Best For No Minimum Balance Requirement: Hsa Bank
We chose HSA Bank based on the fact that you can open an account online in less than 10 minutes with no required minimum to get started. This means you can start saving any amount and you can easily fund your account online.
No minimum account balance to open an account
Option to invest your funds with TD Ameritrade or Devenir
No account management fees if you keep at least $3,000 in your HSA
$25 fee for closing your account
Investment fees vary
Pay $1.75 monthly account management fee if your balance is below $3,000
You may be required to keep a minimum balance to invest your HSA funds
HSA Banks history goes back to 1913 when it began as State Bank of Howards Grove in Wisconsin. This was long before HSAs existed, so they operated as a community bank, offering traditional banking products. However the company has grown and changed its focus to HSAs, flexible spending accounts , and other types of health reimbursement arrangements, and we chose them for our review as best for no minimum balance requirement.
Not only does HSA Bank offer flexible HSAs with no money required to get started, but they also offer a client assistance center that is open 24 hours a day. You should note, however, that there is a $2.50 monthly account management fee if your balance drops below $3,000.
What Do They Offer
Optum Bank offers various tax-advantaged health savings plans, including HSAs, FSAs, HRAs, and MSAs. In this article, well focus on its HSA offering. HSA accounts are triple-tax advantaged. This means:
- Withdrawals for qualified medical expenses are income tax-free
- All contributions to an HSA are income tax-free
- Any interest earnings and investment growth from deposits are income tax-free
Employees of Optum and UHG automatically receive Optum Bank as their HSA administrator. These employees dont pay a fee for investing in their HSA accounts. Other employers may charge a monthly fee, which can be dependent on the HSA accounts balance. However, it’s more common that the monthly fee is waived for employees.
Individual account holders, on the other hand, will incur a $2.50 monthly fee until their account reaches $3,000. After that, the fee is waived.
Digitally Managed Investments With Betterment
Optum Bank is offering automated online advice and investing through Betterment, the largest independent online financial advisor. Betterment combines low-cost, tax-efficient investment strategies with technology and personalized advice to empower you to achieve your financial goals.
Betterment starts by gaining an understanding of your HSA investment goals. For example, you may be using your HSA to save for medical costs during retirement or to be prepared to pay for expenses now and in the near future. Once Betterment understands your goals, they will build you a personalized portfolio with a risk level and investments mix that suits your needs. And if you’d like to adjust that mix, you can. The Betterment portfolio is a globally diversied mix of exchange-traded funds , chosen to help earn better returns at various levels of risk.
When the time comes to use the invested HSA funds, Betterment automatically sells the right investments, allowing you to access your funds for eligible medical expenses without the hassle of needing to choose which investments to sell. Betterment knows it sometimes takes multiple accounts to save for a goal and can provide holistic advice across all accounts including combined external accounts like employer-sponsored 401ks so you can easily track your progress and they can help you maximize your after-tax retirement income.
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Invest In Your Future
Your Optum BankÂ® health savings account provides more than medical cost savings. Itâs a smart investment option that can help you build a ï¬nancial plan for today and tomorrow.
Investing HSA dollars has many potential tax benefits and can be an additional way to save for long-term health care needs and financial goals. HSAs are triple tax advantaged, making them an effective savings and investment account.
- Withdrawals for qualified medical expenses are income tax-free
- All contributions to an HSA are income tax-free
- And, any interest earnings and investment growth from deposits are income tax-free
Once your HSA reaches a certain designated balance, typically $2,000, you may choose to invest a portion of your HSA dollars. In addition to mutual funds, Optum Bank is excited to announce a new investment option: digitally managed investments with Betterment.
You can use your HSA with other retirement accounts to maximize your after-tax retirement income. Saving in an HSA for retirement gives you a tax-advantaged account dedicated to future medical expenses â allowing you the opportunity to avoid dipping into retirement accounts intended for cost-of-living expenses. Also, HSAs are a great way to pay for qualiï¬ed medical expenses in retirement. Once you reach age 65 you may use your HSA funds for non-qualiï¬ed medical expenses without penalty â just pay ordinary income tax.
Do All Hsas Have Monthly Fees
Some HSA providers offer accounts without an annual or monthly account management fee. However, all providers who let you invest your HSA funds charge investment fees, and often more than one type. For example, you might pay an annual fee to your HSA provider for oversight of the underlying investments in your HSA, but you will also pay expense ratios that vary depending on the investments you choose.
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How Much Money Do I Need To Have In My Optum Bank Hsa To Invest
The Optum Bank investment threshold is $2,000. This threshold ensures you will have ready cash dollars for qualified medical expenses. You can choose to invest any amount over this threshold, in $100 increments, as long as you maintain a minimum of $2,000 in your HSA cash account. Similar to your PayFlex account, you wonât need to pay an investment fee while you are a Disney employee, Disney will cover your investment fee.
Optum Bank offers over 30 mutual fund options, designed for all levels of investors, with passive and active management options. The options represent strong performing name brand funds including several Vanguard funds, as well as target-date funds and lifestyle funds.
