Health savings accounts (HSAs) can help individuals and families save and pay for medical expenses with pre-taxed dollars. HSAs are growing in popularity, and in fact, it’s estimated that there will be 43 million accounts by the end of 2023, all holding over $150 billion in assets.
You can use HSAs for several reasons, from paying medical expenses without also paying taxes to investing and saving for retirement. HSAs and their counterpart, flexible spending accounts (FSAs), are common terminology in the healthcare industry.
However, knowing which HSAs to go with can be difficult for most people, especially if you’re unsure whether to choose an HSA through your employer or open one on your own. Our guide shows you how to use HSA accounts to your advantage, no matter your decision.
This article will discuss the best HSA accounts, including why they’re classified as such and how you can use them to your advantage. We’ll also compare them to others to show you what you can get for your money.
Are you ready to learn more about the best HSA accounts? Let’s get started!
What is an HSA
A health savings account is a tax-advantaged account that you can use to pay for medical and dental expenses. “Tax-advantaged” simply means that you can pay for these types of expenses with pre-tax dollars.
When it comes to reducing healthcare costs, health savings accounts are huge. You can easily add an HSA to your list of retirement strategies.
You can open a health savings account through your employer or alone if you're eligible. Eligibility depends on how high your deductible is.
Individuals with deductibles over $1,500 and families with deductibles over $3,000 are eligible. Plans that are classified as high-deductible health plans (HDHPs) are nearly always eligible.
Unlike flexible spending accounts (FSAs), HSA funds roll over from one year to the next. You can also use your HSA funds to invest for retirement.
Contributions to your HSA are limited to $3,850 for individuals and $7,750 for families. These numbers fluctuate yearly, so paying attention to established limits is important to maximize your HSA.
Qualified Medical Expenses
Health savings accounts will require that you pay and submit claims for specific medical expenses. Knowing which expenses qualify can be difficult if you don’t read the fine print.
Examples of qualified medical expenses include:
- Contact lenses
- Addiction treatments
- Hearing aids
- Chiropractic care
- Ambulance services
- Fertility treatments
- OTC medications
- Specific medical devices and equipment
Review your list of qualified medical expenses before deciding on an HSA. It could mean the difference between covering your costs and wasting your time.
7 Best Health Savings Accounts
These HSAs are some of the best you can find if you’re looking for a way to save money and pay for medical expenses. Compare them to find the best health savings account for you and your family.
1. Lively (Our Pick)
Unless you’re ready to retire early, Lively can help you prepare for the future with health savings accounts. This fully online provider lets you open a fund without too much trouble so that you can pay for medical expenses with pre-tax dollars.
Open a Lively HSA account, and you’ll receive a free debit card and the chance to open an investment account with Charles Schwab. You can go online to create your Lively account or download the mobile app.
Though Lively is a relatively new company, it offers FDIC insurance on its accounts. You won’t be charged any fees for monthly maintenance, account opening, fund transfers, debit card usage, etc.
If you open a Charles Schwab account, you’ll pay $24 per year for accounts under $3,000. The Devenir’s Guided Portfolio costs 0.5% of your holdings annually.
Neither one of these accounts requires any minimum balance. You can transfer funds between trustees without issues or fees and participate in paperless account rollovers.
Fidelity is one of the more well-known investment firms and ranks among the best brokerages you can work with. It also offers exceptional health savings accounts to prepare for medical expenses and retirement.
Founded in 1946, Fidelity makes it easy to open and fund an account online. There are no monthly fees or minimum balance requirements to meet.
Fidelity also offers a debit card with this account, which has no fees attached. You can also fund your HSA with your bank account or a mobile check deposit.
When you invest in an HSA with Fidelity, you’re also eligible to invest in the Fidelity Health Savings Fund and the Fidelity Health Savings Index Fund. These funds are otherwise not available to investors.
Fidelity lets you invest in bonds, mutual funds, stocks, ETFs, and fractional shares. You can also use Fidelity BillPay for your medical expenses.
Fees vary depending on which investment you choose. Some come with high expense ratios, so it’s worth looking into specifics if you want to invest in a particular asset.
As you’ll see with many HSAs on our list, Further comes with a mobile app and a debit card to pay for your healthcare expenses. HealthEquity recently acquired Further in 2021.
With Further, employers can oversee several employee accounts, from transportation reimbursement accounts (TRAs) and dependent care assistance programs (DCAPs) to flexible spending and health savings accounts. Once employees reach a balance of $1,000 or more, they can invest through Charles Schwab.
Interest rates at Further hover around 0.7%. Underlying fees will vary, but there is an $18 per-year investment account fee.
