Every year, health savings accounts become more popular. They give people an opportunity to get a tax break on their medical expenses, have flexible withdrawal options, and allow them to invest their savings like an IRA or retirement account. Health savings accounts can be used to save money for medical expenses and provide additional tax benefits. What are the best accounts to open? Fees and investment options are some of the factors that should be considered when deciding which account to open.
In addition to the best health savings accounts available today, this article will cover what a health savings account is and the major benefits of opening one. It will help you find the best account for your needs.
We are going to review the best HSA accounts and providers. It is possible to get the most out of your health savings account with the right provider.
10 Best Health Savings Accounts
Here are the 10 best places to open a health savings account today:
- Lively
- Fidelity
- Bank of America
- HealthEquity
- The HSA Authority
- Further
- DCU Credit Union
- Affinity Federal Credit Union
- Northern Bank & Trust Company
- First American Bank
1. Lively
2. Fidelity HSA
You can open an account with no minimum deposit and no fees. Fidelity has a wide range of investment options to help you meet your financial goals. The account can be accessed with a card. And as one of the largest and best online stock brokers in the world, Fidelity HSA offers you a choice between professionally selected funds, target-date funds, or self-directed investing in mutual funds, ETFs, stocks, bonds, U.S. There are treasuries, CDs, and options. Diversification of risk can be achieved by investing in commodities, stocks, and mutual funds.
Fidelity does not charge commission on stocks, options, and exchange traded funds.
A It’s great for people who have other Fidelity accounts. FidelityHSA is a great way to invest and save for health care expenses that may arise in the future, while also offering tax benefits. You can manage your investment accounts under a single dashboard. Ensuring that you make the most of your investments is something this can help you to do.
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3. Bank of America
With Bank of America, you can open a They don’t charge a minimum initial deposit, but they do charge a monthly fee. When the account balance exceeds a certain amount, the fees are usually nixed.
The account pays interest on balances up to $2,500, but it goes up to 0.07% for accounts over $7,500. The interest rate is 0.05% for accounts between $2,500 and $7,500. You can invest in mutual funds if you have at least $1,000 in your account. mutual funds can help you maximize your returns. I like Lively or Fidelity more if you want to go the investment route due to the wider choice of investment assets and no bank fees.
Bank of America has a number of ways to access your HSA funds. You can use your debit card to access funds at the ATMs.
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4. HealthEquity
HealthEquity is based in Salt Lake City, Utah. HealthEquity’s mission is to empower Americans to connect health and wealth by providing healthcare solutions that make it easy to access, understand, and afford healthcare. There are three different investment options, including a low-interest cash account, a Yield Plus account paying higher interest, and a lineup of Vanguard funds. Regardless of which option you choose, their experienced advisors are on hand to help.
There are no account minimums or account fees for individuals. You can benefit from free stock trades.
There is a monthly investment administration fee of 0.03%, capped at a maximum of $10.
If you take advantage of their Advisor plans for investment guidance, there is also an additional monthly advisory fee of 0.05% per month, capped at a maximum of $15.00
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5. The HSA Authority
The HSA Authority is a part of Old National Bank. Customers can get the most out of their health savings accounts with the help of the HSA Authority. They offer no-load mutual funds for investing, and a minimum balance of $1,000 is required to start. A variety of investments, including stocks and bonds, can be purchased with HSA funds and mutual funds.
The checking account has no monthly fees, as well as check-writing privileges. There is an annual fee for the investment account. If you maintain a minimum account balance or make regular deposits, you can waive the fee.
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6. Further
Recently purchased by HealthEquity, Further offers three different HSA plan types, all with competitive interest rates on your cash balances:
- The highest rates are offered by Further Premium. Premium members will have access to exclusive events and priority customer service. The account has an administrative fee of $4 per month. The introductory bonus rate is 1.00% for the first three months.
