If you’ve completed research in an attempt to find the best HSA account, you’re probably well aware that it is a bit of the “Wild West” out there. Because health savings accounts (HSAs) are still a relatively new type of investment account (they didn’t exist prior to 2003), they have been slow to get the attention and resources of the big players in the investment brokerage world.
In fact, until recently, none of the largest investment brokerages – Vanguard, Schwab, Fidelity, TD Ameritrade, E-Trade, Scottrade, and Ally – offered HSA accounts for individual investors. What we’ve been left with is a number of small independent banks that don’t specialize in investment accounts, taking lead. A small bank creating an investment platform on its own is near impossible, so the HSA administrators that are out there typically charge annoyingly high fees for the administration of the HSA account, as it is their only revenue source from the account, then outsource the investment component to a 3rd party (usually TD Ameritrade). Or, alternatively, they offer no brokerage investment options at all.
Fortunately, this is no longer the case. Fidelity now has individual HSAs. In doing so, they have become the first large investment brokerage to break into the HSA space for individual investors. Fidelity had previously offered employer-sponsored HSA accounts, but not individual HSAs.
This is a VERY exciting development for the personal finance world. And, it’s a scary development for existing HSA administrators.
For starters, if you’ve been following along, you know that I’m a big fan of HSA accounts. After getting a 401K match, I believe that HSAs are the best type of retirement account to contribute to. HSAs offer tax-free contributions (and investment growth), while withdrawals for qualified medical expenses are also tax-free. HSAs are portable, meaning you own the account and can take it with you from one employer to another or to self-employment. And if you don’t use HSA funds for medical expenses, you can withdraw them in retirement – for any purpose – just like an IRA, without penalty, starting at age 65.
- Zero minimum investments to open accounts
- Zero account fees (including account closing/transfer)
- Zero domestic money movement fees (i.e. bank wire)
- Zero investment minimums on Fidelity retail and advisor mutual funds and 529 plans
- Significantly reduced and simplified pricing on existing Fidelity index mutual funds
- Zero expense ratio mutual funds (Fidelity ZERO Index Funds)
And finally, even if you already have an existing HSA account, you can get a Fidelity HSA. Anyone can have multiple HSA accounts (similar to IRA’s) and can contribute to an HSA outside of employer payroll deductions – though you will want to make sure you first get any employer matching to your employer-sponsored HSA. Note that you must have a qualified HDHP to initially get and then continue contributing to an HSA.
Fidelity HSA Account Details
I’ve taken an in-depth look into Fidelity HSA account details, and here is what I found:
- Minimum Balance: There is no minimum balance to open a Fidelity HSA.
- Opening Fee: There are no account opening fees or money transfer fees.
- Maintenance Fees: There appears to be no monthly account maintenance fees for individual HSAs.
- Investment Options: It appears that the full array of regular Fidelity investment options are available within HSAs (I will confirm). Standard Fidelity investment commissions apply.
- Investment Minimums: There are no investment minimums on Fidelity retail and advisor mutual funds.
- Debit Card: Fidelity HSA accounts come with a Fidelity debit card.
I’ll be funneling a portion of my existing HSA over to a new Fidelity HSA to test it further and will share any updates here. And to clarify, I have no relationship with Fidelity, financial or otherwise. I’d also recommend taking a look at Lively, which has a very similar offering (with no added fees to invest), but is focused 100% on HSA’s.
- Who is your current HSA administrator? Why?
- Is Fidelity’s new HSA offering appealing to you? Why or why not?