{"id":4351,"date":"2024-10-07T12:03:15","date_gmt":"2024-10-07T12:03:15","guid":{"rendered":"https:\/\/smartspending.ai\/how-to-pick-a-health-savings-account\/"},"modified":"2024-10-06T21:22:47","modified_gmt":"2024-10-06T21:22:47","slug":"how-to-pick-a-health-savings-account","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=4351","title":{"rendered":"How to pick a health savings account"},"content":{"rendered":"
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As deductibles and out-of-pocket maximums rise on both employer-based and individual plans, Health Savings Accounts, better known as HSAs, are an excellent way to minimize the impact of those high direct costs.<\/p>\n

HSAs are similar to IRAs but for medical expenses instead of retirement savings.<\/p>\n

Contributions to an HSA reduce your taxable income 1:1. (For 2024 you can contribute up to $4,150 for individuals with self-coverage only, and $8,300 for family coverage). If an HSA is an employer-sponsored plan, the employer can make some or all of the contributions to the plan on your behalf, or match any contributions you make, just like contributions to a 401(k).<\/p>\n

Funds in the plan can be stored in cash or invested, and the earnings will accumulate on a tax-deferred basis. Funds can be withdrawn from an HSA only for medical purposes (at least until you hit age 65).<\/p>\n

HSAs help you spread costs across your lifetime. You can accumulate funds in an HSA in low expense years, and withdraw them in years when you have high medical costs.<\/p>\n

HSAs are designed to be used in conjunction with high deductible health insurance plans\u2014the minimum deductible is $1,500 for individuals and a minimum of $3,000 for families.<\/p>\n

Since the contributions are tax-deductible, you are effectively getting a tax deduction for medical costs, even if you don\u2019t itemize on your tax return. (This can be especially helpful for those buying plans on the ACA exchanges, as their premiums are paid with post-tax money.)<\/p>\n

HSAs are typically offered by employers, but you can also set one up with a third-party trustee, which is typically a bank.<\/p>\n

How do you pick a health savings account? Since the plans are regulated by the IRS, they are generally standard. That doesn\u2019t mean, however, that all HSAs are created equal\u2014many, if not most, of them are riddled with fees and high-cost mutual funds.<\/p>\n

If an HSA is sponsored by your employer, this won\u2019t be a relevant issue, since you will only have one option\u2014to participate or not. If you do participate, you will use the plan trustee that has been selected by your employer.<\/p>\n

Different plan trustees will charge different fees and for different things. For example, some trustees charge an annual or monthly fee, while others charge based on transactions within the plan. For instance, you might be charged for every withdrawal you make, or every change you make in your investments.<\/p>\n

Some trustees may charge both a fixed fee and a transaction fee. Still others may waive certain fees if your account balance exceeds a certain amount.<\/p>\n

For example, Bank of America\u2019s HSA charges a $4.50 monthly fee (or $54 a year) for maintenance, as well as $25 for closing your account. It doesn\u2019t, however, charge you an investment fee. SelectAccount\u2019s HSA, on the other hand, has different fees for different tiers of service\u2014you could pay anywhere from $0 to $4 a month\u2014in exchange for higher or lower interest rates on your balance. If you want to invest your money in one of its offered mutual funds, you\u2019ll pay an additional $18 a year.<\/p>\n

When looking for an HSA, try to find one that charges minimal fees and whose fees align with how you\u00a0intend to use the account. If you want to invest, look for one that doesn\u2019t charge a super high fee for investments.<\/p>\n

We recommend Lively<\/strong> for individual and family HSAs. Accounts are completely fee-free and there\u2019 no minimum to open a Lively HSA. Read more in our Lively HSA review.<\/p>\n

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\"Lively\"<\/p>\n<\/div>\n

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Lively<\/p>\n

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Lively is a company devoted to Health Savings Accounts (HSAs) that has flexible, competitive options for savers, spenders, and investors. <\/span>Lively let individuals set up HSAs on their own. Contributions are pre-tax\u2014you won\u2019t pay taxes on your HSA funds as long as they\u2019re used for qualified medical expenses.<\/p>\n<\/div>\n

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