- Further Value has an investment option. With no minimum balance and simple setup, Further Value makes investing easy. The account has an administrative fee and interest rates ranging from 0.05% to 0.20%. If you want to save money without paying large amounts of interest, this is the account for you.
- Further Select has an investment option. You can earn competitive interest rates and access your funds with no minimums or fees with Further Select. The account has an administrative fee of $3 a month.
Further has two-tiered investing options for you to choose from. You can invest in a variety of stocks, bonds, exchange traded funds, mutual funds and more.
You can invest any excess over $1,000 into a variety of mutual funds. It is an ideal choice for those looking for a simple yet effective investment strategy, as this plan will allow you to manage your investments with confidence and ease. You can invest any excess over $11,000 into a wider range of mutual funds, stocks, bonds, and other investment classes. It can help you increase your portfolio’s long-term growth potential. This is offered through a broker account. A variety of investment options can be found in the Charles Schwab account.
Further charges an additional $18 annual fee for investing if you opt for one or both types of investment accounts. When choosing which type of account is best for you, consider additional fees such as this annual fee.
Further is on the list because of their competitive rates on the cash accounts. They offer a range of other services that make them a great choice for those looking to get the most out of their money. If you choose to invest, the fees and balance limitations push me to recommend a different provider.
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7. DCU Credit Union
Digital Federal Credit Union’s The account has no monthly fees and no minimum initial deposit. It has a competitive interest rate on your balance. The account has a card and unlimited check-writing. You can use the card to make purchases online or in person. It currently pays 0.20% on account balances up to $1,000, with higher rates moving up to 0.5% for balances of $100,000 or more.
DCU is available to consumers in the United States. No matter where members are located, DCU is committed to providing top-notch financial services.
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8. Affinity Federal Credit Union
There is no minimum deposit requirement for the Affinity Federal Credit Union HSA account. It’s a great way to save for medical expenses and plan for your future. There is no checking privileges with the account. The card can be used to make purchases or withdraw cash. You can fund the account with direct deposits. You can link your external bank accounts to the account for easier access. It is only available to residents of New Jersey and Connecticut. Military personnel, college students, and those with part-time jobs are exceptions.
Since most credit unions serve consumers who either live in a specific geographic location or work in a certain industry, it is best to check with institutions in your local area.
Learn more:
9. Northern Bank & Trust Company
The minimum balance is required to open the account at the Northern Bank and Trust Company. The Northern Bank and Trust Company has competitive interest rates on money in your account. There is no monthly service charge, but there is a closing fee. You have to pay this fee if you close your account within 90 days. As of September 1st, Up to 0.20% is paid on balances above $25,000. The rate is competitive.
The account holder can use a Mastercard and checks to pay for medical expenses. The IRS states that the account can be used to pay eligible medical expenses.
Learn more:
10. First American Bank
First American Bank has a basic HSA account with no minimum initial deposit and no monthly fees. You can access your account at any time with their free online banking services. The account has a mobile wallet and unlimited check-writing. The card has access to exclusive discounts and rewards programs.
If you have at least $2,000 in the checking portion of your account, you can invest in the basic account. Premium accounts require a minimum deposit of $5,000 and include additional features. There is a monthly fee for the mutual funds that can be invested in.
Learn more:
Compare Top HSA Accounts
| Fee For Cash Accounts | APY On Cash Balances | Fee for Investments | Min to Invest | Investment Platform | |
|---|---|---|---|---|---|
| 1. Lively | $0 | 0.01% | $24 annual fee for self-directed; 0.50% guided portfolio | $0 | TD Ameritrade |
| 2. Fidelity | $0 | 0.01% | $0 | $0 | Fidelity |
| 3. Bank of America | $2.50/mo | 0.03% – 0.07% | $0 | $1,000 | Mutual Funds |
| 4. HealthEquity | $0 | Varies | 0.03% admin + 0.05% advisory | $500 | Mutual Funds |
| 5. The HSA Authority | $0 | Varies | $36/yr | $1,000 | Mutual Funds |
| 6. Further | $1 – $4/mo | 0.05% – 0.70% | $18/year | $1,001 | Charles Schwab |
| 7. DCU | $0 | 0.20% – 0.50% | N/A | N/A | N/A |
| 8. Affinity Federal | $0 | 0.25% | N/A | N/A | N/A |
| 9. NBTC | $0 | 0.02% – 0.20% | N/A | N/A | N/A |
| 10. First American Bank | $0 | 0.01% – 0.15% | $2.95/mo | $2,000 | Mutual Funds |
What Is a Health Savings Account?
