Healthcare costs present a huge financial challenge for many households. With a health savings account (HSA), you can pay for medical costs with pre-tax income. Unlike flexible spending accounts, you won’t forfeit unused funds. In fact, many HSAs have an investment option so your money can grow over time. 

Anyone who has a qualifying high-deductible health plan (HDHP) and isn’t eligible for Medicare or listed as a dependent on someone else’s tax returns can choose an HSA provider.

10 Best HSA Providers

• Lively
• Bank of America
• Health Equity
• First American Bank
• The HSA Authority
• Fidelity
• Further
• DCU Credit Union
• HealthSavings Administrators
• Northern Bank & Trust Company

1. Lively

Lively specializes in HSAs. They use TD Ameritrade as a broker, where your money earns between 0.25% APY and 0.60% APY on balances over $15,000. There are no trading fees on EFTs, options, and stocks. 

This account comes with a debt card to make paying you medical bills and handling prescription costs a breeze. There are no account maintenance or monthly fees. 

2. Bank of America

Bank of America’s HSA starts paying interest when your balance reaches $2,500. You can invest in mutual funds with just $1,000 in the account. 

You’ll get a debit card, but be aware that there’s a $2.50 monthly fee. 

3. HealthEquity

You can start investing funds in your HealthEquity HSA with a $500 account balance. This Utah-based company specializes in HSAs. You can chose to handle investing on your own, put it on auto-pilot, or use a HealthEquity advisor do the work for you.

4. First American Bank

You’ll get unlimited check-writing, mobile wallet, and a debit card with the basic HSA from First American Bank. You can choose to invest your balance in mutual funds, but you’ll pay a $4.95 per month fee. 

5. The HSA Authority

The HSA Authority from Old National Bank handles HSAs for the State of Indiana’s employees. They also serve HSA holders in all 50 states. You can invest in CDs or use the company’s mutual fund platform for $36 per year to help your money grow. There are no trade costs or investment load. 

6. Fidelity

Fidelity is one of the world’s largest investment brokers. You can choose from any type of investment. The account doesn’t have any maintenance fees, but you may pay fees depending on how you choose to invest your HSA balance. There are no commissions on EFTs, options, and stocks with Fidelity. 

7. Further

Further is a Charles Schwab Health Savings Brokerage Account that’s self-directed. When your HSA balance reaches $11,000, you can move $10,000 into the investment arm of the account. You can choose any investment on the Schwab platform, including bonds, mutual funds, and stocks. There are no trading fees for ETFs, options, or stocks. 

8. DCU Credit Union

You won’t pay monthly fees with DCU Credit Union’s HSA. The account offers a free debit card and unlimited check writing in addition to paying dividends on your cash balance. DCU Credit Union is based in Massachusetts, but you can get an account there if you live in the United States.

9. HealthSavings Administrators

Choose from a cash account with a debit card or an investment account. You can also open one of each and transfer funds between the two accounts as needed. Healthsavings Administrators offers mutual funds from Dimensional and Vanguard. 

10. Northern Bank & Trust Company

After making the initial $25 deposit required to open an HSA with Northern Bank & Trust Company, you’ll earn a decently high yield of 0.50% APY on your balance. You’ll get a free MasterCard debit card and checks to pay medical bills. There’s no mention of investment options on the Northern Bank & Trust Company website. 

Still have questions about Health Savings Accounts? FAQs

Choosing an HSA is a smart move if you have a high-deductible health plan that makes you eligible for this type of account. Be sure you understand which expenses are IRS-approved for HSA use to get the full benefit of owning this type of account. Here are some of the most frequently asked questions about HSAs:

What is an HSA?

A health savings account (HSA) works like other bank accounts, in that you can easily deposit and withdraw funds from the account as needed. When you make a deposit to your HSA, you won’t pay taxes on that money. If you use the money for a qualified medical expense in the future, you won’t pay taxes on the withdrawal, either. You can choose to keep your HSA funds in a cash account that may earn a small amount of interest, or invest them in mutual funds, bonds, stocks, or other investments. Your HSA grows tax-free, so this type of account is one of the most tax-friendly available, today. 

