In today’s world of high out-of-pocket medical costs, a health savings account—or HSA—is fast becoming a requirement. Since out-of-pocket costs can total thousands of dollars each year, an HSA will provide you an opportunity to both budget for those expenses, and get a tax deduction at the same time. And much like an IRA, any funds you don’t spend can be retained and invested—also tax-free. Lively stands out from the field of HSA providers in that the company specializes in HSA plans. And because of that, they offer more options than most HSA providers. That includes the option to invest your money either in safe, interest-bearing investments or to choose self-directed investing in any asset class you like.

In the face of ever-rising healthcare costs, a Health Savings Account is a must and Lively is an excellent option to consider.

About Lively

Based in San Francisco, 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 budget for rising out-of-pocket medical costs, while getting a tax benefit in the process.

Read more: The Best HSA Accounts

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.

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 And if funds are withdrawn from the HSA to pay for approved medical expenses, no tax is due on the distributions.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 can be carried forward indefinitely. You can invest the funds in interest-bearing securities, or even equity-type investments, like stocks and mutual 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 2022, you can contribute up to $3,650 for singles and $7,300 for families. But there’s also a catch-up contribution of $1,000 additional for taxpayers age 55 or older.

  • Singles, HDHP minimum deductible $1,400, maximum out-of-pocket, $7,050 in 2022
  • Families, HDHP minimum deductible $2,800, maximum out-of-pocket, $14,100 in 2022

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 7.5% of your adjusted gross income (AGI).

Related: 2021/2022 Federal Income Tax Brackets and Standard Deductions

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 $7,000 in 2021, 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 a self-directed brokerage account with TD Ameritrade. The other is to invest in an HSA guided portfolio. This gives you access to many different funds, depending on your risk tolerance and goals. A 0.50% applies to invested assets.

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.

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.

The HSA Guided Portfolio is another option. You can choose from a variety of high-quality, low-cost funds based on your risk tolerance and preferences. The HSA Guided Portfolio charges an 0.50% annual fee for invested assets.

Mobile App: You can run your Lively 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.

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 enables 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 run your Lively 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.

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 that 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 we mentioned earlier, bank accounts are fully protected by FDIC insurance for up to $250,000 while investment funds are protected up to $500,000 through SIPC.

Customer contact: Available by email and toll-free phone, Monday through Friday, 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.

How to Sign Up with Lively

You can open a Lively HSA account entirely online, with a single-page application. You’ll enter your full name, email address, and mobile phone number, then create a password. You also need to agree to the Terms & Conditions and Privacy Policy, then click to sign up.

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 self-directed investment account through TD Ameritrade, or the HSA Guided Portfolio.

You can also sign up for automatic deposits, either from your bank account or from your paychecks.

Lively 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.

  • 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 0.0% and 0.70% 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 0.01% to 0.07% 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 an interest rate of 0.10% APY. It comes with a debit card and unlimited check writing. There are no fees for maintaining the account.

Lively FAQs

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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 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.