A health savings account is like a medical IRA. It’s an attractive option for anyone looking to save on their healthcare costs if they use an HSA. Contributions to the plan are tax deductible. Your contributions to the plan are exempt from federal income tax, making it even more attractive as a saving option. Tax-free withdrawals can be taken for qualified medical expenses. Whatever you don’t spend can be left in the account to either gain interest or be invested, the same way as with an IRA.
Making medical expenses tax-deductible is one of the advantages of HSAs. One of the most attractive advantages of an HSA is that you can use it to save for future medical expenses, such as retirement health care costs. A few of these benefits include:
- Contributions are made with pre-tax dollars, these savings can be invested and grow tax-free, and the withdrawals aren’t taxed as long as the money is used for healthcare expenses. It’s an attractive savings vehicle for healthcare costs in the long run.
- Even decades after the expense is incurred, you can withdraw from your account. Even when unexpected medical expenses arise, the flexibility of withdrawals allows you to use your funds as needed. If you pay ordinary income tax, you can pull from an HSA for any purpose after age 65. You can use the funds to cover medical expenses and other costs during your retirement years, if you choose to do so. You can leave your money to grow as long as you want, because there are no minimum distributions. It can be beneficial for people who want to save for retirement but also want to leave an inheritance for family members.
- High earners are sometimes phased out of other tax-advantaged accounts, but they don’t have any income limits. People of all income levels can take advantage of the benefits.
- You can choose your own provider with the ability to shop around with any bank or broker. It’s important to compare costs, investment options, and customer service ratings when selecting an HSA provider.
- A catch-up contribution is an additional $1,000 a year for those 55 and over. Those over the age of 55 can use the extra contribution to reach their retirement goals faster.
That said, health savings accounts don’t come without disadvantages:
- Individuals with a high deductible health plan are the only ones who can contribute. Anyone who enrolls in a HDHP and is not a dependent of someone else’s tax return may be able to open an HSA. You are barred from an investment vehicle if you don’t have this. Don’t miss out on the chance to make a lot of money.
- You have to use the money for health care expenses, unless you are over the age of 65. If you don’t, you’re hit with a 20% penalty. It is important to be aware of the rules because the penalty can affect your retirement savings. Fortunately, the IRS definition of qualified expenses is pretty generous. The recent CARES Act expanded the list to provide relief for COVID-19. Grants and loans for small businesses and families, as well as additional unemployment benefits, have been provided by the CARES Act.
What Are the Best Places to Open an HSA?
Many institutions offer health savings accounts. Individuals can set aside money for medical expenses in these accounts. The decision can be difficult due to the different features of each bank. Understanding the features of each bank can help you decide which one is right for you. It is possible to narrow your options based on whether you are looking for an investment account or an interest-bearing account. You can begin comparing the different options available to find the best fit for your needs once you know what type of account you’re looking for.
HSA Providers can also be referred to as “HSA Administrators,” or “HSA Custodians.” All of them are IRS-approved institutions that offer health savings accounts. It’s important to make sure that the institution you choose is IRS approved and that the account you choose is best suited for your financial needs.
Banks and Credit Unions
Health savings accounts are offered by most banks and credit unions. Medical expenses that are not covered by insurance can be paid for using these accounts. These are the most popular choices for interest-bearing accounts.
