More than half of Americans with employer-sponsored insurance are enrolled in high-deductible health plans (HDHPs). If you’re one of them, your health insurance deductibles can leave you in a bind when significant health care expenses arise.
Health savings accounts (HSAs) were developed as a way to combat this issue. Contributions to an HSA are either made on a pretax basis or are tax-deductible, and they remain tax-free as long as they are used to cover qualified medical expenses like copayments, prescription medications, or even over-the-counter products like bandaids and headache relievers.
Lively is an HSA provider founded in 2016. Although the company has only been around for about six years, it’s making a splash in the industry with no-fee accounts and other exciting features. But should you open a Lively HSA account?
Key Features of Lively HSA
Few companies climb to the top of the ranks in just six years as Lively has. It has done so by addressing two common concerns with traditional HSAs — fees and investment options — and making every step of opening an account, building its value, and using your HSA money as easy as possible.
The most exciting features of a Lively account are listed below.
Competitive Pricing With No Hidden Fees
Several HSA accounts claim to be free, but they often have hidden fees. Some of the most common include fees for fund transfers, debit cards, excess contribution, point of sale, reimbursement, account opening, and account closing.
Whether you’re an individual or a business owner, you don’t pay any of those fees on the fee-free HSA account at Lively. The accounts are 100% free for individuals if you manage your own investments, and you pay just 0.5% of your account value per year if you take advantage of the company’s robo-advisor service, HSA Guided Portfolio.
Pricing is also competitive for employers. You pay a straightforward $2.95 monthly fee for each employee on the plan. That compares well to other options that generally range from $50 to $100 per year for each employee.
Multiple Investment Options
Many HSAs manage your money for you, taking the investment decisions out of your hands. Lively isn’t one of those unless you want them to be. When you sign up with a Lively account, you have two account management options:
- TD Ameritrade Self-Managed Brokerage Account. TD Ameritrade brings a wealth of investment opportunities to the table. Choose from thousands of stocks, exchange-traded funds (ETFs), mutual funds, certificates of deposit (CDs), and bonds. There are even 300 fee-free ETFs to choose from. When you choose this option, you manage your HSA like you would your personal investment account, maintaining complete control over your investments.
- HSA Guided Portfolio. If you’d rather let the experts handle the investment decisions for you, choose the HSA Guided Portfolio. The service works like a robo-advisor, making all your investments for you. It was developed by Devenir, a global leader in HSA investment advisory services. If you choose this option, your HSA portfolio will consist of low-cost index funds. However, you will be charged a 0.5% annual investment management fee.
Up to 3 Hassle-Free HSA Debit Cards
HSAs are attached to debit cards to use to pay directly for medical products or services. Some companies offer one free debit card and charge you a fee if you lose it or someone steals it.
With Lively, you can order up to three debit cards by simply logging into your online account or launching the mobile app and requesting a new card. Although you can get an unlimited number of replacement debit cards for free, the company’s system only supports up to three requests through its website. You’ll have to call customer service between 6am and 6pm Pacific to request any additional cards.
If you lose your debit card, you can still access your money while you wait on a replacement. Just upload the receipts for any health care-related out-of-pocket costs you pay and request an HSA reimbursement.
Earn Interest on Idle Money
Money that’s not working for you is being wasted. If you have idle money in your HSA that’s not being invested or used, you earn interest. Lively offers a 0.10% APY on your cash balance. Sure, that interest rate isn’t going to turn any heads, but it’s nice to earn something on money that would do nothing more than sit there otherwise.
Moreover, as recently as January 2020, rates ranged between 0.25% and 0.60% depending on your cash balance. Lively cited the COVID-19 pandemic and the Federal Reserve’s response as the reason the rate was lowered. With the pandemic behind us and the federal interest rate rising, it’s possible that Lively’s interest rate will also increase in time.
Easy to Load
You have two options for making contributions to your Lively HSA.
Connect Your Bank Account
Connect your bank account using the company’s desktop platform or mobile app. Once you connect your account, you can easily make contributions any time you’d like.
Individuals can contribute up to $3,600 or you can contribute up to $7,200 per year on family plans on a pretax basis. That means you can deduct contributions up to these limits from your taxable income at the end of the year.
Lively won’t charge you excess contribution fees if you want to invest more than these amounts into your HSA. However, any amounts over the contribution limits mentioned above are not tax-deductible.