You shouldn’t have to choose if you want to save for retirement or a house. Instead, you can work with HealthEquity to save money for healthcare expenses and retirement, all in one go.
HealthEquity was founded in 2002 and offers 24/7 account support for all its members. The easy-to-use mobile app makes contributing to your HSA and investing a cinch.
Whether you use the app or the HealthEquity website, you can easily create an account in half an hour or less. You can also invest in Vanguard funds with affordable expense ratios.
HealthEquity doesn’t charge any account management fees and doesn’t require a minimum investment, depending on which account you choose. Some HealthEquity HSA accounts have a $36 annual fee, and the underlying fee for Vanguard funds is 0.1%.
You’re also responsible for a 0.25% annual investment fee. However, HealthEquity does award you a free debit card to pay for your medical expenses.
Many members love the mobile app because it lets you view your spending and submitted claims. The website and app also feature several videos and webinars you can use to learn more about HSAs and related subjects.
5. HSA Bank
HSA Bank is another HSA broker that makes signing up and funding your account easy. It’s also known for providing mutual funds investment opportunities for those who want to prepare for retirement.
You can invest with Devenir or TD Ameritrade through HSA Bank, depending on your preference. You can invest in bonds, mutual funds, stocks, ETFs, etc.
HSA Bank doesn’t require any minimum investments to get started. This HSA provider also offers flexible spending accounts and other reimbursement arrangements.
Fees vary depending on which investment opportunities you take advantage of. You won’t pay an account management fee if you have at least $3,000 in your HSA, but you’ll pay $2.25 per month if you don't.
You may incur an investment fee if you have $5,000 or less in your account. There is also a $25 fee to close your account.
You can download the HSA Bank mobile app if you’d like to access 24/7 client assistance that way. You can also navigate directly to the HSA Bank website.
Starship makes it easy to create and fund your new health savings account. You can go online or download the mobile app to begin your Starship journey.
Investing is easy with the mobile app, which lets you choose your investments and contributions with a few clicks. You can also direct your portfolio or delegate the task to a robo-advisor.
Starship HSAs come with no monthly costs or account minimums. If you have less than $5,000 in your account, you’ll pay $1 monthly to invest.
If you have more than $5,000 in your account, you’ll be subject to a 0.35% fee. Starship only offers three pre-built portfolios specializing in ETFs, so the investments are somewhat limited.
HSAs from the HSA Authority don’t require a minimum balance but come with a $36 annual fee. Account holders will also receive a free Visa debit card to use when paying for medical expenses.
The HSA Authority also allows you to invest in mutual funds through Devenir. Expense ratios will depend on your investment option, but The HSA Authority makes it easy to open an account online.
The HSA Authority does not currently support a mobile app. However, parents can easily oversee their spending and contribute with an online account.
How to Find the Best HSAs
If you're self-employed, health insurance can be challenging to find, and HSAs even more so. When you’re comparing several HSA plans, consider the following:
- The company’s reputation, including history and customer service experience
- Fees, which may include monthly, annual, account management, debit card, or advisor/investment
- Minimum deposit requirements
- Website versus mobile app
- Ease of use
- Self-directed or robo-advisor investments
- Availability of debit cards to pay for expenses
Narrowing down your results to those that best fit your needs can help you find an HSA quickly. This gives you more time to contribute to the account and save for retirement.
Flexible spending accounts (FSAs) and health spending accounts (HSAs) allow you to pay for medical expenses from a tax-advantaged account. However, FSA funds do not transfer over from one year to the next as HSA funds do.
The best HSAs take less money from you but give you more opportunities to spend and make money to your advantage. For example, a superior HSA doesn’t charge you a monthly maintenance fee and gives you access to investments in stocks, bonds, ETFs, mutual funds, etc.
HSAs from Lively and Fidelity don’t charge monthly fees. However, you may be subject to additional fees based on your chosen investments.
One of the biggest downsides to health spending accounts is that you will pay the penalty if you withdraw your money early for non-medical expenses. You’ll pay an immediate 20% fee and any income taxes on that amount when you withdraw the money.
Finding the Perfect HSA for You and Your Family
Whether you live alone or have a family, paying for medical expenses can be hard on any budget. With a health savings account, you can save for costly medical expenses and retirement in one fell swoop.
We hope this article has helped you find ways to use an HSA to your advantage. There are many HSAs to choose from, each incorporating several perks to earn your business.
Whether or not you choose an HSA provider from our list above, you’ll at least know what’s out there. You can also compare your favorite HSA plans to those you might find through your own research.
Now that you know more about HSAs, which one will you choose? The good news is that if you’ve decided on one of the HSAs above, you will surely get a great deal.
How can an HSA help you pay for medical expenses?