The Best HSA Plans: Fidelity and Lively

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It’s open enrollment season, and now roughly 50% of you will enroll in a high-deductible health plan. That means that you are also eligible to contribute to a Health Savings Account (HSA), which has triple-tax-free benefits: tax-deductible contributions, tax-free earnings growth, and tax-free withdrawals when used for qualified medical expenses.

There are two ways to treat your HSA – as a spender or an investor. As a spender, you contribute to the HSA, grab the tax-deduction, and then treat it like a piggy bank and spend it down whenever you have a qualified healthcare expense. You don’t have that annoying “use-it-or-lose-it” feature of Flexible Spending Accounts (FSA), and most offer FDIC-insurance on your cash.

As an investor, you are trying to maximize the tax benefits of HSAs but keeping the balance as large as possible and buying long-term (but more volatile) investments like stocks. If you have the financial means, you would max out the contribution limits ($3,600 for individual and $7,200 for family coverage in 2021) and then pay for your healthcare expenses out-of-pocket instead of withdrawing from the HSA. (The advanced trick: keep a “forever” digital PDF copy of all your healthcare expenses. You can still withdraw the amounts of all those expenses tax-free at any time in the future, even decades later.)

Morningstar has a very detailed review in their 2021 Health Savings Account landscape report (e-mail required). After reading through the entire thing, my take is that you really only need to consider the two best HSA plans: Fidelity HSA and Lively HSA.

Fidelity and Lively HSA for spenders. Both have the least fees and a safe place for your cash. Others HSAs have maintenance fees, minimum balance requirements, and more “annoyance” fees.

  • No minimum balances.
  • No maintenance fees.
  • No paper statement fees.
  • No account closing fee.
  • FDIC-insured cash balances with tiny APYs in today’s environment.

Fidelity and Lively HSA for investors. Both feature a low-cost way to invest your contributions for long-term growth:

  • No minimum balance required in spending account in order to invest.
  • Offers access to all core asset classes.
  • Offers free self-directed access to ETFs, individual stocks, bonds, and mutual funds.
  • Offers “guided portfolios” for hands-off automated investing.

If you want access to a cheap all-in-one mutual fund, Fidelity offers the institutional shares of their Fidelity Freedom Index mutual fund line-up with an expense ratio of 0.08%. Lively charges a higher expense ratio than Fidelity on its “guided portfolio” robo-advisor investment options. Morningstar dinged Lively for this, but they didn’t really talk about the fact that Lively also offers a free brokerage window with TD Ameritrade. You can invest in any ETF with zero commissions at both Lively/TD Ameritrade or Fidelity, including rolling your own DIY portfolio using index ETFs.

A simple Vanguard ETF portfolio might be 50% US Stocks (VTI), 30% International Stocks (VXUS), 20% US Bonds (BND). The total weighted expense ratio of such a portfolio would be less than 0.05% annually and fully customizable for the DIY investor. Both accounts essentially cost nothing above the expense ratio of the cheapest ETFs you can find – you really can’t ask for more than that!

(How do they make money? Your employer has to pay a fee to HSA providers. It’s still much cheaper for them than your old full-price health insurance premium, of course.)

Bottom line. Both Fidelity HSA and Lively HSA are excellent options for your Health Savings Account funds. There isn’t that much to separate them, but if you already use other Fidelity products, the Fidelity HSA would be quite convenient. Lively is an independent HSA provider with a modern feel and a good history of customer-friendly practices and service.

(Disclosures: I am not an affiliate of Fidelity (although I would if they had such a program). I am an affiliate of Lively and may receive a commission if you open an account through my link. Thanks for your support of this site.)

My Money Blog has partnered with CardRatings and Credit-Land for selected credit cards, and may receive a commission from card issuers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned. is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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  1. Excellent timing! We’re ditching our HDHP now but I was researching the HSA companies to transfer into and Fidelity and Lively were at the top of the list for exactly these reasons. I didn’t love the investing options at Lively quite as much, I prefer to stay invested consistently across our products but for someone who doesn’t have a particular fund in mind, Lively does look just as good as Fidelity.

  2. I rather like Health Equity, they have 23 Vanguard funds to choose from, and their fees are 0.3% debited monthly with a limit of $10/month. They’re definitely more transparent than my 401k about their fees. The interface for investing is a bit clunky but overall I’ve been satisfied with them over the years.

    • $10 per month might be worth it if you are happy with them. I am with them and want to switch to Fidelity because I like free. Might be hardly worth it though.

  3. All in on Fidelity. No annoying fees, invest in whatever you want. Can even get approved to trade options and all tax free.

  4. How do you get these options within your HSA? I thought your only options were the ones chosen by your employer? At my employer, I only have (or see) TD Ameritrade as an option. Can I just go out and get another one on my own?

    • From the Lively site:

      My health insurance or employer is offering an HSA. Do I need to go with the option they provide?

      No. Because an HSA is an individual account, you are free to choose whichever HSA provider you want to work with (e.g., Lively).

      Source: “Publication 969 (2018), Health Savings Accounts and Other Tax-Favored Health Plans.”

    • You can also do a rollover (trustee-to-trustee transfer) of your existing HSA funds into another HSA provider. HSA funds are “your property” and thus portable similar to an IRA.

      • My employer contributes certain amount every year. If I decide to go with HSA provider of my choice, does it mean I will have to do a rollover every year? or my employer should be contributing to the HSA of my choice? Thanks

      • Hi Jonathan – Are we allowed to do only one rollover per year (365 days) or if it’s Trustee-To-Trustee, without having the check cut in my name), can we do several (say every 6 months – say every $1000, it accumulates) rollovers per year. I only see info about rolling over to your name and deposit and I don’t see much info on direct rollover (trustee to trustee). I believe it should be the same as other IRAs for this HSA as well, but appreciate your confirmation, in case of direct rollover count per year (if any) is allowed. Thanks.

  5. Contributing using employer plan will reduce FICA tax liability.

    Some states don’t recognize HSA, and profits are still taxed as a taxable account: “Interest or other earnings earned from a Health Savings Account (HSA) are not treated as taxed deferred. Interest or earnings in a HSA are taxable in the year earned.”
    HSA will not issue 1099, so extra record keeping is necessary.

  6. Rolling it all over to fidelity. Simple to open.

  7. Can I contribute to my Fidelity HSA in 2022 for a 2021 contribution (like IRA’s)?

  8. Richard Sharon says

    Jonathan, Do you know if we need to do any reporting for this Trustee to Trustee transfer of HSA funds, while doing taxes for that year.
    I don’t see any forms for the transfer I did (it was direct between the trustee’s without me being involved). Can you or anyone confirm.


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