Choosing the Best HSA Account Administrator (Yes, you CAN Choose, & Here’s a List)
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 tripled since, and now 19.7 million Americans have one in 2015 (up from 17.4 million the prior year).
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. And you can contribute to an HSA outside of employer payroll deductions. 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 $5,000 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. |
Custodial fee: 6.25 basis points per quarter (i.e, $0.625 per $1,000 every three months) with no cap.
|No||Health Savings Administrators fees||Choice of 22 Vanguard Funds.|
|Health Equity||Monthly account maintenance fee: paid by sponsor or up to $3.95||No||Health Equity fees||Choice of 43 mutual funds. No purchase fee.|
|Select Account||Monthly maintenance fee: $0-4/mo. Plans vary.||No||Select Account HSA fees||Fee of $1.50 per account per month for 26 funds: Select Account investment options when balance exceeds $1,000. If balance > $10,000, you can open a self-directed brokerage account with Charles Schwab.
|Alliant Credit Union||None with basic account. Investment account monthly fee: $5.95||No||Alliant Credit Union HSA fees||0.65% dividend rate, or choose from 125 mutual funds in a self-managed brokerage account at a $5.95/month fee.|
|Wells Fargo HSA||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 HSA fees||Choice of 25 funds (mostly Wells Fargo).|
|Lake Michigan Credit Union HSA||No||No||Lake Michigan Credit Union HSA fees||High interest savings interest or 1.5% or 2% (based on balance), but no equity investing.|
|Saturna HSA||No. With investment account, inactivity fee of $12.50 per year, if no trades.||No||Saturna HSA fees||Saturna self-directed investment account with $14.95 stock trades, no fee & no load funds.|
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?