Employer Contributions
You can also ask your employer to make pretax contributions to your HSA so you don’t have to worry about the write-offs at the end of the year. All you need to do is tell your employer how much of each paycheck you’d like invested in your HSA and they’ll make the investment for you before withholding taxes for the IRS.
Employer contributions do more than simplify the process from a tax standpoint; they help you meet your savings goal because your HSA money is deducted from your paycheck before you get it.
Advantages of Lively HSA
Lively HSAs are quickly becoming a leader in the HSA industry. The company leverages an innovative platform to provide simple, low-cost solutions that help you save for what could otherwise be crippling medical expenses. Some of the biggest benefits of working with Lively include:
- Choose How You Invest Your Money. Lively offers some of the most comprehensive investment options available with an HSA thanks to its relationships with TD Ameritrade and Devenir. If you want a hands-free, low-cost solution, the company’s guided portfolio is the way to go. If you want complete control over your investments, take the reins by connecting your account with a TD Ameritrade investment account and build your portfolio from thousands of investment options.
- No Minimum Balance Requirement. No matter which direction you choose to take your HSA, you don’t have to worry about a minimum balance at Lively. Get started right away with just a few bucks.
- Intuitive Mobile App. Lively is a relatively new company that’s making a splash, so you’d expect them to be innovative. The company’s mobile app is an answer to that expectation. Manage your HSA on the go with all the features and options you use on the desktop interface.
- Tax Advantages. As an HSA, the money you hold in your Lively account has tax benefits. All contributions are tax-free and you’ll never pay the IRS a penny on the funds if you use them for qualifying medical expenses. When you retire, your HSA funds are eligible for withdrawals for any reason, but any HSA money you withdraw that’s not related to medical expenses will be taxed at your standard income tax rate just like a traditional IRA or 401(k).
- Unused Funds Rollover. HSAs are a lot like flexible spending accounts (FSAs). The big difference is the rollover. All the HSA funds you don’t use this year will roll over to next year and continue to build toward your retirement. FSAs, on the other hand, have a $570 rollover limit as of June 2022.
Disadvantages of Lively HSA
Lively’s services are undoubtedly impressive, but there are a few drawbacks to consider too. Most of these are drawbacks of HSAs in general, but it’s important you’re aware of them before signing up for Lively or any similar service.
- Customer Service Isn’t Always Available. The customer service team at Lively is very knowledgeable and eager to answer your questions. However, they’re not available 24/7. If you want to contact the company’s support, you’ll have to call between 6am and 6pm Pacific time, Monday through Friday.
- Must Have an HDHP. As with any other HSA service, you have to have a high deductible health plan to qualify for an account. As of June 2022, that means your health insurance plan deductible is at least $1,400 if you’re on an individual plan or $2,800 if you’re on a family plan. You don’t qualify for an HSA if you have a lower deductible or you don’t have health insurance at all.
- Contribution Limits. HSA contributions are tax-deductible — to a limit. The HSA contribution limits for 2022 are $3,600 for individuals and $7,200 for family plans. You can invest more in your HSA if you’d like, but any investments over these limits are considered excessive contributions and don’t qualify for tax benefits.
How Lively HSA Stacks Up
Lively is a relatively new HSA provider that’s taking the market by storm. Fidelity is a long-standing company that’s been providing quality financial services since 1946. Let’s see how the two stack up against each other.
| Lively HSA | Fidelity | |
| Individual Fees | $0 on self-managed accounts; 0.50% for robo-advisor accounts. | $0 on self-managed accounts; $3 per month or 0.35% per year depending on your account balance for robo-advisor accounts. |
| Employer Fees | $2.95 monthly fee per employee. | Up to $48 per year per employee. Employers can pass the fee on to the employee. |
| Minimum Balance | $0 | $0 |
| Idle Cash Interest Rate | 0.10% | 0.25% |
| Hidden Fees | None | None |
Final Word
If you have a high deductible health plan, an HSA should be part of your personal finance plan. The reality is you never know when a medical ailment will take hold or an accident will happen, and a high deductible may mean struggling to afford the care you need if you’re not prepared to cover it.
The best HSAs make saving for these unexpected health care costs a breeze. Lively easily falls into that category.
The company offers an innovative website and mobile app that make every aspect of saving for your health simple. At the same time, it offers completely fee-free accounts, and when Lively says fee-free, they mean it. There are no hidden fees that are standard in the industry. Moreover, if you choose fee-free investments for your account, like one of 300 ETFs at TD Ameritrade that have a 0% expense ratio, you’ll never pay a dime to save.