With the cost of healthcare continuing to surge nationwide, individuals and families are smart to look for new ways to stash money. Health savings accounts (HSAs) give applicants a tax-advantaged way to do just that, although you need to have an eligible health insurance plan to qualify.
How do HSAs work? In a nutshell, a health savings account lets you contribute money on a pre-tax basis, and your money gets the chance to grow tax-free until you use it for qualified healthcare expenses. If you’re eligible for a plan, you will face contribution limits each calendar year, although these limits tend to be generous. In 2021, individuals can contribute up to $3,600 in an HSA for self-only coverage, and families can contribute up to $7,200.
To be able to fund an HSA, you must have what the government considers a high-deductible health plan (HDHP), or a plan with a minimum deductible of $1,400 for individuals or $2,800 for families this year. Meanwhile, your plan must also meet a maximum out-of-pocket limit for the year, which is $7,000 for individuals and $14,000 for family plans in 2021.
If you believe saving for healthcare is important and you have an eligible health insurance plan, you should know that you can open a health savings account with any provider you want. Investopedia compared more than 15 companies who offer HSAs nationwide to find options with reasonable fees (or no fees), minimal requirements to get started, and plenty of smart investment options for your money.
The 7 Best Health Savings Account (HSA) Providers of 2021
HealthSavings Administrators: Best Overall
HealthSavings Administrators is our best overall due to the fact they let you invest in Vanguard funds with low expense ratios and no trading fees. HealthSavings Administrators also offers accounts with no minimum investment threshold, so every dollar you put in your HSA can be invested right away.
Invest your HSA funds in low-cost Vanguard funds with no minimum investment threshold
Get a debit card you can use for healthcare expenses
Average underlying fund fee of 0.14% for Vanguard fund options, which is better than competitors
Annual maintenance fee varies, but is usually $36 per year
Required annual investment fee of 0.25%
While HealthSavings Administrators was originally founded in 1996 as a medical savings account (MSA) provider, the company began focusing on health savings accounts in 2004 after the legislation that created HSAs was passed. These days the company focuses on offering HSAs exclusively, particularly accounts with some of the best and lowest-cost investment options available today.
We chose HealthSavings Administrators as our best option overall due to the fact they offer 43 low-cost Vanguard and Dimensional Funds options you can invest in with their HSAs. They don’t have a minimum account balance for your funds to be invested, and HealthSavings Administrators says their HSA balances are five times higher than competitors due to the fact that they tend to attract knowledgeable, cost-conscious customers.
You can open a health savings account with this provider online in less than 20 minutes and you’ll receive a debit card that lets you pay directly for eligible medical expenses from your account if you prefer. This industry pioneer also offers a wealth of educational materials, including videos and webinars, that can help you select the right combination of investments for your account.
Lively: Best for No Fees
Lively doesn't charge any fees to open or maintain a health savings account, and that includes no hidden fees. If you want an account where fees won’t eat away at your savings, then Lively is a solid option to consider.
No fees for their HSAs
Open and fund your account with ease and entirely online
Invest your HSA funds with TD Ameritrade
Lively offers a mobile app that lets you track your HSA funds on the go
Get a free debit card you can use to pay medical bills
Only one of Lively’s two investment solutions is free—the other has a 0.50% annual fee
It's a new company with only a few years of experience
Lively was just founded in 2016, so this HSA provider hasn’t been around that long. However, we chose Lively as best for no fees based on the fact that their HSAs don’t come with any account opening fees, maintenance fees, fund transfer fees, debit card fees, or hidden fees of any kind. Lively also gives you a debit card that is connected to your account, which lets you pay for medical expenses over the phone or in an office with the money being automatically debited from your HSA.
Lively is fully online and they also offer a mobile app that can help you track your HSA funds using your favorite device. You can also use the app to monitor your healthcare payments and keep track of your health insurance deductible. Lively also offers paperless account rollovers and trustee-to-trustee transfers of funds.
Lively offers two investment solutions for users to choose from. TD Ameritrade’s Self-Directed Brokerage Account is free to access, and Devenir’s Guided Portfolio incurs a 0.50% annual fee. Neither requires a minimum balance to invest your money. However, there is no minimum balance required to invest your money, so you can start small if you prefer.
HSA Authority: Best for Families
The best option for families is HSA Authority based on their wealth of online account management options and the fact that you can easily delegate financial tasks to other members through their online banking portal. Their online functionality makes it easy for two parents or partners to oversee HSA funds, make contributions, or pay medical bills for the entire family.
Superior online functions for families, such as shared account access, online bill pay, mobile deposit, text banking, and more
Receive a Visa debit card for medical bills
Easy to open and fund online
No investment options until you have at least $1,000 saved
$36 annual fee for investment oversight
Expense ratios among investment options vary
We chose HSA Authority as our best option for families for a few reasons, but it all starts with the fact that they offer so many ways to co-manage an HSA online. Their shared portal lets the main account holder delegate and share tasks with other members of the plan, and you can also benefit from online bill pay, text banking, mobile deposits, e-statements, and other web-based services.
