If you don’t have employer-sponsored health insurance, finding affordable health care can seem like an impossible task.
Yet millions of Americans survive without employer health benefits. That includes gig economy workers, small-business entrepreneurs, and others looking for self-employed health insurance options.
If you’re among them, one of the greatest tools in your arsenal is the health savings account, or HSA. But where should you open an account?
Best HSA Providers for Checking-Style Usage
Planning on simply using your HSA as a tax-friendly checking account to cover medical expenses? Below are several HSA administrators that offer accounts with no monthly fees and easy access to your funds at all times.
Note that checking accounts in your HSA are FDIC-insured like normal checking accounts. They usually allow you to pay directly for medical costs, as you pay out of pocket before your high-deductible health plan (HDHP) kicks in.
1. HSA Authority (Old National Bank)
Old National Bank brands its HSA program as the HSA Authority, and they offer a flexible and convenient HSA option.
They don’t charge monthly maintenance fees, and they waive the enrollment fee if you create your account online. They do charge an account closure fee of $25, but it’s a one-time fee and won’t affect you if you never close the account.
Once your account reaches $1,000, it becomes eligible to access investment options should you choose to invest some or all of your funds. If you opt in for investing, your account becomes subject to a $36 annual fee.
The HSA Authority offers flexible, easy access to your funds. They provide you with a debit card; checks; and full online banking, including bill pay, account-to-account transfers, and mobile deposits.
They even pay a little interest on a tiered schedule based on your account balance. All in all, it makes for a great option if you primarily plan to use your HSA as a medical checking account.
Another great option for checking-style HSA usage is HealthEquity. They charge a monthly maintenance fee of $3.95, but they waive it if you maintain an account balance of at least $2,500.
Other basic account fees include an excess contribution refund fee of $20 — which you won’t incur as long you keep your contributions within the legal limit — and an account closure fee of $25 if you ever decide to close it.
HealthEquity also offers an investing option, with your choice of roughly two dozen Vanguard mutual funds. If you invest money in them, HealthEquity imposes a small annual fee of $0.33 for every $1,000 invested (0.033% of assets under management, or AUM).
HealthEquity pays up to 1.5% interest on a tiered system based on your balance and account type. As for access to your funds, HealthEquity makes it easy with a debit card, checks, and a full online banking suite.
Best HSA Administrators for Investing-Style Usage
If you’re looking to capitalize on your HSA’s tax benefits to invest money more like a Roth IRA and grow it tax-free, the options get more nuanced. Given the way retirement has changed over the last generation, you might consider investing at least some of your HSA account in index funds or other equities.
Here are some of the best health savings account providers on the market that combine the traditional checking-style HSA usage with a multitude of investment options, including money market accounts, to create a stable floor in your HSA to cover your deductible.
Fidelity is a broker, and you get full access to all investments with their HSA, just like a normal brokerage account.
They don’t charge monthly maintenance fees or account open or closure fees. Like their competitors in the online brokerage world, Fidelity no longer charges commissions on trades.
Unfortunately, Fidelity HSA does charge an annual fee, which can run as high as $48. But that’s the only fee they impose, and there’s no minimum balance to access their full suite of investing options.
They make it easy to access funds with a debit card, online banking, and checks. Fidelity’s HSA makes a well-rounded, affordable, feature-rich option for account holders looking to invest, not just save and spend.
4. Lively HSA
Lively’s health savings account partners with TD Ameritrade to power its investing platform, giving account holders full control over their investment choices.
There’s no minimum balance to access a brokerage-style investment account, and TD Ameritrade no longer charges commissions on trades, making investing both cheap and flexible.
Although Lively doesn’t charge a monthly or annual fee to employees who participate in HSA plans, they do charge a $2.95 monthly fee to employers. If you’re self-employed, prepare to cover that monthly fee yourself, but it remains extremely affordable.
Lively provides a debit card to cover expenses, plus full online banking access to your accounts to transfer funds easily. They don’t offer checks, but in the 21st century, checks are a relic of the past anyway.
5. HSA Bank
Another HSA administrator that uses TD Ameritrade’s brokerage platform, HSA Bank offers low fees and high flexibility.
