Best HSA Accounts in 2020

Daniel Penzing
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What Is an HSA Account?

An HSA (Health Savings Account) is a medical savings account that works a lot like a normal savings account. It’s linked to a bank account and is backed by the same FDIC insurance that protects other federally insured bank accounts.

It’s primarily for health-related expenses. Funds in your account can be used to cover a wide range of medical expenses, from co-pays and prescriptions to dental work and vision insurance.

HSAs are also tax-sheltered. The money you deposit into them does not count towards your taxable income, and you can use your account funds to pay for your medical expenses tax-free.

Funds left in your account at the end of the year remain. You don’t have to pay any taxes on the capital gains earned in your account.

The one catch is that you’ll generally have to choose between a traditional or Roth HSA. You can fund your account with pre-tax income or after-tax income. Both offer their own advantages and disadvantages, which we’ll talk about in a minute.

So what are the HSA benefits?

Access to Tax-Deductible Medical Expenses

Compliance with medical expense flexible spending accounts.

What to Look For in an HSA Account?

When choosing an HSA Account, it’s important to make sure it meets all of your needs and will be easy to use. An HSA Account should reduce the need for an expense account or debit card in the sense that it should provide you with both a debit card to make purchases and a checkbook to pay any bills.

It should also provide you with online access to your account, as well as the ability to talk to an actual representative over the phone. Ideally, it should even provide you with online bill pay to make it easier to pay your bills on time, and all of this should be free of charge.

Another thing to look for in an HSA Account is a low draw down limit. Your HSA Account bank should set a low funding limit that they don’t extend too far. If you exceed this limit, you may find that you incur excess fees, so if you think you might exceed this threshold, choose an HSA Account with a low funding limit.

Comparing The Best HSA Accounts

A health savings account (HSA) is a special tax advantaged bank account offered by most banks to its customers. With an HSA, you put pre-tax funds into a bank account and use it to pay for certain health care expenses. In a way, an HSA can be thought of as a more pure version of an IRA or 401(k)…except that it’s used for health care expenses instead of retirement.

You can keep your HSA at any bank of your choice, and all the money put into it is completely free from federal income tax. Depending on your specific situation, you can also get some of the money coming into your HSA tax-free for use in other ways. Most employers contribute to their employees’ HSAs as well. In addition, depending on your age and health, you can contribute extra funds to your HSA at the end of the year as well.

With an HSA, you have complete control over what happens to the funds in the account. You can use the funds for any purpose you’d like, or you can keep it for health-related expenses. In the end, it’s your account, and what you do with the money is entirely up to you.

Lively

If you are interested in contributing to a tax-advantaged account, the Lively HSA account is the best option because it has some of the highest savings interest rates and best transparency on annual fees of all HSAs.

It also has one of the largest networks of doctors, pharmacies, and specialists. Lively promises to save you money on premiums from major health care providers by negotiating up to 5% off premiums and reducing your out-of-pocket costs.

No matter what your HSA needs may be, Lively is a great option.

Fidelity Investments

Not only has Fidelity Investments been ranked at the top of HSA providers time and time again, but they also provide a number of different investment choices for all of your HSA needs.

When you open up an Fidelity HSA account, you are immediately given the choice between three different types of investments.

The first and most traditional of these investments involves a regular mutual fund that allows you to invest in a number of different stocks and earn a minimum of 6% interest.

The second investment option is a limited investment fund made up of a variety of stocks. You should be able to make some excellent returns with this option depending on the market at the time.

The third and most progressive of these investments is made up of some of the top stocks and trades on the NASDAQ. This option is more volatile than the first two, but you have a high potential for returns as well.

All three of these investment options have been assigned a risk rating of one, which is a way to determine their suitability. As you become a better and more experienced investor, you may opt to move up the risk ladder and invest in a higher ranked option, but for beginners, this is a great way to get their feet wet and get an education in financial investment.

Besides the investment options, Fidelity also provides you with plenty of other perks and services.

HSA Bank

While we can't forecast where the IRS will stand on HSA bank accounts in 2020, we can confidently say, based on our experience, that we've never seen anything other than healthy growth for these accounts.

Preventative health is one of the fastest growing industries in healthcare today, and people are more aware of how having a solid health strategy is the best way to combat health issues before they start.

Health savings accounts are playing a huge role in this future of healthcare. The analytics of health spends are now being well collected, and providers are starting to understand how to manage them differently.

That is where the health savings account comes into play. The HSA has become the way that employers, insurers, and consumers are starting to handle this shift.

2019 was a big year for HSAs as the IRS clarified that consumers could now contribute to an HSA for 2018 if they met the January 1 of the next following year criteria. This change added a great deal of clarity to the HSA market in 2018 and will continue to do the same in 2019.

Before we get into our list of the best HSA accounts in 2020, let's first go over how HSAs work.

What is an HSA?

An account that allows you to save tax-free for qualified medical expenses.

HSA Authority

HSA Authority is the official site for information about the HSA plan administrator and mutual fund provider. This site covers all the bases to help compare, choose, and enroll in self-directed health care spending account plans for individual and family needs.

Optum Bank

Will also offer a Health Savings Account in New York State.

Optum Bank will also offer a Health Savings Account in New York State beginning in April of 2019. You can get maximum value out of an Optum Health Savings Account when using the HSA debit card at the more than 5,000 supermarkets accepting debit cards or any pharmacy inside of Target, CVS, Walgreens, or Walmart. HSA debit cards are also accepted at drug stores like Rite Aid and Kmart Pharmacy, at certain gas stations, and even at Walmart.

If you are looking for the best Health Savings Account (HSA) accounts, keep in mind that many banks and credit unions offer HSAs, but not all of those HSAs are created equal. Some account features are better than others and you should compare all of the features of all the different HSAs you are considering.

HSAs offer tax benefits as well as the opportunity to save for medical costs without the limitations of other medical savings accounts. You can bank with the same tax-advantaged HSA for the rest of your life, making it a great long-term investment. Learn more about HSA accounts and take advantage of everything these accounts have to offer.

Here are some of the most important features to look for when comparing HSA accounts in New York:

Using an HSA as an Investment Account

Health savings accounts ( HSAs) are similar to more traditional medical savings accounts in that they are both tax-advantaged savings or accounts used to save money for future medical and healthcare expenses. But unlike traditional medical savings accounts, HSAs do not have a life-expectancy limit. In fact, some of the best HSA accounts available let you keep funds open indefinitely.

Why Invest in an HSA?

Downsides to an HSA

Although the HSA is still a terrific idea, it’s worth pointing out a few small drawbacks. The first thing you should know about HSAs is that you can’t contribute to an HSA if you’re on Medicare or if you have health insurance that provides any type of significant coverage.

If you’re on Medicare, you may still be eligible to contribute to an HSA IF your income is not too high. Ask your financial planner to check on this finer point with you.

If you have health insurance that provides health, dental, and/or vision coverage, chances are you’re also not eligible for HSA contributions. You’ll probably have to end your health plan in order to be eligible.

Another potential drawback is that you can’t use your HSA to pay for any healthcare or dental expenses incurred before you sign up. If you don’t sign up, you’ll miss out on some free money.

Finally, under certain IRS rules, you’re allowed to contribute a certain amount (by December 31 of the following year) but you’re not actually required to take the money out until you retire (if you do retire before retirement age).