The Best Health Savings Account Administrators in 2023 – A Guide to HSA Banks
If you’re like most people, fully funding a health savings account HSA) is the single most beneficial thing you can do to minimize taxes and limit the impact of high out-of-pocket health expenses.
This is because of the HSA’s triple tax benefit:
- Pre-tax contributions
- Tax-deferred growth
- Tax-free withdrawals to pay qualified medical expenses
The net effect is that HSAs allow you to pay medical expenses with tax-free dollars. And any surplus funds in your HSA that you don’t need for medical bills are there to supplement your retirement income, like an additional IRA.
HSA adoption has surged in recent years, with the number of HSA accounts exceeding 30 million and total HSA assets reaching a staggering $82 billion.
But to get the most value out of an HSA, you need to choose the right HSA administrator to act as custodian for your HSA accounts. Especially if you want to take advantage of the right to invest your HSA account funds to get a better return on your investment.
In this comprehensive guide, we will delve into some of the top health savings account administrators on the market, evaluating their features, benefits, and investment options. So you can make an informed decision and harness the full potential of an HSA to help secure your financial health.
|HSA Administrators||Opening Fee||Min Opening Balance||Monthly Fee||Annual Fee||Investment Options||Fund Access||Comments|
|Avidia Bank||None||$10 ($1,000 to negin investing HSA funds)||$2.50/month "investment fee" (Waived on balances > $3,000)||None||Checking Accounts, or choose from over 30 mutual funds in a variety of categories||Checkbook &|
|Good, inexpensive option for small businesses|
|Optum Bank||Not disclosed||$25 ($1,000 for investing)||$2.75/month "investment fee" (Waived whenn balances > $3,000)||None||Vanguard mutual funds, target date funds, and a digital management option through Betterment||Checkbook &|
Debit Card. Digital wallet option
|Good investment options, but pricey. Better for larger accounts.|
|HSA Bank||None||None||$2.25, waived on balances > $3,000 ($0.75 paper statement fee)||None||TD Ameritrade self-directed brokerage account for stocks, bonds, ETFs and thousands of mutual funds. Direct offerings from Vanguard, Fidelity, T. Rowe Price and Cohen & Steers||Checkbook &|
|Good for self-directed HSA investors who want access to a lot of funds from good investment companies.|
|Lively||None||None||None for individuals $2.95/month per employee. $50 flat fee for 15 employees or fewer.||None||Excellent Brokerage window, with over 13,000 funds, ETFs, stocks and bonds available via Schwab.||Debit Card||Best all around, except for small employers|
|Fidelity||None||None||None||None||Fidelity brokerage window with hundreds of mutual funds and thousands of securities to choose from||Debit Card||Great for employers. Best return on cash holdings.|
|Health Equity||None||None||Waived on balances over $2,500. Employers pay $2.75 per employee per month. 0.05% fee on investment, capped at $15 per month.||None||Solid lineup of 29 low-cost Vanguard mutual funds. Easy to use. Emphasis is on index funds and "target date: funds based on your estimated retirement date.||Debit Card. Check reimbursement||Good for novice investors|
To be eligible to contribute to an HSA, you must meet these criteria:
- You must enroll in a high deductible health plan (HDHP), as of the first day of the month
- You cannot be covered under another including TRICARE or Medicare Parts A and B
- You must not have accessed VA medical benefits in the previous 90 days
- You cannot be claimed as a dependent on another person’s tax return
- You must be a valid resident of the U.S. with a Social Security number.
What Does an HSA Administrator Do?
An HSA third party administrator or bank serves as a custodian of the assets in your health savings account.
They are responsible for processing contributions, managing investments, and ensuring your funds are available to you when you need them.
Third-party administrators also provide customer service support to account holders, helping them understand how to use their HSA funds and answering any questions they may have.
What to Look for in an HSA Administrator
When selecting an HSA TPA or bank, there are several factors to consider:
- Fees. Look for a provider that offers competitive fees. Some TPAs charge an annual fee, while others charge fees for each transaction. It is important to compare fees to ensure that you are getting the best value for your money.
- Investment options. Some TPAs offer investment options for HSA funds. If you are interested in investing your HSA funds, look for a provider that offers a range of investment options in many different categories with competitive fees.
