Most people are painfully aware of the high and rising cost of health insurance premiums.
But just below the awareness radar is a problem of almost equal proportion, at least when a medical event happens – out-of-pocket costs. They often amount to thousands of dollars, especially if you have a major procedure or require ongoing therapy.
Consumers have been facing a double whammy when it comes to healthcare costs. On one side are high premiums, and on the other are very large out-of-pocket costs.
Given the rising cost of healthcare overall, there’s not much any of us can do to slow this price spiral. But there is a way to deal with the out-of-pocket cost side of the problem, and that’s to set up a health savings account. Not only will an HSA enable you to set money aside for out-of-pocket medical costs, but you’ll also get a big tax break for doing so.
One of the very best places to open an HSA is Lively HSA. Not only do they provide you with the full benefits of an HSA plan, but they also offer no fewer than three investment options for the funds in your account. That will give you the ability to combine future, tax-sheltered growth with ready funds to cover those out-of-pocket costs whenever they occur.
And don’t worry about the costs of a Lively HSA account – there aren’t any!
Quick Summary
- FREE HSA for individuals.
- Multiple medical expense payment options.
- Free self-directed investing option via TD Ameritrade.
- Handy mobile app.
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About Lively HSA
Founded in 2017 and based in San Francisco, Lively HSA is a company that specializes in health savings accounts. In fact, HSAs are the only product they offer. The program is available for both individuals and for employers as an employee benefit program.
The advantage with Lively HSA is that they are a true health savings account specialist. Unlike banks and brokerage firms, that offer HSAs as only one product on an extensive menu, Lively HSA focuses it’s entire business on HSAs. That can assure you that your account is held with the best trustee possible.
Why Have An HSA?
An HSA is a tax-sheltered savings program designed specifically to help individuals and families pay out-of-pocket portion of health care costs. This is more important than ever since many health insurance plans have out-of-pocket costs of thousands of dollars. And not only are HSA contributions tax-deductible, but they also provide you with a way to budget for unexpected out-of-pocket medical costs.
An HSA plan starts with a high deductible health plan (HDHP). Under IRS regulations, an HDHP has the following limits (for 2020):
- Minimum annual deductible: $1,400 for an individual, $2,800 for a family.
- Maximum annual deductible and other out-of-pocket expenses: $6,900 for an individual, $13,800 for a family.
You can make tax-deductible contributions to an HSA up to the following limits:
- $3,550 for an individual plan
- $7,100 for a family plan
There’s also an additional $1,000 catch-up provision if you are 55 or older, which will raise the contribution amounts to $4,550 and $7,200 per year.
In addition to the tax deductibility of HSA contributions, investment earnings in your plan are tax-deferred, similar to an IRA.
Withdrawals can be made tax-free, as long as the money is used to pay for medical expenses that would be eligible under IRS guidelines. These will generally include the out-of-pocket portion of expenses normally covered by health insurance plans, as well as medications and treatments prescribed by a healthcare professional. Specifically excluded however are over-the-counter medications and the payment of health insurance premiums.
You are eligible to participate in an HSA until age 65 (since Medicare does not qualify as an HDHP). However, any funds remaining in the account by age 65 can be withdrawn for purposes other than health care expenses, though withdrawals will be subject to ordinary income tax upon distribution.
Lively HSA Investing Options
The investing options are what separate Lively HSA from the competition. Most competitors are banks and credit unions offering interest-bearing money market accounts or checking accounts for HSA plans. The money is safe, but it earns very little in the way of investment income.
There are also a small number of investment brokerages offering HSA accounts. They typically offer the ability to invest in a wider range of investments, including individual securities and funds. This provides an opportunity to earn higher returns on your plan.
Unlike the competition, Lively HSA offers both options. You can either invest in an interest-bearing bank account, or in growth type assets in a brokerage account. And more recently, Lively HSA has added a managed investment option.
