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, or if you have a high-deductible health plan (HDHP) that asks you to pay thousands out of pocket before coverage kicks in, one of the greatest tools in your arsenal is the health savings account, or HSA. But where should you open an account?
Best Health Savings Account Providers
These are the best HSA providers on the market right now. Each does at least one thing really well, whether it’s keeping fees to a minimum or offering an unusually wide range of investment options.
Our best overall pick offers the best value for the most potential users, in our estimation.
Best Overall: HSA Authority (Old National Bank)
HSA Authority is Old National Bank’s in-house HSA administrator. It’s a flexible and convenient HSA option for individual account holders and has several advantages that combine to nose it ahead of the other administrators on this list:
- No monthly maintenance fees
- No enrollment fee if you create your account online
- Invest in equities with a minimum balance of $1,000 — but the flat $36 annual fee is steep on low balances, so wait until you’ve accumulated $5,000 or more in investable assets
- Complimentary debit card and checks
- Full online and mobile banking access with free billpay and P2P transfers
- Competitive interest rates on a tiered schedule
Best Checking-Style HSA: HealthEquity
HealthEquity has the best checking-style HSA on the market. It has all the features you’d expect from a full-service checking account, except it’s designed for long-term appreciation. If you’re risk-averse or not particularly keen on investing your health savings in equities, this is a great choice.
That said, HealthEquity has a market investment option as well. Choose from roughly two dozen Vanguard mutual funds with tiny expense ratios. HealthEquity’s own investment management fee is microscopic: just $0.33 for every $1,000 invested, or 0.033% of assets under management.
Additional features:
- The monthly maintenance fee is waived with a balance above $2,500
- $25 account closure fee
- Up to 1.5% interest on eligible balances
- Free debit cards and checks
- Full online banking access
Best Hybrid HSA: Starship HSA
Starship HSA offers both a checking-style account and an investing brokerage account.
The checking-style account comes with a debit card, like most similar HSAs. Not only does it not cost you anything to maintain one of these accounts, but they even pay you interest if you maintain a balance over $2,000. At 0.04% APY, it hardly qualifies as a high-yield checking account, but it’s better than nothing.
The investment-style account costs $1 per month for balances under $5,000. For higher balances, they charge 0.35% annual percentage of your AUM. That’s high but not excessive and could be worth the cost with a thoughtful, disciplined investing strategy.
Additional features:
- No transaction fees
- No overdraft fees
- No “minor” hidden fees
- Mobile-friendly interface
Best for Zero Maintenance Fees: Fidelity
Fidelity HSA takes full advantage of its association with Fidelity’s powerful online brokerage platform. It comes with the same broad range of investment options you’d find in a taxable brokerage account, just in a tax-advantaged package. That’s great news if you’re an aggressive investor by nature and want to really put your HSA funds to work in the market.
Additional features:
- No monthly maintenance fees for personal HSAs — employer HSAs may carry fees
- No trading commissions
- No minimum balance required to invest
- Free debit card and checks
- Full online and mobile banking access
Best for Active Investors: Lively HSA
Lively’s health savings account uses TD Ameritrade to power its investing platform, giving account holders full control over their investment choices. That’s a big selling point for active investors who value TD Ameritrade’s robust charting and research tools. A run-of-the-mill robo-advisor, TD Ameritrade is not.
It gets better. There’s no minimum balance to access Lively’s TD Ameritrade-powered investment account. Nor does TD Ameritrade charge commissions on trades — making investing for your health and retirement both cheap and flexible.
Additional features:
- No monthly or annual fee to employees who participate in HSA plans
- $2.95 monthly fee (per user) to employers, including self-employed individuals
- Free debit card to cover expenses
- Full online banking access
- Earn interest on cash balances
Best Robo-Advisor: Further HSA (Formerly Select Account)
Further HSA uses another well-known online brokerage — Charles Schwab — to support HSA users looking to invest for the long haul.
With a balance of just $1,000, you’re set to invest in a preselected mix of asset allocationss. Or, deposit $10,000 to take advantage of Schwab’s powerful Intelligent Portfolios platform, one of the best robo-advisors in the business — and the best of any HSA on this list.