- Customer service. Look for a provider that offers excellent customer service. You want to be able to reach a representative quickly if you have any questions or concerns.
- Ease of use. Look for a provider that offers an easy-to-use online platform. You should be able to access your account information and make transactions quickly and easily.
- Integration with other benefits. If you are using an HSA in conjunction with other benefits, such as a flexible spending account (FSA) or a health reimbursement arrangement (HRA), look for a provider that offers integration with these benefits. This will make it easier to manage your healthcare expenses.
- FDIC backing. If you keep some or all of your FDIC amounts in cash, you should consider the stability and strength of the financial institution, and what would happen to your money in the unlikely event the institution should fail.
Most HSA administrators will keep your cash deposits in an FDIC-insured bank, which provides protection of up to $250,000 per depositor against the risk of bank failures.
FDIC protection would not apply to money you’ve invested in stocks or mutual funds. Only on the cash you keep in FDIC-insured institutions.
The Best HSA Administrators in 2023
There are many HSA administrators to choose from, each with different fee structures and services. It’s important to compare and contrast each TPA to find the one that meets your specific needs.
Here are a few of the best options to consider:
BEST FOR NEW HSA INVESTORS: HSA Bank
With over 3 million HSA accounts and $10.7 billion in HSA assets, HSA bank is a leader and long-time innovator in the HSA and consumer directed health care industry.
HSA Bank is also known for its excellent customer service. So it makes a solid choice for people who are new to HSAs and to self-directed investing, or who are active users and frequent health care consumers.
On top of its best-in-class customer service team. HSA Bank offers a window to a full discount brokerage service via TD Ameritrade. This allows people who want to self-direct their investments within their HSA to purchase mutual funds, exchange traded funds (ETFs), stocks, bonds, and mutual funds.
The investment options are solid, and the fee structure is competitive.
If good customer service is important to you, or you’re worried about getting your questions answered, you can satisfy these concerns and still be confident you’re getting a solid all around value with HSA Bank and its TD Ameritrade broker partners.
BEST FOR FREQUENT HEALTHCARE CONSUMERS: Health Equity
If you go to the doctor a lot, or otherwise spend regularly on qualified medical expenses, Health Equity may be a good choice for you.
What sets Health Equity apart in this regard is the best-in-class functionality of its expense tracking features. Health Equity makes it easy to track your spending and check to see exactly how much you have in your HSA to spend at any moment.
Health Equity account holders receive a free debit card. You also have the option of writing checks against the account, and using their excellent, intuitive mobile app.
Health Equity’s fees are reasonable, with a 0.36% investment fee, which is capped at $10 per month.
For self-directed HSA investors, Health Equity offers a menu of mutual fund and ETF products from Vanguard funds, which is a month the leading investment companies in the world when it comes to low-cost, efficient mutual funds.
BEST FOR SAVERS AND CONSERVATIVE INVESTORS: Fidelity
We give Fidelity the top slot for cash savings because of the combination of no annual fees and a very solid money market investment option, which combines safety of capital with rates of return that are far superior to the basic cash rates available at most other HSA administrators.
As of this writing in late May, 2023, Fidelity HSA investors’ cash savings are earning 4.54% APR in a government money market fund. Many other competing HSA administrators are showing APRs of just 0.10% APR on cash savings. Which is just a passbook savings-level interest rate.
This isn’t a perfect apples-to-apples comparison: Money markets are considered extremely safe, but are not backed by the FDIC. Still the rates aren’t even close. The higher rate more than compensates for the lack of FDIC protection.
BEST FOR SMALL ACCOUNTS – Fidelity
We also give Fidelity the top slot for people with small accounts and new investors. Why? No annual fee, a great option for cash savings as mentioned above, and no account minimum. You can take advantage of the full range of Fidelity features even if you’ve just made your first monthly contribution to an HSA.
On top of those advantages, Fidelity provides people interested in investing for greater returns with full access to one of the best fund lineups in the world – including four index funds with a zero expense ratio.
For those who want to invest in individual stocks via a self-directed account, Fidelity offers fractional shares. That means if you want to buy a higher-priced stock, you don’t have to pay the full price for an entire share of common stock. You can buy a fraction of a share for your account.
This is important for people who make small, regular monthly contributions.