The HSA Authority was founded quite recently, in 2004, but it’s important to know this HSA provider is actually part of Old National Bank, which has its own history that goes back to 1834. You don’t need a minimum balance amount to open an account with HSA Authority, but you should note that you’ll need to have at least $1,000 in your HSA to invest the money into underlying funds. In terms of their investment options, HSA Authority lets you invest in mutual funds through their investment partner, Devenir.
A $36 annual account management fee applies to your account, and you’ll earn only a nominal amount of interest on your money until you’re able to invest for the long term. Fortunately, health savings accounts with HSA Authority are easy to open and fund online, and you can add money to your account at any time thanks to their online banking and account transfer features. You’ll also get a Visa debit card you can use to pay medical bills directly from your HSA if you prefer.
HSA Bank: Best for No Minimum Balance Requirement
We chose HSA Bank based on the fact that you can open an account online in less than 10 minutes with no required minimum to get started. This means you can start saving any amount and you can easily fund your account online.
No minimum account balance to open an account
Option to invest your funds with TD Ameritrade or Devenir
No account management fees if you keep at least $3,000 in your HSA
Pay $2.50 monthly account management fee if your balance is below $3,000
$25 fee for closing your account
Minimum account balance of $1,000 required to invest your HSA funds
Investment fees vary
HSA Bank’s history goes back to 1913 when it began as State Bank of Howards Grove in Wisconsin. This was long before HSAs existed, so they operated as a community bank, offering traditional banking products. However the company has grown and changed its focus to HSAs, flexible spending accounts (FSAs), and other types of health reimbursement arrangements, and we chose them for our review as best for no minimum balance requirement.
Not only does HSA Bank offer flexible HSAs with no money required to get started, but they also offer a client assistance center that is open 24 hours a day. You should note, however, that there is a $2.50 monthly account management fee if your balance drops below $3,000.
With HSA Bank, you get the option to earn a fixed interest rate on your savings or invest your account into stocks, bonds, mutual funds, ETFs, and other investment options with Devenir or TD Ameritrade. However, you should keep in mind that you need a minimum balance of $1,000 to invest your HSA funds with this provider.
Fidelity: Best Investment Options
Fidelity allows you to invest your HSA money into Fidelity mutual funds and index funds. Fidelity even offers a handful of fund options that are only available to clients with a Fidelity HSA, including Fidelity Health Savings Fund (FHLSX) and Fidelity Health Savings Index Fund (FHSNX).
Invest your HSA into high-quality, low-cost Fidelity mutual funds and index funds
No account minimums or account management fees
Receive a debit card you can use to pay for eligible healthcare expenses
Underlying fund expenses apply when you invest your HSA money, and these vary
Some Fidelity HSA investment options come with expense ratios as high as 1.03%
If you’re looking for an HSA provider who has been around for a while, you might be interested to know that Fidelity was founded in 1946. However, we chose Fidelity for our ranking not for their longevity, but based on the fact you can invest your HSA funds in so many low-cost options aimed at long-term growth.
Fidelity even offers two funds specifically for their HSA members, including Fidelity Health Savings Fund (FHLSX) and Fidelity Health Savings Index Fund (FHSNX). FHSNX, in particular, has an expense ratio of just 0.17%, which makes it an affordable option for long-term investors who want to grow their HSA balances over time. Plus, Fidelity lets you choose from other investments laid out on their website, including dozens of funds from Fidelity, JP Morgan, Wells Fargo, T. Rowe Price, and others.
Fidelity doesn’t charge any fees for account opening or account maintenance, nor do you have to pay any fees to use your associated debit card account. They also make it easy to open and fund your account online.
HealthEquity: Best Mobile App
While several HSA providers have their own mobile app, we chose HealthEquity for best mobile app based on the broad range of functions their app offers. Not only can you track your HSA funds and healthcare expenses using the HealthEquity app, but you can snap a photo of a healthcare bill and submit a claim using your mobile device.
Handy mobile app makes managing your healthcare expenses a breeze
Invest in low-cost Vanguard funds
No account minimums or account management fees
Nationally endorsed by The Dave Ramsey Show
Minimum balance requirement of $500 to invest; minimum of $2,000 to invest in mutual funds
Underlying investments have separate management fees that vary
While HealthEquity was founded in 2002, this provider now manages over $8.1 billion in custodial assets. With a focus on the future, HealthEquity has one of the most helpful healthcare apps in the business. With the HealthEquity app, you can keep track of your HSA balance and its growth and you can track your healthcare spending throughout the year. Best of all, you can take a picture of your medical bills and file a claim with a few clicks using your favorite mobile device.
Opening an account with HealthEquity is easy, and you can complete the entire process online in less than 15 minutes. You’ll also get a Visa debit card that you can use to pay medical expenses directly from your account, which can be helpful if you need to pay for a doctor’s visit or your co-pay amount.