Credit unions with high interest and no monthly fees are more likely to be found between the two. If your current bank offers an HSA account, you can keep all your accounts in one place. It may take several days for the funds to be transferred from your current account to the new one.
Investment Brokers
While credit unions offer interest-bearing accounts and banks offer both interest-bearing and investment accounts (mostly as a mutual fund), investment brokers provide the widest range of options on the investing front.
With a brokerage, you can engage in self-directed investing in just about any asset class you want, giving you full control of your HSA investment. You can work with a financial advisor to make informed decisions about your investments.
If you go this route, make sure the broker offers the same options as banks and credit unions. You should always research the broker and read reviews from other users. An easy process to withdraw money to cover healthcare expenses is what you want. Managing healthcare costs can be difficult if you don’t have the right account setup and access to funds.
Other HSA Providers
There are also providers that offer hybrid accounts. You can invest and grow your savings with these hybrid accounts. You will get a checking/cash account with these health savings administrators.
It is necessary to transfer funds back to the checking account. It is important to make sure the funds are transferred in a timely manner so that medical bills can be paid on time.
What to Look for in an HSA Provider
There are a few key aspects to consider when shopping for a health savings account:
1. Access to Your HSA
Easy access to your funds is offered by the best companies. Excellent customer service is provided to ensure you get the most out of your financial experience.
The account should include a few checks and a card that can be used to pay a qualified medical expense. When choosing which account is right for you, it is important to consider the fees associated with the account.
You can make a one-time or recurring online transfer from your HSA to your personal checking or savings account in order to reimburse yourself for out-of-pocket expenses. You don’t have to submit a claim form to access the funds.
2. Minimal HSA Fees
The very best providers don’t have any fees for individual accounts. They are an attractive option for people looking to invest in their long-term health care savings without paying unnecessary fees.
A lot of companies impose various fees, including an activity or a monthly fixed fee. When choosing a company to manage an HSA, it is important to consider all of the fees. If you do choose that company, make sure you have a good reason for doing so.
3. Opening Deposit and HSA Balance Requirements
The opening of any other type of account is more complicated than opening an HSA account. Once your account is opened, you can make contributions to your account and take advantage of the tax savings. You need to provide basic information, complete forms specific to the provider, and make an opening deposit. Your account will be up and running once youTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkiaTrademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia,Trademarkia
The opening deposit can be as little as $50 or $100. This helps ensure that you will be able to make regular contributions to your savings. You will need to check it because it varies from one administrator to another. Some states may impose a tax on HSAs, so you should check with your state.
You will want to understand minimum balance requirements. To keep your account in good standing, you need to read the fine print carefully. If your account balance is high enough, some administrators will waive fees if you invest your funds instead of keeping it as interest-bearing cash. For example, they may offer a bonus in the form of cash or additional interest on deposits.
Understanding the nuances can help you choose the best account. To ensure you are getting the most out of your money, research the fees associated with each account.
4. HSA Investment Opportunities
This goes back to the nature of an IRA. The flexibility to save funds on a tax-advantaged basis for qualified medical expenses now and in the future is provided by an HSA.
Any unused money in the account can be left to grow. You want to be able to put that money to work since it is a tax-advantaged investment vehicle. You can invest your funds in a variety of options, such as mutual funds, stocks, bonds, and Exchange Traded Funds.
The account should be interest-bearing. The account holder should be able to make the most of their savings with features such as investment options and debit card access.
You will want to compare the interest rates being offered for these types of cash accounts. Minimum balance requirements and transaction fees are some of the fees that may be associated with these accounts.
Depending on your age and health status, you may be interested in more aggressive investments. When choosing an investment strategy, it’s important to consider your risk tolerance. You will want to compare what asset classes are available to you and how easy it is to re-balance them. Fees associated with each account can have a significant impact on your returns.
You can open an investment account with a bank, but an investment broker will give you the most flexibility if you are interested in self-directed investing.