How To Compare Hsa Fees Hsa Investment Options And More
- ADELIA CELLINI LINECKER
- 08:39 AM ET 04/20/2018
Health savings accounts let people with high-deductible health plans set aside savings through tax-advantaged plans. Money can be used to pay for medical expenses, and funds that aren’t spent can be invested. But how to compare HSA fees, and what about HSA investment options and other features?
Enter the Investor’s Business Daily Best HSA 2018 list. With hundreds of health savings accounts to choose from, IBD editors have identified the nine Best HSAs based on account features, customer reviews and benefit consultants’ input.
See our Best HSA 2018 list for details on all nine companies’ fees, investment choices, interest rates paid on money that’s not invested, and more. The providers aren’t ranked and are listed by the number of accounts they manage. Also highlighted are the best HSA accounts in key categories that you should consider: the best HSA investment options, the best HSAs for low fees, and the best ones for investment quality, interest rates, access to funds, and account integration with other customer accounts like 401s.
Jon Robb, senior vice president at HSA research firm Devenir, says people should be “thinking about how they are going to be using HSAs.”
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Financial Products & Health Savings Accounts From Optum Bank
Health savings accounts and Medicare Advantage Medical Savings Accounts are individual accounts offered or administered by Optum Bank®, Member FDIC, and are subject to eligibility requirements and restrictions on deposits and withdrawals to avoid IRS penalties. State taxes may apply. Fees may reduce earnings on account.
Are Hsas Worth It
If you have a high-deductible health insurance plan and you qualify for an HSA, then opening and funding an account is definitely worth it. Even if you do not invest your HSA funds and you only add money to your account as you need it, funneling contributions into an HSA before you pay medical bills can help you reduce your taxable income and save money on taxes during the year you contribute.
Also note that, once you reach the age of 65, you can withdraw money from your HSA penalty-free without having to use the funds for healthcare expenses. This can make an HSA account a smart alternative for backup retirement savings you can tap into if you dont wind up using your money for healthcare expenses.
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Options To Invest Your Hsa Funds
Accelerate your financial wellness, start investing now
Your HSA is a smart investment vehicle that can play an important role in your wealth and retirement strategy. In addition to mutual funds, Optum Bank is now offering a new investment option: digitally managed investments with Betterment. Sign in and start investing.
What Is A Health Savings Account
A health savings account is a popular tax-advantaged account consumers can use to save for eligible healthcare expenses. To be eligible to use an HSA, you must have a high-deductible health insurance plan , or a plan with a minimum deductible of $1,400 for individuals or $2,800 for families in 2021. Your plans maximum out-of-pocket limit for the year also cannot exceed $6,900 for individuals and $13,800 for family plans.
With a health savings account, individuals can contribute up to $3,600 and families can contribute up to $7,200 in 2021. This money is saved on a pre-tax basis, meaning you can deduct contributions up to these limits on your tax return. The money is then able to grow tax-free over time, and you wont pay taxes on distributions when you use the funds for eligible healthcare expenses.
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Best Investment Options: Fidelity
Fidelity allows you to invest your HSA money into Fidelity mutual funds and index funds. Fidelity even offers a handful of fund options that are only available to clients with a Fidelity HSA, including Fidelity Health Savings Fund and Fidelity Health Savings Index Fund .
Invest your HSA into high-quality, low-cost Fidelity mutual funds and index funds
No account minimums or account management fees
Receive a debit card you can use to pay for eligible healthcare expenses
Underlying fund expenses apply when you invest your HSA money, and these vary
Some Fidelity HSA investment options come with expense ratios as high as 1.03%
If youre looking for an HSA provider who has been around for a while, you might be interested to know that Fidelity was founded in 1946. However, we chose Fidelity for our ranking not for their longevity, but based on the fact you can invest your HSA funds in so many low-cost options aimed at long-term growth.
Fidelity even offers two funds specifically for their HSA members, including Fidelity Health Savings Fund and Fidelity Health Savings Index Fund . FHSNX, in particular, has an expense ratio of just 0.24%, which makes it an affordable option for long-term investors who want to grow their HSA balances over time. Plus, Fidelity lets you choose from other investments laid out on their website, including dozens of funds from Fidelity, JP Morgan, Wells Fargo, T. Rowe Price, and others.
Start Planning For Retirement
An HSA is a great tool to help you prepare for future health care costs and retirement. After turning 65 you can use your HSA funds for non-qualified expenses, like a boat or an exotic vacation. Youâll pay ordinary income tax on those funds, but the 20% tax penalty no longer applies. As you’re planning for the future, your HSA can ease your mind and prepare you for retirement by saving money income tax-free.
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Hsa Rollover Or Transfer Request Optumcom
In order to use this form, you must have an Optum Bank HSA. To open an account, visit us at optumbank.com. Questions? Call the number of the back of your debit card if you have any questions while completing this form. *Required fields 040 CO HA MCDH HSA . 1 Account holder information . Account holder name:* Optum account # or SSN:* Address:*
Earning Interest And Investing
For non-invested funds at Optum Bank, youll earn interest at tiered rates. Unforunately, these rates are not publicly disclosed. To see your specific APY, you’ll need to login to your account. You can also choose to invest your funds.
