Lively HSA Review - Excellent Service and Free to Use!
In the face of ever-rising healthcare costs, a Health Savings Account is a must — and Lively is an excellent option to consider.
- Provides all the tax and spending benefits of an HSA plan
- Invest in either interest-bearing or self-directed investments
- Available for both individual and employer-sponsored plans
Based in New York City, and founded in 2018, Lively is a company dedicated to bringing health savings accounts (HSAs) to the masses, to take some of the sting out of the rising cost of healthcare. By specializing in HSAs, Lively is helping consumers to budget for rising out-of-pocket medical costs, while getting a tax benefit in the process.
There are many financial institutions that offer HSA accounts, especially banks and credit unions. But there are very few companies focusing exclusively on this highly specialized tax-sheltered financial account.
Lively HSAs are available for both individuals and through employer plans. If your employer doesn’t offer an HSA option, it may be time well spent to recommend the service to your human resources or employee benefits departments.
Lively has a Better Business Bureau rating of “A-“on a scale of A+ to F. It has a rating of 4.7 stars out of five by users on the App Store, and 4.9 stars out of five by users on Google Play, although both ratings come on very few reviews. Still, a positive review is a positive review!
What is a Health Savings Account (HSA)
The easiest way to describe an HSA is to think of it as a medical IRA. It works very much like an IRA, in that your contributions to the plan are tax-deductible. Any income you earn on the money you have in the plan is earned tax-free. And if funds are withdrawn from the HSA to pay for approved medical expenses, no tax is due on the distributions.
Furthermore, any funds you don’t use in your HSA one year, can be carried forward indefinitely. You can invest the funds in interest-bearing securities, or even equity-type investments, like stocks and funds.
In theory at least, if you make the maximum contribution to an HSA each year and never take withdrawals, you can accumulate hundreds of thousands of dollars after several decades of steadily investing the funds.
For 2020, you can contribute up to $3,550 for singles and $7,100 for families. But there’s also a catch-up contribution of $1,000 additional for taxpayers age 55 or older.
To qualify for an HSA, you have to have a high deductible health insurance plan (HDHPs) meeting the following limits:
- Singles, HDHP minimum deductible $1,400, maximum out-of-pocket, $6,900.
- Families, HDHP minimum deductible $2,800, maximum out-of-pocket, $13,800
If you qualify based on the above criteria, you’re eligible to participate in an HSA. Unlike most tax-sheltered plans, there are few provisions that would prevent you from opening your own account. However, one limitation you need to be aware of is that you will no longer qualify for an HSA once you go on Medicare.
Why You May Want to Open Your Own HSA
With healthcare costs being as high as they are, even having health insurance often isn’t enough. The combination of copayments, high deductibles and coinsurance provisions can result in out-of-pocket costs well into the thousands of dollars each year. An HSA offers you an opportunity to a) budget funds in anticipation of those costs and b) to get a tax break for the contributions.
That second part is significant. Since the Tax Cuts and Jobs Act of 2017 roughly doubled the size of the standard deduction, it’s almost impossible for the average household to itemize deductions. It’s even more difficult with medical expenses, since they can only be deducted to the extent they exceed 10% of your adjusted gross income (AGI).
But, you can bypass that problem by using an HSA. It gives you the ability to get a tax break on out-of-pocket medical costs even if you don’t itemize on your tax return. For example, if you have a family plan and contribute $7,100 in 2020, you’ll be able to take a full deduction for the amount of the contribution that year. And you can take that deduction even if you don’t itemize, and even if you don’t use any of the funds for medical expenses.
Not only will you lower your tax bill, but you’ll also be building up a reserve for both present and future out-of-pocket medical costs. And what you don’t spend out of the account, you can keep and invest. That makes it a combination medical expense account and retirement plan, rolled into one.
And if you decide to open an HSA account, Lively is an excellent place to do it.
