Choosing the Best HSA Account Administrator (& Yes, you CAN Choose)
I’ve been on a big HSA kick, since I made the move to an HDHP.
Tax-free (pre-tax) contributions and withdrawals for qualified medical expenses, employer contributions, and growth through investments for the win!
Unlike FSA’s, HSA account contributions roll over from year-to-year, and they are portable, meaning you can take them with you from one employer to another or to self-employment. YOU are the owner of your HSA account and your employer can’t take the funds away from you.
Later on, if you don’t use the funds, you can even withdraw funds from HSA accounts in retirement like an IRA, without penalty and for any reason, starting at age 65.
When I first signed up for an HSA, I wondered how married I’d be to a particular HSA account. Could I switch if I didn’t like mine, just like an IRA? I’ve since done a lot of research on this topic, and here’s what I found…
Can you Switch HSA Account Administrators?
HSA’s are fairly new to the health insurance and investing worlds. They weren’t established until 2003. As recently as 2008, only about 6 million American’s had one. But that number has more than doubled since, and its projected that 13.5 million Americans had one in 2012.
2.5 million Americans are covered by HSA/HDHPs purchased in the individual market, outside of an employer.
The HSA marketplace is young, but quickly growing.
HSA accounts can be started with banks, brokers, credit unions, and insurance companies. Any company that offers an HSA is referred to as and “administrator” or “custodian”. HSAs were originally designed for modest deposits through payroll, followed by frequent small withdrawals. This is why most started and are still through banks and credit unions (unfortunately, if you’d like to invest).
If you or your employer have picked a poor HSA admin, the good news is that you are not stuck with them. Just as with IRA’s, you can switch if you aren’t happy with your administrators policies and fees. A person contributing to an HSA is under no obligation to contribute to his or her employer-sponsored HSA. Employers, however, may require that direct payroll contributions be made only to the sponsored HSA plan.
As with most things, it definitely pays to shop around. In this post, I’ll do some of the heavy lifting to get you started.
Best HSA Account Administrators List
There are far more HSA administrators out there than there are IRA brokers. The rub is that most are through banks and very few of them allow you to invest your savings in anything outside of their own money market accounts, CD’s, and other in-house financial products. And with bank rates as low as they have been, with low borrowing rates, those yields are not helping you much.
That’s key. If you can’t invest, as you would in a 401K or IRA, your HSA contributions are just sitting there, eroding with high health care inflation every year.
Unfortunately, most online brokers do not offer an HSA account option.
|HSA Administrator||Annual or Maintenance Fees||Setup Fees||Other Fees||Investment Options|
|HSA Bank||Monthly account maintenance fee: $2.50 (waived on daily HSA balances of $4,850 or more)||No||HSA Bank fees||Self-directed through TD Ameritrade. Trading fees apply. Or, pre-selected funds with no trading fees ($24 annual fee).|
|Health Savings Administrators||Annual administration fee: $45.00||No||Health Savings Administrators fees||Choice of 22 Vanguard Funds.|
|Health Equity||Monthly account maintenance feee: $3.95 (waived if HSA balance is over $2,500)||No||Health Equity fees||Choice of 39 mutual funds. No purchase fee.|
|Millennium Trust||Annual account fee: $35||$10||Millennium Trust||Some no transaction fee funds. Otherwise, trading fee of $15 plus commission in self-directed account.
|Alliant Credit Union||None with basic account. Investment account monthly fee: $5.95||No||Alliant Credit Union||1.25% dividend rate, or self-managed investment options|
|Wells Fargo||Monthly maintenance fee: $4.25 (waived if the combined deposit and investment balance in your HSA on the last day of the month is greater than or equal to $5,000)||Not if done online, otherwise $10||Wells Fargo||Choice of 17 Wells Fargo funds.|
|Lake Michigan Credit Union||No||No||Lake Michigan Credit Union||High interest savings interest, but no equity investing.|
|US Bank||Monthly maintenance fee: $3.25 (waived if account balance exceeds $2,500)||No||US Bank||Choice of 20 mutual funds when monthly balance exceeds $2,500.|
Remember, you must have an HDHP to get and continue contributing to an HSA.
For more basics on HSA’s, check out the previous links and the IRS HSA guidelines.
Best HSA Account Discussion:
- Who is your current HSA account administrator and what are their fees, policies, and investment options?
- Have you invested within your HSA account?