Fixed Income Option. With the fixed income option your account will be held at Choice Financial, an FDIC member bank.
Self-directed Equity Investing. If you choose the equity investments route, your account will be held in a self-directed brokerage account with TD Ameritrade. There you’ll be able to invest in individual stocks, bonds, mutual funds and exchange traded funds. What’s more, TD Ameritrade offers commission-free trading.
Guided Portfolio. If you’re interested in equity investing but don’t want to manage the investments yourself, Lively HSA also offers a guided portfolio option provided by Devenir. This is a robo-advisor investment option that provides personalized guidance and automatic rebalancing. The guided portfolio option comes with an annual fee of 0.50% of your account balance on an annual basis. Your portfolio will be constructed from up to 24 funds, investing in stocks, bonds, real estate, money markets, and target date funds. The specific portfolio mix will be based on your own investment risk preferences and time horizon.
Lively HSA Features & Benefits
Minimum contribution/investment: None.There are also no ongoing minimum balance requirements.
HSA debit card: Your Lively HSA will come with a debit card which you can use to pay expenses at the point-of-sale. That can include a hospital, medical clinic, physician’s office, pharmacy, or any other eligible facility. Any expenses not paid by debit card can be paid directly through the account to the provider, either immediately or at a later date.
Lively HSA mobile app: The mobile app can be used to track your spending, make contributions, and monitor your investments on TD Ameritrade. It’s also possible to upload photos of receipts and expenses paid outside your account for later reimbursement. The mobile app is available at The App Store for iOS devices, 11.0 and later, and is compatible with iPhone, iPad, and iPod touch. It’s also available for Android devices, 5.0 and up, at Google Play.
Customer service: Lively HSA is available by both phone and email, Monday through Friday, from 6:00 AM to 6:00 PM, Pacific time.
Lively HSA security: In addition to FDIC insurance on your savings at Choice Bank, and SIPC insurance on your investments at TD Ameritrade, Lively HSA provides the following security measures:
- Two-Factor Authentication - Two-factor authentication adds a second layer to accessing your account. It helps make sure only you have access to your personal information.
- AES 256 Disk Encryption - Your data is encrypted on disk using the industrial strength AES 256 disk encryption standard. That makes it out of reach for unauthorized access.
- SSL/TLS - Hashed Passwords & Encrypted Access - All data is encrypted over the internet and over Lively internal networks. Additionally, all sensitive data is encrypted at rest. Passwords are hashed in the Lively database using industry best practices.
- Data Security Architecture – The Lively system was constructed so that all sensitive servers are hosted in a private subnet not accessible over the internet.
- HIPAA Compliance - Being HIPAA compliant, Lively is required by law to keep your sensitive personal health information safe.
Lively HSA Pricing & Fees
There’s plenty of good news on this front. Lively HSA charges no fee for individuals and families to maintain an account. This is true of both the fixed income and equity investment options. However, there may be certain investment fees involved with equity investing for TD Ameritrade, such as mutual fund load fees.
There are no fees for other services either, including account opening and closing fees, funds transfer fees, debit cards, point-of-sale transactions, expense reimbursement, or access to investments at TD Ameritrade.
Employers can set up a plan as an employee benefit at a cost of just $2.95 per employee.
As noted earlier, the Devenir Guided Portfolio has an annual advisory fee of 0.50% of your account balance.
How To Sign Up For Lively HSA
The entire Lively HSA sign up process takes place online. An account can be opened in just a few minutes, since the process is a very intuitive question-and-answer format that works something like this:
You’ll be asked to provide your email and to create a password, as well as to agree with both the terms and conditions and privacy policy of the company.
Also, you’ll need to provide other basic information, including your full name, address, mobile phone number, and details about your health insurance plan.
You’ll also need to choose the specific investment method, whether that’s the interest-bearing bank account, the self-directed TD Ameritrade account, or the guided portfolio option.