BEST FOR SMALL BUSINESSES – Fidelity
Fidelity has been a leader in employee benefits for generations. In addition to having an excellent HSA product, Fidelity also offers an outstanding 401(k) custodian service, and provides great support for small and large groups, solo 401(k)s, and many other business products and services.
Fidelity provides access to a great array of quality mutual funds including low-cost index funds for HSAs as well as 401(k)s, 403(b)s, SIMPLE IRAs, SEP IRAs, and much more.
They also have a sophisticated web portal that can provide employees with a seamless experience managing all these benefits with a single login.
What’s more, Fidelity has the resources to easily scale their services for employers of any size.
BEST ALL AROUND: Lively
Lively combines very low fees, a wide choice of investment options, and an easy-to-use, intuitive website and portal, which makes it a great all-around choice for any HSA user who wants to take things to the next level.
Lively prides itself on having no hidden fees: Everything is up front. As of this writing in late May 2023, individuals pay no fees to open and keep an HSA account open with Lively.
Customers receive a free debit card they can use to pay qualified medical expenses.
Customers receive access to over 13,000 different mutual funds, stocks, bonds, CDs, and other investment products through Schwab, which is known for its low fees and efficiency.
There’s an annual fee of $24 to use the Schwab brokerage window, but this fee is waived if your balance is $3,000 or more.
There are commissions to pay for trading some investment products. Not huge, but big enough to cause drag for frequent traders.
But it’s an excellent choice if you concentrate on the Exchange Traded Funds (ETFs), which provide rock bottom expenses, instant diversification, and zero commissions or fees to transact.
Plus, unlike most other HSA administrators, Lively has no minimum account size to get started investing. You can start right away… though you should try to get your balance to $3,000 or more as soon as you can to make the $24 annual fee go away.
Cash holdings are held in an FDIC-insured, interest-bearing savings account. The rate is low, but your money is safe. Lively pays interest based on how much money you keep in your account. But even very small accounts receive interest, and you can maximize the interest you earF with just $10,000 in your account.
That’s less than two years’ worth of contributions for a family plan.
Those who want access to Lively’s “Guided Portfolio” service pay 0.50 percent per year.
Lively for Small Businesses
Lively is an excellent choice for individuals and families. They are also a good choice for small businesses with at least 16 employees. Businesses pay $2.95 per month per employee to maintain an HSA.
Lively is less competitive for smaller employers because they charge a minimum fee of $50. So if you have five employees, your effective monthly cost is $10 per employee. So very small businesses may be better off with a no-fee approach, such as Avidia Health.
Can I take advantage of an HSA while using a healthsharing plan?
Yes, but only with certain healthsharing plans. The HSA Secure plan, one of our most popular healthsharing plans, is designed to maintain eligibility for HSA contributions. HSA Secure is currently the only HSA-compatible health share plan on the national market today.
As a healthsharing organization, HSA Secure offers savings of up to 30% to 40% compared to the monthly premiums of an unsubsidized traditional health insurance policy.
As such, it’s especially popular for people in higher tax brackets who earn too much to qualify for a subsidy under the Affordable Care Act.
And unlike a traditional health insurance plan, health sharing organizations don’t restrict enrollments to open enrollment periods. And you don’t need a qualifying lifetime event. You can enroll in healthsharing plans like HSA Secure at any time.
To join HSA Secure, you must be a business owner or have documentable income from self employment.
How To Start an HSA
If you aren’t already enrolled in a high-deductible health plan, the first step is to join one. Click here to contact a Personal Benefits Manager at HSA For America.
We’ll make it very easy for you to verify your eligibility, explore your options, and make sure you can select the very best plan for your situation and budget.
Apply Online or by Mail
Once you’ve chosen a TPA that meets your needs, you can apply online with some companies or download an application to mail in with your initial deposit. Be sure to follow the instructions carefully to ensure that your application is processed quickly and efficiently.
HSA for America is an independent health insurance broker specializing in HSA-qualified plans for individuals and families. We are happy to provide our health insurance customers assistance in choosing the best HSA administrator to meet their needs.
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Disclaimer: All information on this website is relayed to the best of the Company's ability, but does not guarantee accuracy. Information may be out of date. The content provided on this site is intended for informational purposes only and does not guarantee price or coverage. This site is not intended as, and does not constitute, accounting, legal, tax, and/or other professional advice. Determination of actual price is subject to Carriers.