How Lively Works
Lively allows you to set up either one-time contributions or recurring contributions. You won’t need to complete any paperwork, and you can fund your account either by linking your bank account or through your regular employer payroll contributions. They also give you the ability to transfer HSA accounts from other trustees into a Lively account.
When you put money into a Lively HSA account you’ll have two investment options. One is to invest the funds in an interest-bearing account with an FDIC-insured bank. The other is to hold the funds in a self-directed brokerage account with TD Ameritrade.
If you choose the fixed-income bank investments, your funds will be held at Choice Financial. It will come with FDIC insurance, protecting your account for up to $250,000.
Current interest rates paid on the Choice Financial Account are as follows:
- Less than $2,500 – 0.25% APY
- $2,500 to $4,999 – 0.35% APY
- $5,000 to $14,999 – 0.45% APY
- $15,000 or more – 0.60% APY
The TD Ameritrade account is a no-fee account, with no minimum balance required. You can manage your account entirely online (or on your mobile app), and set up recurring fund transfers to different investments. The TD Ameritrade account will be easy to manage, providing all the tools you’ll need to invest successfully.
While TD Ameritrade does have fees for certain investment types, like bonds, real estate investment trusts, and some mutual funds, they offer no-fee trading on stocks, options, and exchange traded funds. They also have a selection of no transaction fee mutual funds. In all, TD Ameritrade will give you access to more than 13,000 mutual funds.
All accounts held with TD Ameritrade are protected by SIPC, for up to $500,000 in securities and cash, including up to $250,000 in cash. SIPC protects your account from broker failure, not from losses sustained due to market factors.
Accessing Your HSA for Medical Expenses
To make accessing your HSA account convenient when paying for medical expenses, you’ll be provided with an HSA Visa debit card, which can be used anywhere Visa is accepted. The card can be used at a doctor’s office, pharmacy, or any qualified medical expense provider.
You’ll be issued up to three debit cards free of charge.
Lively HSA Fees & Pricing
As an individual, there are no fees to hold your HSA account with Lively. That means no account opening fee, no closing fee, monthly maintenance, funds transfer, and up to three debit cards.
Lively reports its account owners have saved more than $1,378,858 in fees through their service.
Lively Features and Benefits
Lively Marketplace: Through partnerships with various service providers, Lively is able to offer certain discounts. Service providers include:
- Access Labs – Lab testing for less at a location near you.
- PlushCare – Online doctor service enabling you to get prescriptions in 15 minutes.
- HSA Store – Provides tools to manage your HSA.
- Parasail – Offers affordable monthly payment plans to help pay for health care expenses with tax-free money.
- SimpleContacts – Renew and order contact lenses from home.
- Jonas Paul – Offers designer children’s glasses, with every frame sold contributing toward preventing childhood blindness in the developing world.
- Zendy Health – Provides tools to help you diagnose, find, and price compare medical and dental services.
- Candid Co. – Offers custom clear aligners to make straightening your teeth easy, convenient and affordable.
- Audicus – The most affordable way to get quality hearing aids, including online testing and expert support.
- Pill Pack – Offers pre-sorting of your medications by day and time, then delivered right to your door.
Mobile app: You can monitor and run your Lively HSA account from your mobile device. The Lively app is available at the App Store for iOS devices 11.0 or later, and is compatible with iPhone, iPad, and iPod touch. The app is also available for Android devices 5.0 and up, at Google Play.
You can use the mobile app to set up contributions, track HSA spending, check your account balance, monitor your investments, or even search the HSA marketplace to find retail partners for the qualified services and products you need.
Customer contact: Available by email and toll-free phone, Monday through Friday, from 6:00 am to 6:00 pm, Pacific time. There’s also an extensive HSA Guide that will answer many of your more common questions.
Account security: Lively takes the following steps to ensure the security of your account:
- Since an HSA is a health-related account, Lively keeps sensitive personal health information safe, in compliance with HIPAA regulations.
- They prevent unauthorized access to your information by encrypting data using the AES 256 disk encryption standard.
- Use of two-factor authentication as an extra layer of security when accessing your account.
