t seen this discussed anywhere, what would you do?
Check with your employer/HSA Bank/TD Ameritrade to see if those fees are paid by you or the employer. If the employer, do the autosweep. If by you, then you’re weighing the extra commissions against the opportunity cost of not being invested.
Another option may be to have HR lump sum the whole thing in each January/February. Ask them if they’ll do that for you. Worst case scenario, you’re paying $100 a year in commissions. That’s not the end of the world. But I might limit it to once a quarter to minimize hassle/commissions.
Does anyone who used Lively have a list of TDAmeritrade funds that would be available from this HSA?
The idea is you can buy ANY ETF (including all the Vanguard ones) at TD Ameritrade.
I also have inertia at play here; been planning all year to get out of the AUM fee at HSA Administrators as my assets grow. Will probably go with Lively and buy a commission-free SPDR fund. Any feedback about experience thus far with Lively out there?
Also FYI, I asked Vanguard on the phone if they have an HSA plan on the horizon. Unfortunately they do not.
I suspect those answering the phone aren’t the same people in the board room making decisions like that.
True. I also asked HSA Administrators if they have plans to lower fees in the face of increasing competition. The response was a flippant no. But again, that is coming from the front lines, not the board room.
I used Lively for the first time this year. They were extremely responsive with questions and the setup. It took a few days for the money to deposit (they tell you that up front), but otherwise they were great. I transferred to TDA a day later and bought Vanguard Funds. I get regular account statements from TDA, and the Lively website is great for tracking funds and medical expenses. I’m very happy with Lively. The cost is $2.50 per month. I do one purchase per year with TDA. So it was the most economical route I could find to own Vanguard funds with my HSA.
Thanks @ThomH! I just finished my Lively application. Next question is commission-free SPDR ETF vs paying $7 for Vanguard ETF. I see bid-ask spread is addressed above, and this is an interesting nuance. Based on the current amount in my HSA, and an average bid-ask spread difference of about 5 bps between the funds I’m looking at (emerging markets index), it looks like Vanguard would actually be cheaper by a couple bucks even with the commission. I’ve also learned via investing in ETFs in my taxable account that it’s better to make transactions during business hours, because sometimes institutions make transactions off-hours that widen the bid-ask spread. The problem with a limit order is that you might not make the transaction, and be out of the market longer. I would go with a market order.
I transition to a HSA this month. I’m wondering if I can contribute the full $6900 for 2018 since I will only have been on the plan for a few months of the 2018 calendar year
You can contribute the full annual amount if you want to implement the “last month rule.” That means that you can make an entire year’s contribution in one year as long you are covered under an HSA qualified plan by the first day of the last month of that same year. However, there is a caveat to that. You have to remain an eligible individual (covered by HDHP) for the next twelve months (called a “testing period”). If, for some reason, you changed health plans and are no longer covered by the hdhp before the completion of those 12 months, then you are considered as having over-contributed and you have to get your bank involved to fix that scenario to reduce the amount to the appropriate pro-rata amount.
https://bfy.tw/KHrE 🙂
Teach a man to fish and all that.
The answer, however, is surprisingly complicated. You could potentially be eligible to contribute the full $6,900 per the December 1st rule, but there are caveats. Read about them here:
https://www.shdr.com/shdr/assets/shdr/pdf/resources/articles/hsa-contribution-rules-article.pdf
probably a new #1 here at least for those of us that just want to invest HSA funds with access to good low cost index funds and minimal fees https://www.fidelity.com/go/hsa/why-hsa
I’m transferring my assets from Saturna over to Fidelity. Will probably be a $75 transfer fee on the part of Saturna.
Probably. I might even be able to get over my inertia to do something about it. Zero fees PLUS one of the fancy new 0% ER funds! 🙂
Via email:
I wanted to say thanks for the great overview of HSA Account options. I see you’ve made updates to the article since you published it, so I figured I would send you information on the HealthEquity, since I have one and have access to it.Â
https://www.whitecoatinvestor.com/the-best-health-savings-account/
You cannot invest your first $2,000, but I believe you can allow the Admin Fees to reduce your un-invested account value to below $2,000. There is a $3.95/month Admin Fee. Primary (checking) balance is subject to the interest rates in the screen capture below (not very much). For investment accounts, the monthly administration fee for investments is 0.033% of the average value invested. Dividends are automatically reinvested. You can setup your investments based on a Total Investment divided into Target Percentages of various Funds (see attached investment options) and then the Portfolio will be built accordingly. If you have Automatic Investing setup, it will maintain your target balance using future investments. Within that menu, you may also (separately) change your Target Percentages (&/or) select the option to Rebalance Portfolio (may be useful if you do not automatically invest but eventually want to rebalance). It’s not excellent, but for certain HSA account balances, &/or for people who want to trade more frequency, & with their available Vanguard funds, it might not be a terrible value in comparison to paying fees to TD Ameritrade through the other HSA providers. However, since I am now a passive HSA account holder (no longer on an HDHP) & I plan to simply invest the money in a few funds to let sit until retirement, I would like to see their account fees lowered significantly or I will be looking to transfer to a lower fee option in the near future.Â
I currently have my HSA at HSA Bank/TD Ameritrade and am interested in transferring it to Fidelity or Lively. I’m interested to hear about your rollover experience with Fidelity so far and why you chose Fidelity over Lively. Thank you.
I took a few screen shots and plan to write a post eventually, but it’ll probably be a few weeks. I’m in the middle of the rollover right now. Did you have a specific question?
My specific question is what in particular made you decide to go with Fidelity over Lively? Is it because Fidelity has been around longer?
I already have an account at Fidelity for my main credit card, so it eliminate my account at HSA Bank and my account at TD Ameritrade from my live, simplifying my financial life. If I go to Lively, I’m just swapping an HSA Bank account for a Lively one and keeping a TD Ameritrade account with its associated commissions. At Fidelity, I’ll just use one of their low cost index funds (I picked the fancy new 0% ER TSM fund.)