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Check out our podcast on Health Savings Accounts. In this episode, Dough Roller’s founder Rob Berger calls them “one of the best tax-advantaged accounts”; he tells us why he has one and why you should too. For more episodes, click here or keep watching on our Youtube channel.

HSA Overview

These days, more and more consumers are moving to HSA-eligible health plans. To qualify for an HSA (health savings account), your health plan needs to have a minimum deductible of $1,350 for yourself or $2,700 for your family. If your health plan qualifies, using an HSA is a smart way to save on a tax-advantaged bases for health-related expenses.

When HSAs first arrived on the market, none of them were really very good. Many didn’t offer solid investing options at all. And some had high fees. They were basically a glorified savings account, albeit one that let you put in pre-tax money up to the annual limit. Now, though, HSA providers are catching up.

Now you can find HSAs geared more towards investing. This means your HSA can be similar to your 401(k) or IRA as a long-term investment that could provide significant gains. This is a solid strategy for HSA savers who don’t tend to have high out-of-pocket health costs each year.

Even if your employer offers an HSA through a particular provider, you can go out on your own to choose a provider that more closely suits your own needs. Typically, you can just fill out a form from your chosen provider, and your employer can still put pre-tax dollars into your HSA.

If for some reason your employer won’t do this, you can opt out of contributing pre-tax dollars to the employer’s HSA. Then, just contribute post-tax dollars to your chosen account, and take a tax write-off at the end of the year.

So it’s good to know that you can choose your own HSA provider. But which one should you choose? First, let’s talk about what to look for in a good HSA. Then, we’ll highlight a few of the best accounts available on the market today.

Two Ways to Use an HSA

Before we dive into what to look for in an HSA, let’s talk about the two primary ways to use an HSA. This is important because how you plan to use your HSA will define what makes a “good” HSA for your needs.

There are basically two ways to use an HSA: for spending or for investing.

You may do a combination of both throughout the year. But chances are you’ll lean more towards one or the other.

You’ll likely lean towards the spending end of the spectrum if you have lots of health expenses. This could be because you’ve got some chronic health problems to manage. Or it could just be because you have a couple of kids who have constant check-ups that require co-pays. Either way, if you plan to spend at least half of the money you put into your HSA within a year, look for a spending-related account.

What if you don’t have many healthcare expenses in a year? In this case, you can use your HSA as basically a supplement to your retirement savings. You can invest the money for the long term because you’re less concerned about potential short-term losses. Remember, if you ever get into a situation where you need to pull back to safer, spending-centric investments, you can always do that, too.

If this isn’t your first year using an HSA, you probably already know which direction you lean towards. But if this is your first year to use this type of account, you should look back at your healthcare expenses over the last year or so. And be sure to account for any upcoming major changes, such as a new baby on the way.

Once you know about how you plan to use your HSA, you can decide which account features are key for your needs.

What to Look for in an HSA

Just like you look for something different from savings accounts versus 401(k)s, you’ll want to look for features in your HSA based on how you plan to use it. Here’s what to look for in spending versus investing accounts:

Spending HSA

  • Fees: Fees are important either way, but with a spending HSA, you definitely want to spend as little money as possible out of your account each month.
  • Interest Rate: With these types of accounts, you don’t have to invest in mutual funds or market investments. Instead, you can just opt for an interest rate. So a higher rate is better than a lower one, of course.
  • Debit Cards: This isn’t a must-have, but it’s convenient. If you plan to use the money in your account often, being able to spend directly from the account on a debit card is nice. Just be sure you’re only using it for qualified HSA expenses so you don’t have to reimburse your account.

Investing HSA

  • Investing Options: Choosing an investing-focused HSA is similar to choosing an IRA. You want to have a good, varied menu of investment options so you can make the investing choices that make the most sense for your needs.
  • Price: Investing HSAs will carry different fees than savings-oriented accounts. Be sure to understand both the account fees and the fees for underlying investments to get the most bang for your buck.
  • Performance: Look at the historical performance of the HSA’s underlying funds to make sure that it’s done well in the past. Past performance isn’t always an indicator of future performance, but it can be helpful.

The Best HSAs for Both Categories

Since we’re dealing with two different categories here, let’s break down the HSAs in to the best options by category. First however, I want to address that one HSA is the best in both categories; the Lively HSA.

The monthly cost to own a Lively HSA is $0.  Account opening fee; $0. Account closing fee; $0.  Debit card fee (up to 3 cards per account); $0.  I hope you’re getting the idea here.