The next step will be to link a bank account for funding purposes. To verify your connected bank account, Lively HSA will perform micro deposits. Once these are cleared and have been verified you can begin transferring funds into your HSA account.
Once your account is opened, you’ll be able to set up recurring payroll deductions to fund the account or make periodic lump sum deposits. You’ll also have the ability to roll over an HSA account from another trustee.
Lively HSA App
Lively has an app available for iOS and Android that you can use to do most of the same tasks that you can do on their website.
Among the things you can do in the app:
- Set up contributions: Link your bank account, set a one-time or recurring contribution.
- Easy reimbursement: Take and upload photos of receipts for easy reimbursements from personal credit card spending. Get reimbursed today or save those funds for your future.
- Track HSA spending: Lively debit card spending appear within the app as you spend.
- Manage your account: View your account balance or make contributions.
- Manage investments: View and monitor investment portfolios.
- Search HSA marketplace: Find retail HSA partners for all of the qualified services and products you need.
The app is easy to use, and makes the account even more convenient for most users.
Lively HSA Pros & Cons
Pros:
- Lively HSA charges no fees to open or manage your account.
- Three investment options – fixed income in a bank account, self-directed trading through TD Ameritrade, and a guided portfolio option.
- Available for both individuals and employers, as an employee benefit.
- You can pay eligible medical expenses using your debit card, directly out of the HSA account, or later by reimbursing yourself for expenses paid from outside the account.
- All activity in your account, including contributions, payment of eligible medical expenses, and managing your investments, can be handled on the Lively HSA mobile app.
Cons:
- An HSA can only be used in conjunction with a high deductible health plan. If your plan has deductibles or out-of-pocket limits that are higher or lower than the IRS minimums and maximums, you won’t be able to participate in a Lively HSA. However, this is true of all HSA accounts.
- The fixed income option pays very little in the way of interest, however this is also common of HSA accounts.
- The investment options offer the ability to grow your account value but will require investment liquidation to cover medical expenses that exceed your cash balance.
- Unlike setting up an HSA account at a local bank or credit union, there are no branches available when you are working with Lively HSA.
Is Lively HSA the Right Health Savings Account for You?
If you work for an employer that doesn’t offer an HSA benefit, or one that does and you’re not happy with the plan they have, you can suggest they take a look at Lively HSA. Most companies and individuals hold their HSA account either at a bank account or a brokerage firm. But Lively HSA has both options – you can choose which you want to use to hold your account.
If you’re a small business owner, you might consider offering an HSA plan as an employee benefit. If so, Lively HSA is an excellent choice, and a provider that makes setting up and managing the plan easy.
With the high and increasing amount of out-of-pocket costs connected with health insurance plans, an HSA has become practically a necessity. This is especially important for individuals in their 20s and 30s. Not only can an HSA be used to cover out-of-pocket medical costs, but if you’re young and healthy you can accumulate funds in the account similar to an IRA. As you get older, and your need for health care grows, you’ll be able to tap the HSA to cover those expenses.
And if you seldom use the account, you can invest the funds for future growth, turning an HSA account into a backdoor IRA, for which funds can be withdrawn to pay for non-medical living expenses once you reach age 65.
Lively HSA is an excellent choice because it offers three different investment options. You can hold the majority of your funds in a self-directed account with TD Ameritrade or the guided portfolio with Devenir, while keeping just enough funds in your FDIC insured bank account to cover any short-term medical expenses.
Lively HSA has definitely taken the basic HSA concept to a higher level. It gives you more investment options than any other provider and charges no fees for the privilege. If you’re sold on the idea of an HSA account, Lively HSA is too good an offer to pass up.
Lively HSA
Pros
- No fees to open or manage your account
- Three investment options
- Available to individual and through employers
- Multiple medical expense payment options
- Track all account activity on the mobile app
Cons
- Low return on fixed income option
- Not all funds should be invested
- Online only
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