Additional features:
- No trading commissions on U.S. equities
- $18 annual fee plus monthly maintenance fees ranging from $1 to $4
- Competitive interest on eligible balances
- No enrollment fees, account closure fees, or excess contribution refund fees
- Debit card and online banking combo starts at $30/year
Methodology: How We Select the Best HSA Companies
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.
With that in mind, here are five factors to consider when choosing an HSA.
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.
Investment Options
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. They can choose from savings account-like HSAs that may or may not pay competitive interest rates on eligible balances. The latter need HSAs that work more like wealth managers — offering a selection of investments every bit as complete as what you’d get from a regular brokerage account.
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. All else being equal, we prefer HSAs with low or no minimums.
Ongoing and One-Time Fees
Different HSA administrators assess different fee schedules. Frequent fees include:
- Monthly maintenance fees
- Investment management 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.
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 Account FAQs
You have questions about health savings accounts. We have answers.
What Can You Use Your HSA Funds For?
Before age 65, you can use funds held in your HSA only for medical expenses. Don’t worry — that’s a very broad category that includes:
- Medical copays and coinsurance
- Prescription drug costs not covered by insurance
- Medical supplies, such as bandages
- Dental care
- Certain types of vision-related expenses, including eyeglasses
- Birth control and certain fertility expenses
- Hospice and long-term care expenses
- Mental health treatment
IRS Publication 502 has a much more comprehensive list of qualifying expenses. If you withdraw HSA funds for nonmedical expenses before age 65, you could face a 20% penalty in addition to taxes on any gains. Wait until you turn 65, however, and you can withdraw for nonmedical expenses with no penalty — just ordinary taxes.
What’s the Difference Between a HSA and a FSA?
HSAs and FSAs have different annual contribution limits and different rules about how you can use their funds. But perhaps the most important distinction is the timeframe. HSAs allow you to accumulate tax-deferred funds over years or decades without spending them, while FSAs are generally “use it or lose it” — you have to use a given year’s contributions within a few months after the year ends.
Separately, HSAs offer the option — depending on the provider — of growth-oriented investing, rather than simply holding funds in cash until they’re ready to be disbursed, as virtually all FSAs do. In this way, a HSA is more like a Roth IRA that enables funds to grow tax-free over time in index funds and other market-traded equities.
Should You Invest Your Entire HSA?
If you’re young and healthy and have savings elsewhere, you can feel comfortable investing your entire HSA. That said, you’ll want to be prepared to access your funds at a moment’s notice should you face a serious medical bill.
If you have ongoing medical needs that your high deductible health plan doesn’t cover, keep a portion of your HSA funds in cash at all times. That’ll save you the trouble and potential expense of selling equities to cover those bills.
How Much Do HSAs Cost?
Setting aside the hefty penalty for nonmedical withdrawals before age 65, HSAs generally charge ongoing account management fees. Individual equities held in the account may charge separate management fees as well, which aren’t within the HSA administrator’s direct control.
All told, these management fees shouldn’t amount to more than 1% of the total amount invested, annualized. That is, for every $1,000 invested, you’ll want to keep your fees under $10 per year.
This isn’t an ironclad rule. But it’s a helpful benchmark if you’re worried about paying more than you should for peace of mind.
How to Choose the Best Health Savings Account Provider
Health savings accounts offer incredible and unique tax benefits and increasing flexibility for account holders. But not all are created equal.
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. As you evaluate your choices, consider:
- Recurring HSA fees that you can’t avoid
- How easy it is to withdraw funds from your HSA
- Your HSA’s investment options (and whether you can invest your funds in equities at all)
- Hidden or “extra” fees, like trading commissions and account closure fees
- Interest paid on cash balances, if any
Finally, consider user-friendliness. You hopefully won’t have to log into your HSA account every day, but that doesn’t mean you shouldn’t choose a provider that’s easy to navigate. If nothing else, you’ll want those regular investment performance check-ins to be as efficient and painless as possible.