The account is also FDIC insured and it currently yields the following interest rate (depending on balance size):

  • Less than $2,500 – 0.01% APY
  • $2,500 – $4,999 – 0.01% APY
  • $5,000 – $14,999 – 0.01% APY
  • $15,000+ – 0.01% APY

And if you’re an investor, all accounts are attached to the TD Ameritrade platform.  And as luck would have it, TD Ameritrade recently changed their fee structure, and all stock trades now cost $0.00.  So whether you’re looking to save or invest with your HSA, how can you go wrong with Lively?

Open a Lively HSA or read our full Lively HSA review

The Rest of the Best Spending HSAs

Using our metrics of maintenance fees, interest rates, and potentially a debit card, here are the best HSAs for spending:

BMO Harris Health Savings Account

The BMO Harris Health Savings Account has no minimum opening deposit and no monthly maintenance fee. You can get paper or online statements for free, and it comes with a BMO Harris Hsa Debit Mastercard so you can spend directly from your account.

The account does carry a $25 transaction fee if you move money over from a different custodian, and a $3 fee for non-BMO Harris ATM transactions. You do have to visit a branch to open an account, and the accounts earn a variable interest rate.

Affinity Credit Union HSA

This is another account with no minimum deposit or balance and no fees. You can add an Affinity Visa Debit Access Card to your account for more convenient spending. And the account earns a 0.25% APY.

Before you can apply for this HSA, you have to apply to be a member of Affinity Federal Credit Union.

First American Bank HSA

The First American Bank HSA has no monthly minimum balance or monthly fees. It comes with free mobile and online banking and a Mastercard debit card for convenient spending. It pays tiered interest rates based on your balance. The rates range from 0.09% APY to 1.00% APY. You can find the full list of rates and one-off potential fees here.

Besides these, there are plenty of other credit-union based HSAs that don’t charge any maintenance fees and that do offer some interest. Be sure to check out your local credit union options before you decide which HSA to use for your spending.

The Best Investing HSAs

For this ranking, we’ve relied heavily on the Morningstar report on the best HSAs. It came out in 2017, so we’ve verified the latest numbers for the highly-ranked investing HSAs listed there.

Health Equity

Health Equity has three different HSA options, one of which is geared towards mutual fund investments. You can choose to invest your money automatically for a higher account fee, or you can choose a self-driven account.

The self-driven account has no monthly service fees and an investing administrative fee of 0.033% per month. The auto-pilot account, which is the most hands off for investors, has a monthly service fee of 0.08% and an investing administration fee of 0.033%.

The account earned a high ranking from Morningstar for its plethora of mutual fund investing options, many of which have a strong performance historically.

The HSA Authority

Run by Old National Bank, The HSA Authority is one of the oldest names in the game. Once you get a $1,000 balance in your account, you can use it to invest. The account has an annual fee of $36, or $3 per month. This could be more or less than you’d pay with percentage-based fees, depending on your account balance.

You can invest your account here in mutual funds, which are load-waived. The HSA Authority has a decent list of underlying mutual fund options in which to invest.

SelectAccount: Potential for Both

The only account in Morningstar’s list that scored well in both the saving and investing categories was SelectAccount. This account gives you a few options for a savings account. For a higher account maintenance fee, you can get a higher interest rate each month, which also varies according to your account balance. You can also decide to transfer your savings account to an investing option, which costs just $18 per year.

Saving in Multiple HSAs

What if you don’t fit cleanly into one category or the other? Maybe your family is planning to contribute the maximum $6,900 to your HSA this year. You know your health expenses should be around $3,000, but you want to invest the remaining $3,900.

In this case, you could consider opening two different HSAs. This is allowed, provided your total HSA contributions for the year don’t exceed the annual limit.

You could put $3,000 into a no-fee account first, and use that account for spending. If you’re planning to spend the money within the year, it doesn’t even matter much if you earn any interest. But then you could put the remaining $3,900 in an investment-focused account to save for the rest of this year and beyond.

The advantage of this is that you don’t pay balance-based investment account maintenance fees on money that you’re just going to spend quickly, anyway.

This may not be the right strategy for you, but it’s worth considering if you need to take more of a combination approach to your HSA saving and spending.

Author Bio

Total Articles: 279
Abby is a freelance journalist who writes on everything from personal finance to health and wellness. She spends her spare time bargain hunting and meal planning for her family of three. She has a B.A. in English Literature from Indiana University–Purdue University Indianapolis, and lives with her husband and children in Indianapolis.

Article comments

Jeff says:

Top choice for investing comes with a 0.4% annual ER? Won’t take long for that to be a serious drag on returns. Lively allows investing every dollar through TD Ameritrade for $2.50 per month. Saturna is a bit old-school but you can do a single purchase for $15 per year ($10 surcharge for the lowest cost brokerages).