Interest-Bearing Account vs. Investment Account
Which one should you choose? It really comes down to two questions:
- What amount of money do you intend to give to the plan each year? I want to learn how I can maximize my contributions.
- In a typical year, how much money do you expect to withdraw for medical expenses? It’s important to budget for these medical expenses as they can add up quickly. (I recommend you review your out-of-pocket medical expenses over the past several years to get an idea.)
Is it better to keep your money in an investment account or an interest-bearing account? It’s important to remember that both types of accounts have their advantages and disadvantages, so be sure to do your research before making any decisions.
Investment HSA Accounts:
If you don’t anticipate regular withdrawals, you can expect the account to grow to a substantial balance over time. This growth can be a great way to save for future health care costs and the tax advantages give even more incentive to contribute.
If that is the case, you might prefer an investment account. It’s important to research the different types of accounts and their features to find the best one for you.
You can use this type of HSA to invest in stocks, bonds, mutual funds, exchange-traded funds, or any other investment allowable under the plan.
If you are years away from retirement, this will be even more important. It’s important to start saving now because compound interest can help you reach your retirement goals faster.
Once you reach 65, you won’t be able to make contributions to an HSA. If you build up the account between now and then, you can use it to cover medical expenses in retirement. Medical expenses in retirement can be costly, so it is wise to plan ahead.
Interest-Bearing HSA Accounts:
If you have high out-of-pocket medical expenses that will challenge the annual contribution limit, you would be better served with an interest-bearing account. If your health plan meets the IRS requirements, you can consider a Health Savings Account as an alternative to an interest-bearing account.
It won’t earn as much growth as an investment account, but it will offer the same level of safety. That will make sure your money is available when you need it. You can make sure your account is in good standing if you stay up-to-date with the regulations.
Opening a Health Savings Account with an Investment Broker
Brokerage firms are more likely to impose a minimum initial deposit into the account, and to charge fees. You have to consider the fees against the potential investment performance of your account. Before making a decision, it is important to understand the differences between the account options.
There are restrictions on investment options within the account. It is important to remember that the contributions are not insured or guaranteed by the FDIC, so be sure to do your research before investing. Some investments may be made available in the account. Before investing, it is important to understand the restrictions and parameters that a broker may have in place.
If they have no restrictions, you may want to stick with the conservative side of the risk spectrum. When choosing how to invest in this account, you should consider your own comfort level with the risk associated with investments. A sudden need for funds to cover a major health event can happen at any time. To reduce stress and worry, it is important to be prepared for unexpected events.
That makes a strong case for emphasizing better-behaved investment options, like high-dividend stocks and index funds. This type of account may not be suitable for more speculative investments.
Some of the money should be held in a cash-type account if you choose an investment account. It’s important to consider your long-term financial goals, but having access to emergency funds can offer peace of mind. Sometimes the need for healthcare occurs suddenly. When it’s needed most, having a plan in place that ensures access to quality healthcare is the best way to prepare for the unexpected.
You don’t want to be caught in a situation where you need to sell investments to cover medical expenses. If you find yourself in this situation, it’s best to have a plan in place. The sale will lock in your losses if the expenses coincide with a decline in the value of your investments. Before losses become too large, it is important to watch the market closely and consider selling.
The first purpose of an HSA is to cover your medical costs. You can use your HSA to save for future medical expenses, making it a great long-term investment. The investment angle and additional tax benefit are nice, but they are only one part of the equation. I want to make a good financial decision.
Find the Best Health Savings Account for You
As you can see from the list above, there are a lot of options when it comes to the best Health Savings Accounts. While giving you the flexibility to use your funds in a variety of ways, HSAs offer a great way to save money for qualified medical expenses.
As health insurance and out-of-pocket medical bills rise, it is becoming more important. It’s important to have a plan in place to make sure medical costs are covered. Major shifts in the tax code were ushered in by the changes that took place with the Tax Cuts and Jobs Act. The way in which individuals and businesses plan their finances and structure their operations have been influenced by these changes.