They charge $2.50 per month for the HSA itself, plus $3 to access the investing platform. But HSA Bank waives both fees if you maintain a minimum balance of $5,000. The only other fee they charge is a $25 account closure fee.
In addition to TD Ameritrade, HSA Bank offers an alternative investing option with more hands-on management through Devenir if you’re looking for more guidance. Devenir follows a robo-advising model emphasizing index fund ETFs, and they charge accordingly, in the form of an annual fee of 0.45% of your AUM.
HSA Bank offers great ease of access with a debit card, checks, and full online banking. To use the investing options, either through TD Ameritrade or Devenir, you must have a balance of at least $1,000.
6. Further HSA (Formerly Select Account)
Further HSA uses Charles Schwab’s brokerage platform to manage your trades and HSA investments. This works out great because Schwab no longer charges any commissions on U.S. equities.
Further HSA charges an $18 annual fee. Monthly maintenance fees vary by plan and range from $1 to $4 per month. The more expensive plans offer higher interest. Further HSA doesn’t charge enrollment fees, account closure fees, or excess contribution refund fees.
Be aware that they do have minimum balances for investing. At $1,000, you can invest in their pre-allotted investments. At $10,000, you have full access to a Schwab brokerage account to invest in whatever you like. That includes Schwab Intelligent Portfolios, their robo-advisor service.
Further HSA makes access easy with a debit card and online banking. It’s a great option for investors with a high HSA balance and costs as little as $30 per year.
Factors to Consider When Choosing an HSA
Not all health savings accounts are created equal. Different HSA administrators have different strengths and weaknesses, so you need to know what you want from an HSA to choose the one that’s best for you.
Health savings account holders fall into two camps: those who just want to use their HSA as a checking account to cover qualified medical expenses, and those who want to use their HSA as a tax-free vehicle to invest for long-term growth. The former have simpler needs and are therefore easier to please.
With that in mind, here are five factors to consider when choosing an HSA.
1. Ease of Access
The more you plan to withdraw money regularly from your HSA, the more important it is that you can do so easily.
Many HSA administrators offer debit cards, checks, online banking, and even online bill pay, similar to a checking account. Keep ease of access in mind, especially if you plan to use your HSA more like a checking account than a brokerage account.
2. Investment Options
Each HSA administrator offers different investment options. They range from extremely limited to the complete selection of investments available through a regular brokerage account.
Again, this matters more or less depending on how you plan to use your HSA.
3. Minimum Balance Requirements
Some HSA administrators impose minimum balance requirements on account holders. Failing to meet those requirements could result in monthly maintenance fees, restricted investment options, or other penalties and limitations.
Make sure you understand clearly the minimum balance requirements, if any, for an HSA administrator before opening an account.
Different HSA administrators assess different fee schedules. Frequent fees include:
- Monthly maintenance fees
- Annual fees
- Trade commission fees
- Excess contribution correction fees
- Account enrollment fees
- Account closing fees
- Human phone service fees
Administrators can also get creative and come up with other fees to confuse and cost you. Read the fine print, and choose an administrator that fits your HSA needs with minimal — or even zero — applicable fees.
5. Interest Rates
Some HSAs are structured more like checking or savings accounts than brokerage accounts. They often pay interest on the funds you hold in them.
In most cases, the interest isn’t high enough to write home about. And account holders must be careful to balance any interest offers against fees. For example, if an account charges a $5 monthly maintenance fee and pays 0.2% interest, then an account with a $3,000 balance would earn $6 in annual interest but lose $60 annually to fees.
Contrast that with an account that doesn’t charge monthly fees and doesn’t pay interest. Often, you’re better off avoiding fees rather than chasing interest in HSA accounts.
Health savings accounts offer incredible and unique tax benefits and increasing flexibility for account holders. The best HSA administrators make it easy to access funds and pay medical bills, even as you invest for tax-free growth on the brokerage side of your account.
If you’re new to the idea of HSAs, aim to keep a portion of your HSA balance in cash, rather than investing it all in equities. You might need to access it at a moment’s notice to pay a medical bill.
And remember, your HSA funds won’t go to waste in retirement. You’ll have plenty of health care bills, so consider using your HSA more creatively as another tax-sheltered retirement account.