Brian says:

We had an HSA provider that decided to stop, so they sold all their accounts to Health Equity. I am eagerly looking for something else, as Health Equity has terrible interest rates and one of the worst websites of any business I’ve used (not just banking). Navigation is nightmarish. To find it on a list of one of the best 3 is unbelievable.

Datapoint says:

We moved from Health Equity to Connexus Credit Union. Anyone can join with a five (5) dollar fee and they pay 2% APY on fund balances over 5000.

Alan says:

For investing or just parking your money in the HSA to be used for medical bills, Lively is a far superior HSA than all the others mentioned here. There is no minimum to leave in the HSA; you can invest all your money in ETFs via TD Ameritrade if you want. TDA offers over 300 commission-free ETFs. The only expense you pay with Lively is a $2.50/month fee if you use the investment option. $25 a year, that’s it. The way they charge the fee is smart too-it’s taken once per month from your bank account, not out of your HSA money or your investments at TDA, but from your checking or savings account at your separate bank. Brilliant! That way you have more money in your account for health care costs or in your investment account to grow until retirement.

Bryan says:

Used to have Alliant as our provider and loved them. Sadly, they decided to get out of the HSA business and sold all their HSA accounts to HealthEquity. HealthEquity’s investment options may compare adequately to others, but their website is the absolute worst. Unnavigable, and you have to go through like 8 pages for each reimbursement. If you have 2 reimbursements, you have to do the whole thing twice. I’m eagerly looking forward to finding something different – anything different.

Andy says:

My employer is changing from Optum to NueSynergy. We have the option to leave the existing funds in Optum, but all new dollars go to the NueSynergy account. Optum’s investment earnings seem mediocre and I don’t want two HSAs, but I don’t know much about NueSynergy. Any suggestions?

Ronnie Snoke says:

What are your thoughts about Optum? Right now we have the option of using whoever we want for our HSA. Our company is now going with Optum and from the reviews I have read it’s not that great of a bank. Needless to say, no one that I have talked to is happy about the switch. Any thoughts?
Thank you!

Andy says:

I apologize for not responding sooner. Optum is OK. I just moved some funds around and plan on exploring it more. I probably was not doing my share of the research, thus the ‘mediocre’ comment above. Once you move to it be sure to look at all the options in the investments. I’m not happy about NueSynergy’s monthly fees.

K says:

My employer switched from Optum to NueSynergy also. I never had too many problems with Optum until this conversion. I had intended to keep my Optum account open due to investments. However Optum cashed out my investment and closed my account. After 4-5 calls to customer service and finally getting it escalated it was finally straightened out. But it was a nightmare. I am in the process of researching a individual HSA account to transfer my money out of Optum and any excess out of NueSynergy. I just don’t want to have to deal with another employer influenced conversion.

Tom Anderson says:

Fidelity just recently (mid-November 2018) started allowing HSA contributions from individuals. This is a game changer. No fees, plenty of investment options. I can’t think of a reason to go anywhere else until the competition can match Fidelity. Maybe this will inspire Vanguard and Schwab to offer something similar.

Here’s a link: https://www.fidelity.com/go/hsa/why-hsa

Tim says:

Was just researching the latest HSA news, and discovered Fidelity HSA was opening its doors to individuals. You’re right, I can’t think of a reason to use any other HSA custodian as of the time I’m posting this comment.

Bob says:

Anyone with experience using bendhsa.com? Looks very interesting from reading their site, they use artificial intelligence, have no fees for the cash account, but do charge $3/month to invest. Thanks.

Steve says:

Don’t know why DoughRoller didn’t include Lively in its review. About a year ago I did the research and opened an HSA at Lively. I am extremely pleased with my decision. Read some of the other Lively related posts below for more info.

Rob says:

Agreed. Lively and Fidelity are two of the best. I just transferred my HSA from MyBenefitWallet to Fidelity. No fees and first dollar investing.

Dale A Rusch says:

I’m thinking about opening an HSA account with Lively because it has no fees. Are you still happy with your Lively account?

Jay says:

STAY AWAY from Health Equity if possible. 36 basis points in annual fees on invested money (deducted monthly) will drive you nuts. Fidelity now offers a great plan. It’s just like a brokerage account. The only fees you pay are on ETFs or funds where a trading fee might apply. I rolled my HSA to Fidelity FROM Health Equity and I’m very happy. Great job, Fidelity!

Joy says:

What if the HSA is with KAISER ? Would either of these HSA types be applicable to medical bills , premium bills , etc. through Kaiser ? The plan is a BRONZE HSA (high deductible ) as I rarely go to the doctor . Thank you so much !!

Jason says:

None of these is a very good option. Think this article may have been influenced too much by advert dollars. Look around people. There is better out there.