I’ve been on a big HSA kick, since I made the move to an HDHP, but I wanted to refresh my picks for the best HSA account. Why are HSA’s so great?
- Tax-free (pre-tax) contributions and withdrawals for qualified medical expenses, employer contributions, and growth through investments.
- HSA account contributions fully roll over from year-to-year (unlike FSA’s).
- HSA’s 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.
- You can withdraw funds from HSA accounts in retirement like an IRA, without penalty and for any reason, starting at age 65.
- HSA’s don’t have required minimum distributions at retirement age.
The challenge with HSA’s, however, is that a lot of the big name financial players aren’t in the HSA space. And many administrators have a maze of fees to navigate – if you get stuck with the wrong one, it can be a drain on your balance.
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. In 2008, only about 6 million American’s had one. But that number has more than tripled since, and now 20.2 million Americans have one.
The HSA marketplace is still 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 an “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 administrator’s 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 23 Vanguard funds or options with TIAA, T. Rowe Price, & others.|
|Health Equity||Monthly account maintenance fee: paid by sponsor or up to $3.95||No||Health Equity fees||Choice of 23 Vanguard mutual funds.|
|Further (formerly "Select Account"||Monthly maintenance fee: $0-4/mo. Plans vary.||No||Further Fees||Fee of $18 per account per year: Further investment options when balance exceeds $1,000. If balance > $10,000, you can open a self-directed brokerage account with Charles Schwab.|
|Optum Bank HSA||Monthly maintenance fee: varies||No||Optum Bank fees||Choice of 31 funds (including some Vanguard).|
|Lake Michigan Credit Union HSA||None for basic savings. $30/year fee for investment account.||No||Lake Michigan Credit Union HSA fees||Interest savings of 0.5% or 1% (based on balance). Or, choice of 20 no-load funds through Devinir. 12 of which are Vanguard.|
|Elements Financial HSA||Monthly maintenance fee: $4, unless ave. daily balance is $2,500+ (in which case, it is $0)||No||Elements Financial HSA fees||Interest dividend based on account balance, or self-directed brokerage option through TD Ameritrade|
|Saturna HSA||No. With investment account, inactivity fee of $25 per year, if no trades (Fee is reduced to $12.50 for accounts holding only mutual funds)||No||Saturna HSA fees||Saturna self-directed investment account with $14.95 stock trades, no fee & no load funds.|
|Lively HSA||No||No||$2.50/month to use TD Ameritrade self-directed brokerage investment option.||TD Ameritrade self-directed brokerage.|
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?