The standard deduction has doubled. Deductibles may no longer be necessary for many taxpayers in order to reduce their tax bill. For single people, the standard deduction is $12,550 and for married people, it’s $25,100. The standard deduction can change from year to year. Less people will be able to claim expenses on their tax returns as a result of the increase in thresholds. Medical costs are included. It’s important to factor in the costs of living in a new city, such as housing, transportation, and food. That is where HSAs can help. Tax advantages that can help people save for medical expenses can be a great tool for managing health care costs.
You will get a tax deduction for your annual contribution to the account, but it will also make any expenses paid out of the account tax-free. The money in the account can be used for medical expenses throughout the year, without having to worry about taxes. If you can, itemizing the expenses on your tax return will be even better.
Frequently Asked Questions
Do Banks and Credit Unions Offer HSAs?
Both banks and credit unions routinely offer Health Savings Accounts. Most of the time, a bank or credit union will set up your account using a savings account or money market account. The funds you save in your account can be used for qualified medical expenses. Both will be liquid and interest-bearing. Cash accounts are often referred to as checking or savings accounts.
If you want to be an active user of your account, you should choose banks and credit unions. Adding online banking and customer support to your account will make it easier to manage it. The funds you deposit into your account will be available as needed. When dealing with local healthcare providers, opening an account through your local bank may be more convenient than using a remote investment broker. You may be able to take advantage of additional services offered by your local bank.
The highest rates on deposit accounts are likely to be paid by the bank or credit union that pays the highest interest on the HSA account. The rates are usually lower than the market rate.
But it’s important to remember that an HSA is a special-purpose account, and the interest rate of return is, at best, a secondary consideration. That will be true if you use the account to pay medical expenses.
Can I Use my HSA Funds for Non-Health Expenses?
Any payments made from your account must be limited to qualified medical expenses. In case of an audit by the IRS, you should save your receipts and other records.
If funds are disbursed for other purposes, they will be subject to an early withdrawal penalty. If you use your HSA to pay for a prescription, then include other non-medical purchases or take cash back, the payment over and above the cost of the prescription itself will be taxed. It is important to keep track of your transactions and receipts so that you can accurately report your income on your tax return.
Are HSA Accounts Worth It?
If you are healthy and want to save for a future qualified medical expense, an HSA is worth it. It is possible to save for future medical expenses while also providing a tax advantage in the present.
It could be a great way to plan for a prosperous future. It could give you peace of mind that your future is secure. After retirement, the money in your HSA can be used to offset the cost of medical treatments so you can hold onto your hard-earned savings. You can use the funds to pay for qualified medical expenses for your spouse and dependents.
Is Having Two HSA Accounts Illegal?
There is no limit to how many accounts you have. You can open an account at any financial institution. You can’t exceed the annual maximum contributions across all of your accounts. The unused contributions will not be rolled over into the next year. You have to have an eligible health plan to make contributions to an HSA.
Health Savings Accounts Offer Tax-Sheltered Investing
Whatever you don’t spend in your HSA account can simply be carried forward and invested in much the same way as an IRA. You can hold the funds in safe, interest-bearing bank accounts, or with investment platforms that allow you to either invest in mutual funds or engage in self-directed investing in just about any asset class you want. It’s important to understand the fees associated with any investment accounts, as these can have an impact on your overall return.
It can build up like a retirement account if the investment income is tax-sheltered. This can be a great way to increase your savings without spending a lot of money. Between now and retirement, whatever you don’t spend out of the account can provide for you in your old age. It’s important to plan ahead so you have enough money for retirement.
There is no time like the present to take advantage of this major benefit that is available to anyone with an HDHP insurance plan. Setting aside funds for future health care costs can be done today and you can start saving money through an HSA account. It is possible to open an HSA in the best places. Make it happen by using this guide as a starting point. Start planning now by taking the first step.