HealthEquity HSAs also come with no account management fees, although their underlying investment options through Vanguard and other firms have separate investment fees that vary. Also, note that a minimum account balance of $2,000 is required to invest your HSA funds in mutual funds.
Further: Best for Employers
Further is the best HSA provider for employers based on the selection of accounts they help manage. Business owners, including owners of small firms, can turn to Further for help overseeing employer health savings accounts, flexible spending accounts, transportation reimbursement accounts (TRAs), dependent care assistance programs (DCAPs), and more.
Oversee several different employee reimbursement accounts and savings accounts in one place
Employees can grow their balance with interest rates as high as 0.70%
Investment options available with Charles Schwab once an account balance grows to $1,000 or more
Investment options have underlying fees that vary
Further charges an additional $18 per year for investment accounts
Further charges varying fees to employers who open accounts for their workers, and you have to call in for pricing
Further was founded in 1989 with the goal of streamlining the healthcare payment process. And while you can sign up for an individual or family HSA with Further, this provider stands out due to their wealth of healthcare account management options offered to employers.
With the Further HSA, businesses can expect streamlined administration on a single platform, and their employees can manage their HSA using their mobile device while enjoying the perks that come with a simplified claims and reimbursement process. The Further HSA can be offered as a standalone product to employees, and you can also pair it with other options like FSAs, transportation reimbursement accounts, dependent care assistance programs, and more in order to attract and retain the best talent.
Note that Further HSAs can earn a variable interest rate based on market conditions, but that employees can invest their funds with Charles Schwab once they have at least $1,000 in their HSA. An annual fee of $18 is required for investment accounts with Charles Schwab, and included investments come with their own fees that vary.
Finally, one downside to consider is the fact that Further HSA charges ongoing fees to employers who open their HSA and other reimbursement accounts, but that these fees vary and you have to call in to receive pricing.
What Is a Health Savings Account (HSA)?
A health savings account (HSA) is a popular tax-advantaged account consumers can use to save for eligible healthcare expenses. To be eligible to use an HSA, you must have a high-deductible health insurance plan (HDHP), or a plan with a minimum deductible of $1,400 for individuals or $2,800 for families in 2021. Your plan’s maximum out-of-pocket limit for the year also cannot exceed $6,900 for individuals and $13,800 for family plans.
With a health savings account, individuals can contribute up to $3,600 and families can contribute up to $7,200 in 2021. This money is saved on a pre-tax basis, meaning you can deduct contributions up to these limits on your tax return. The money is then able to grow tax-free over time, and you won’t pay taxes on distributions when you use the funds for eligible healthcare expenses.
How Does an HSA Differ From a Flexible Spending Account?
HSA funds are owned by the account holders, so they roll over from one year to the next and never expire. This makes them markedly different from flexible spending accounts (FSAs), which are often offered through employers.
Generally speaking, a flexible spending account is a savings account that lets employees contribute a portion of their earnings to pay for medical expenses and dental bills. FSA contributions are also tax-advantaged, meaning they are deducted from the user’s taxable income. If an employee doesn’t use the money in their FSA by the end of the plan year, their account balance will disappear unless their employer offers a grace period of up to two-and-a-half months.
Are HSAs Worth It?
If you have a high-deductible health insurance plan and you qualify for an HSA, then opening and funding an account is definitely worth it. Even if you do not invest your HSA funds and you only add money to your account as you need it, funneling contributions into an HSA before you pay medical bills can help you reduce your taxable income and save money on taxes during the year you contribute.
Also note that, once you reach the age of 65, you can withdraw money from your HSA penalty-free without having to use the funds for healthcare expenses. This can make an HSA account a smart alternative for backup retirement savings you can tap into if you don’t wind up using your money for healthcare expenses.
Do All HSAs Have Monthly Fees?
Some HSA providers offer accounts without an annual or monthly account management fee. However, all providers who let you invest your HSA funds charge investment fees, and often more than one type. For example, you might pay an annual fee to your HSA provider for oversight of the underlying investments in your HSA, but you will also pay expense ratios that vary depending on the investments you choose.
Is There a Penalty to Use HSA Funds for Non-Health Expenses?
If you need to withdraw the money from your HSA for non-medical expenses before the age of 65, you can do so. However, you can expect to fork over a lot of your proceeds right away. Specifically, you’ll have to pay a 20% penalty for withdrawing funds early as well as income taxes on the amounts you withdraw.
How We Chose the Best Health Savings Account (HSA) Providers
To find the best HSAs on the market today, Investopedia compared more than 15 of the top providers to see how they stack up. Criteria we considered included ongoing fees and account management costs, investment options, ease of opening an account, debit card access, and minimum account requirements. The HSA providers who made our ranking tend to stand out due to their lack of fees, their unique or lucrative investment options, or the technology they use.
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Healthcare.gov. "What are HDHPs and HSAs?" Accessed September 21, 2020.