Lively HSA Review: One of the Best HSA Providers for 2020
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One of the best ways to save money on taxes is with a Health Savings Account (HSA). These accounts pair with high-deductible health plans (HDHP) to save money pre-tax for medical needs. Among our favorite HSA providers is Lively.
If you’re in the market for a HSA, this Lively HSA review will share why this fee-free provider is worth considering to maximize savings.
Lively HSA Review: One of the Best HSA Providers?
There are numerous HSA providers you can choose from to pair with your HDHP. If you have an HDHP through your employer, they may offer an HSA. Unfortunately, not every employer offers HSA plans for their employees.
In that case, you need to choose an independent HSA provider. That causes one significant problem – many HSA providers charge fees. These fees can include any of the following:
- Account termination fees
- Administrative fees
- Debit card fee
- Funds transfer fees
- Monthly maintenance fees
- Overdraft fees
Avoiding providers with excessive fees is an excellent way to make your savings more impactful. This is not something you need to worry about with Lively HSA. Lively HSA offers a fee-free way to save money for healthcare needs and reduce your taxes.
Our Lively HSA review will cover why they’re one of the best HSA providers to select, and how you can invest your savings with their platform.
Who is Eligible to Open a Lively HSA?
To open a Lively HSA, you must meet one of two qualifications:
- You must currently have an HDHP that lets you contribute funds
- You have an HSA that already has funds in it
If you have an HDHP through your employer, or independently, you can open an account with Lively HSA. If you already have an HSA, you can rollover those funds to Lively during your enrollment period.
What if you already have an HSA through your employer?
If your employer already offers an HSA option, it’s still possible to choose an independent provider. You will need to work with your employer to ensure they can still make contributions to an independent provider like Lively.
Assuming they do, you can open an HSA with Lively or any other provider. In every other case, as long as you have an HDHP, you can open an HSA and deposit funds.
Lively HSA Investment Options
Investing HSA monies in the stock market is one of the top benefits of having an HSA. This allows you to take advantage of tax deductibility of deposits, plus grow your money.
If you don’t invest your money, you can let your funds sit in cash and earn a nominal interest rate. Assuming you want to grow your funds beyond that rate, investing them is the route to take.
Lively HSA lets you invest your funds through the TD Ameritrade platform. This service is free of charge from Lively as they integrate with the TD Ameritrade platform as a service to clients.
There is no minimum balance to invest your funds with Lively. You can invest your funds in anything TD Ameritrade offers, but you will pay the normal trading fees assessed by the investment firm.
There are two ways to avoid or mitigate these fees:
- Invest in one of the 300+ commission-free Exchange-Traded Funds (ETFs) they offer
- Invest in one of their 13,000+ available mutual funds, of which 2,000+ are no-transaction-fee funds
- Do your stock trades online to take advantage of $0 commissions
You can also invest in stocks or any other investment vehicle TD Ameritrade offers.
This service is a huge plus for people wanting to grow the money in their HSAs. However, there is one drawback to keep in mind.
It takes several days for funds to transfer from Lively HSA to TD Ameritrade. This is not an issue with other HSA providers.
This may not be a big issue for most, but it is important to keep in mind if you plan to actively invest on a regular basis.
Lively HSA Interest Rates
As previously noted, you can choose to hold your funds in cash with Lively HSA. These funds are FDIC insured, just like you have at your local bank.
Below are the Lively HSA interest rates on cash:
- Under $2,500 = .25 percent
- $2,500 – $4,999 = .35 percent
- $5,000 – $14,999 = .45 percent
- $15,000+ = .60 percent
You won’t get rich quick with the interest rates, but they beat savings accounts at virtually any local bank. Any earnings are tax deductible, making an HSA even more attractive.
Lively HSA Fees
Fees are an important consideration with any financial account. As discussed previously, Lively charges no fees to have an HSA. They used to charge a fee of $2.50 per month to invest with TD Ameritrade, but that has recently been removed.
You can open a free Lively HSA account and have no fees as an account holder. If you’re an employer and want to offer Lively to your employees, they do charge $2.95 per employee per month – this is to manage contributions and sync with your payroll.
However, if you’re an individual or family that opens a Lively account, you have no fees. The only fees you will pay is if you choose to invest your funds and incur charges from TD Ameritrade. Thankfully, there are even ways around those fees.
Commonly Asked Questions About Health Savings Accounts
HSAs are a vital tool to saving money on healthcare. They’re also a terrific option to help grow your wealth. Even if you don’t currently spend a lot on health needs, HSAs are worth considering. Below are some common questions people ask before opening an HSA.
Is an HSA a good investment?
Investing in the stock market does pose risk. You don’t have to invest your HSA funds in the stock market. Funds can also sit in cash to earn interest.
The key to remember with an HSA is its triple tax deductibility. Here is how an HSA has triple tax deductibility:
- Contributions are pre-tax
- Earnings are tax-free
- Withdrawals or payments for qualified medical expenses are tax-free
If you want to save money and reduce taxes, HSAs can be a great investment option to consider.
Can you lose money in an HSA?
Whenever you invest money in the stock market, it’s possible to lose money. So, yes, you can lose money in an HSA. If you choose to keep your funds in cash, you don’t lose money – unless you pick a provider that charges fees.
How much can I contribute to my HSA?
The IRS sets limits for what you can contribute to an HSA each year. Below are the HSA contribution limits for the 2019 tax year:
- Individual – $3,450
- Family – $6,900
Remember, contributions are made pre-tax, so they help reduce your taxable base income.
Can I have two HSA accounts?
Yes, you can have two or more HSA accounts. In that sense, HSAs operate much like IRAs you have with different providers. You can have multiple HSA accounts, but that does not increase the amount you can contribute.
Lively HSA Review: Our Take
Lively is currently one of the best HSA providers available. The market space for independent HSA providers has grown significantly over the past few years, so competition is fierce.
Lively’s combination of no fees and investment options through TD Ameritrade make them a tough provider to overlook. If your employer offers an HSA, you may believe it’s not worth comparing your options. However, it’s worth looking at your current HSA fees and investment options to ensure you have the best possible fit for your needs.
If your current plan is high in fees or has limited investment options, consider opening an account with Lively HSA and get the same tax benefits you would through your employer’s plan.
What do you look for in choosing an HSA? How do you save money on your healthcare costs? Do you feel comfortable investing money you save for healthcare costs?
John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.
Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.
Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.
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