- All sensitive servers are hosted in a private subnet which is not accessible over the Internet.
- SSL/TLS past passwords and encrypted access are employed, encrypting all data transmitted over the internet and internal networks, with passwords hashed in the database using industry best practices.
And as mentioned earlier, bank account funds are fully protected by FDIC insurance for up to $250,000, while investment funds are protected up to $500,000 through SIPC.
How to Sign Up with Lively
The next step will be to link your bank account to your Lively account. As soon as you begin transferring funds, they’ll be available for paying medical expenses.
You’ll also be given the choice to either open the interest-bearing bank account, or the self-directed investment account through TD Ameritrade.
You can also sign up for automatic deposits, either from your bank account or from your paychecks.
Lively HSA Pros and Cons
- For individual and employer-sponsored plans — Lively is available for both individual plans and employer-sponsored benefit programs.
- Free to use — Lively is a free service for individuals and families.
- Manage your account on the go — You can manage your HSA account using the Lively Mobile app, including locating participating medical providers.
- Service discounts — The Lively Marketplace offers an opportunity to get discounted services in combination with your HSA account.
- Tax and spending benefits of an HSA plan — Lively offers all the benefits of an HSA plan, including tax-deductible contributions, tax-free investment income, and tax-free withdrawals of qualified medical expenses.
- Investment options — You can invest in either an interest-bearing bank account or in a self-directed brokerage account, with virtually unlimited investment options.
- No local branches — As an online service provider, Lively doesn’t provide the benefit of local bank or credit union branches.
Alternatives to Lively
There’s a wide variety of institutions that offer HSA accounts. Local banks and credit unions are certainly one option. But on a national basis, you can try one of the following:
Further is probably the primary direct competitor to Lively. They offer a similar HSA setup, but they also charge an annual fee of $18. The base HSA account is interest-bearing, paying between 0.20% and 1.25% APY. But once your account reaches at least $11,000, you can move $10,000 or more into a brokerage account with Charles Schwab. There you can invest in stocks, bonds, mutual funds, exchange traded funds, and any other investments offered on the platform.
If you prefer a bank, Bank of America allows you to open an HSA account with no minimum initial deposit, and pays interest ranging from 0.10% to 0.45% APY. But if you have at least $1,000, you can invest in mutual funds through Merrill Lynch or Merrill Edge. The account comes with a debit card, and has a monthly fee of $2.50.
Among credit unions, DCU Credit Union is available to consumers nationwide. Their HSA Checking account requires no minimum initial deposit and has no monthly fees. The account pays interest ranging from 0.20% to 0.45% APY. It comes with a debit card and unlimited check writing. There are no fees for maintaining the account.
Should You Enroll in an HSA with Lively?
It’s not an exaggeration to say nearly everyone today needs an HSA account–at least if you have a high deductible, high out-of-pocket health insurance plan. Even if you have health insurance, high out-of-pocket costs can seriously impair your financial situation. That’s especially true if you have a medical condition that requires ongoing treatment and expenses.
An HSA account will give you the ability to allocate money to out-of-pocket medical costs on a regular basis, so they’ll be available when needed. And you can get a tax reduction for your contributions, even if you don’t or can’t itemize on your tax return.
But even if you don’t use medical services on a regular basis, you can still use an HSA to get an additional tax deduction, as well as to invest money tax-free. That’s because an HSA is part medical savings and part IRA. You can simply let the funds build up for many years, and accumulate a large HSA nest egg.
Lively is one of the best companies you can possibly open an HSA with. While banks provide safe, interest-bearing investments, and brokerage firms offer unlimited investing, Lively offers both options. You can choose one or the other, or even split your account between both.
And when funds are needed for eligible medical costs, you can access the account with the Lively HSA Visa debit card. You can even manage your account entirely from your mobile app, including locating eligible healthcare providers. And best of all, perhaps, the service is free to use.
If you’d like more information, or if you’d like to sign up for the service, visit the Lively website.