Self-directed brokerage services are provided by Charles Schwab. Before you can start investing, your account balance must be at least $1,000. Once you’ve hit that savings mark, you can invest in a solid variety of mutual funds and target date funds.
You can also choose digitally-managed portfolios through Betterment with automatic rebalancing. Its easy and fast to move money between your HSA and investment account in $100 increments.
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The Partnership Connects The Robo With 3 Million Customers And $9 Billion In Optum’s Hsas
Health savings account customers of Optum Bank, one of the nations largest HSA providers, can now use Betterment for help investing HSA money.
Betterment CEO Jon Stein announced the new partnership Wednesday at CB Insights annual Future of Fintech conference in New York. Calling it a simple, smart, automated HSA, the idea is to help unused cash sitting in an HSA grow tax-free as an additional retirement savings vehicle.
Customers who elect to invest some or all of their HSA with Betterment will go through an onboarding process to determine how much the investor plans to use funds for medical expenses versus long-term savings to determine investment allocations.
The company didnt share specific investment recommendations it would recommend, but Betterment vice president of communications and policy Joe Ziemer said it would be similar to the low-cost portfolios of ETFs recommended by Betterments core, direct-to-consumer robo-adviser. Investors who will need funds more readily available for healthcare expenses will be given a more conservative allocation than those primarily using HSAs for retirement saving.
HSA funds invested with Betterment will take advantage of the robos tax optimization technology, automated rebalancing and asset location strategies.
The partnership provides Betterment an opportunity to reach more than 3 million customers who have $9 billion saved in Optum Bank HSA accounts.
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How Does Optum Bank’s Hsa Compare
The Optum Bank HSA offers an impressive variety of spending and investing options. However, it does charge a monthly fee until your balance reaches $3,000. If you’d like to consider your alternatives, check out this quick comparison chart:
- Document copy fee
- Check processing fee
There is a monthly fee of $2.75, which can be avoided with a higher balance. The actual amount will depend on your employer. For individuals, the amount is $3,000. Additionally, the following fees apply if you choose to use these options:
- $2.50 per ATM transaction plus any fees charged by the ATMs bank.
- $20 to transfer your HSA to another bank or custodian.
- $1.50 printed statement fee. You can choose online statement delivery to avoid this fee.
Finally, if you choose to invest some of your HSA funds, you’ll be charged a monthly brokerage fee of 0.03% of your invested assets, up to a maximum of $10 per month. Thus, this brokerage fee only applies to the first $33,000 in your investment account.
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How We Chose The Best Health Savings Account Providers
To find the best HSAs on the market today, Investopedia compared more than 15 of the top providers to see how they stack up. Criteria we considered included ongoing fees and account management costs, investment options, ease of opening an account, debit card access, and minimum account requirements. The HSA providers who made our ranking tend to stand out due to their lack of fees, their unique or lucrative investment options, or the technology they use.
Best Hsa Investment Options & Investment Quality
If you’re interested in using your health savings account to boost retirement savings, look for robust HSA investment options offered by providers. Many top companies in this category offer a varied choice of top-performing mutual funds. You also may be able to pick your own stocks, bonds and ETFs. Fidelity Investments is among the leaders in this category, as are HSA Bank, Further , Saturna HSA and HealthSavings Administrators.
Administrators highlighted for investment quality offer funds that generally outperformed their peers, according to Morningstar. HealthEquity, Optum Bank and HSA Authority excelled in this category.
Being able to invest without a minimum balance can also be an attractive incentive. Be sure to check out investment thresholds for each provider.
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Optum Bank Mutual Funds Investments
Optum Bank offers a diverse set of mutual funds that average a four-star Morningstar rating and represent some of the lowest expense ratios in the industry. Once your HSA reaches the certain investment threshold, typically $2,000, you may choose to invest a portion of your HSA dollars in mutual funds.
Optum Bank mutual funds include:
Charles Schwab Brokerage Account
Optum Bank wants to help make investing easy and more accessible for users by offering a health savings brokerage account option with one of the leaders in self-directed brokerage, Charles Schwab. An HSBA within the HSA can satisfy the more sophisticated, demanding investors who want more investment opportunity.
A Charles Schwab brokerage account means more choices, plus zero commissions and fees for online trades for the DIY investor. After receiving an account number, Employees can invest and trade commission-free ETFs, stocks and options listed on the U.S. or Canadian exchanges across all mobile, automatic phone and web trading channels. Participants can also access more than 8,500 no-load mutual funds from over 630 well-known fund families. Over 4,000 mutual funds are available with no-loads and no-transaction fees. Other investment options include bonds and other fixed income investments, CDs,and money market funds.
|Capped at $10 per month
In our study of the top 10 investment HSAs, Optum Bank ranks as one of the most expensive administrators. Optum Bank charges its investment participants a maintenance fee and an asset-based fee. The maintenance fee is reasonable, but the 36 basis point annual asset based fee is steep.
Optum Bank has a unique asset-based fee structure. Investment accounts are charged 0.03% per month up to a maximum of $10 . Thus, at the $33,000 mark, the most Optum Bank will charge an investor is $10 per month.
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