Even if you lose your job, start working for a different company, retire, or start your own business, you’ll keep your HSA. Some companies offering HDHPs contribute a certain amount of money to their employees’ HSAs, so ask your employer if they offer this benefit. 

What types of medical expenses can pay for with funds from my HSA?

You can use funds in your HSA to pay for many medical expenses that may not be covered by your health insurance. The IRS sets rules about which expenses you can pay for with your HSA.

Here are a few medical expenses not typically covered by health insurance that the IRS allows with an HSA:

• Chiropractor bills
• Eye exam, glasses, and contact lenses
• Expenses for a service animal or guide dog
• Hearing aids
• Medically necessary home improvements
• Long-term care services
• Medicare part A, B, or D premiums
• Lifetime care, including payments for future medical care
• Nursing services
• Oxygen
• Psychiatric care

What medical expenses aren’t allowed with an HSA?

While many medical expenses are included in the lengthy IRS list of HSA-eligible expenses, there are some medical bills that are specifically excluded from the list, including:

• Cosmetic surgery
• Diaper service
• Funeral expenses
• Hair removal
• Hair transplant
• Medications and drugs from other countries
• Nutritional supplements
• Teeth whitening

What’s the difference between an HSA and an FSA?

A flexible spending account (FSA), owned by your employer, allows you to make automatic pre-tax deposits from your paycheck into an account used exclusively for medical expenses. Unlike HSA funds, you can’t roll over the unused balance from one year to the next. Any funds leftover in your FSA are forfeited. 

You can change your contribution amounts at any time with an HSA, but with an FSA, your can only make a change during open enrollment, when you change employers, or if your family situation changes. 

If you lose your job, quit your job, or change employers, you may be able to keep your FSA through the end of the year through COBRA. Your HSA goes with you when you change jobs. 

Can I have an FSA and an HSA?

Most of the time, it’s not possible to have both an FSA and an HSA. If you have an HSA, you may be able to get a limited-purpose FSA (LPFSA) that you can use for dental and vision expenses. For people with high medical costs, this combination may work well to mitigate out-of-pocket expenses if it’s possible to contribute to an LPFSA after maxing out HSA contributions. 

Can anyone get an HSA?

No. You must have a high-deductible health plan (HDHP) to open and deposit money into an HSA. 

A HDHP, as defined by the IRS, must meet these qualifications:

• Deductible: $2,800 for a family or $1,400 for an individual 
• In-network out-of-pocket maximum: $13,800 for a family or $6,900 for an individual

To get an HSA you can’t be eligible for Medicare or be claimed as a dependent on anyone else’s tax return. 

What are the tax advantages of having an HSA? 

HSAs offer a triple tax advantage. You can make contributions to the account before you pay taxes on that income. You can earn interest and money from investments tax-free, and you can make withdrawals from your HSA for qualified medical expenses tax-free. 

What happens if I use money in my HSA account for something other than medical expenses?

If you are over the age of 65, you can use money in your HSA for anything without paying taxes. People under the age of 65 who use their HSA funds for nonmedical expenses must pay a 20% penalty and pay income taxes on the withdrawal. 

The Bottom Line

Opening an HSA is a smart way to manage healthcare costs using pre-tax income. If you can afford to do so, plan to contribute the maximum allowable amount to your HSA each year ($7,750 for a family and $3,850 for an individual in 2022). HSA owners over the age of 55 can make “catch up” contributions of an additional $1,000 per year. This is an ideal investment vehicle, and one of the only types of accounts that offer triple tax benefits. If you don’t use the funds in your account during the year, the money grows tax-free. 

Even if your health insurance has a high deductible, you can plan for unexpected medical expenses by making a set monthly contribution to your HSA. This type of account allows you to cover costs using funds from your HSA instead of struggling to pay medical bills out of your household account. Plus, you’ll get the tax benefits, even if you don’t itemize medical costs on your tax return.