HSA with no fees and max investments?

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pepperz
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HSA with no fees and max investments?

Post by pepperz » Wed Mar 13, 2019 3:35 pm

Our company just started offering an HDHP that is HSA enabled and I want to sign up.

Just need to find an HSA provider to hook up with.

In the past I used “Health Equity” - they had no admin fees but required you to keep $2,000 in cash. (You are only allowed to invest the amount above that.)

I’d like to invest 100% of my HSA funds and not pay unecessary statement fees.

Any recommendations?

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CalculatedRisk
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Re: HSA with no fees and max investments?

Post by CalculatedRisk » Wed Mar 13, 2019 3:42 pm

Fidelity is the new go-to. No fees. Invest everything.

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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Wed Mar 13, 2019 9:48 pm

CalculatedRisk wrote:
Wed Mar 13, 2019 3:42 pm
Fidelity is the new go-to. No fees. Invest everything.
Thank you! I found this page on their website but it appears geared to “employers”. Is this the program you are referring to?

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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Wed Mar 13, 2019 9:49 pm

pepperz wrote:
Wed Mar 13, 2019 9:48 pm
CalculatedRisk wrote:
Wed Mar 13, 2019 3:42 pm
Fidelity is the new go-to. No fees. Invest everything.
Thank you! I found this page on their website but it appears geared to “employers”. Is this the program you are referring to?

https://workplace.fidelity.com/health-s ... count.html

MotoTrojan
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Re: HSA with no fees and max investments?

Post by MotoTrojan » Wed Mar 13, 2019 9:51 pm

Just opened an HSA for the first time. So I don't have to use the bank provided by my employer?

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FrugalProfessor
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Re: HSA with no fees and max investments?

Post by FrugalProfessor » Wed Mar 13, 2019 10:07 pm

pepperz wrote:
Wed Mar 13, 2019 9:49 pm
pepperz wrote:
Wed Mar 13, 2019 9:48 pm
CalculatedRisk wrote:
Wed Mar 13, 2019 3:42 pm
Fidelity is the new go-to. No fees. Invest everything.
Thank you! I found this page on their website but it appears geared to “employers”. Is this the program you are referring to?

https://workplace.fidelity.com/health-s ... count.html


https://www.fidelity.com/go/hsa/why-hsa
I blog. Taxes are the lowest hanging source of alpha.

motorcyclesarecool
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Re: HSA with no fees and max investments?

Post by motorcyclesarecool » Wed Mar 13, 2019 10:39 pm

MotoTrojan wrote:
Wed Mar 13, 2019 9:51 pm
Just opened an HSA for the first time. So I don't have to use the bank provided by my employer?
Nope. The only potential downside of going with a different HSA custodian is it might be harder to do your contributions under a “cafeteria plan” which would reduce your income for FICA and Medicare tax.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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White Coat Investor
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Re: HSA with no fees and max investments?

Post by White Coat Investor » Wed Mar 13, 2019 11:59 pm

pepperz wrote:
Wed Mar 13, 2019 3:35 pm
Our company just started offering an HDHP that is HSA enabled and I want to sign up.

Just need to find an HSA provider to hook up with.

In the past I used “Health Equity” - they had no admin fees but required you to keep $2,000 in cash. (You are only allowed to invest the amount above that.)

I’d like to invest 100% of my HSA funds and not pay unecessary statement fees.

Any recommendations?
Fidelity or Lively. No fees at either. It really comes down to whether you prefer the Fidelity or the TD Ameritrade platform. Come on Vanguard, get with the times.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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SevenBridgesRoad
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Re: HSA with no fees and max investments?

Post by SevenBridgesRoad » Thu Mar 14, 2019 12:08 am

White Coat Investor wrote:
Wed Mar 13, 2019 11:59 pm
pepperz wrote:
Wed Mar 13, 2019 3:35 pm
Our company just started offering an HDHP that is HSA enabled and I want to sign up.

Just need to find an HSA provider to hook up with.

In the past I used “Health Equity” - they had no admin fees but required you to keep $2,000 in cash. (You are only allowed to invest the amount above that.)

I’d like to invest 100% of my HSA funds and not pay unecessary statement fees.

Any recommendations?
Fidelity or Lively. No fees at either. It really comes down to whether you prefer the Fidelity or the TD Ameritrade platform. Come on Vanguard, get with the times.
One vote here: absolutely everything with Vanguard except HSA with Lively/TDA.
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Tamarind
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Re: HSA with no fees and max investments?

Post by Tamarind » Thu Mar 14, 2019 6:28 am

I use Lively because I had it set up before Fidelity started offering theirs and don't see a reason to move. No fees and the full amount can be invested through TDA including in commission-free index ETFs.

I think either would be fine and far better than Health Equity, which I used to have through an employer.

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Re: HSA with no fees and max investments?

Post by oldcomputerguy » Thu Mar 14, 2019 6:39 am

I just opened an HSA at Fidelity. I already had my IRAs there, so once I logged in, they pulled my info from my existing accounts and prefilled most of the application. Easy.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

Txroadrunner
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Re: HSA with no fees and max investments?

Post by Txroadrunner » Thu Mar 14, 2019 7:32 am

motorcyclesarecool wrote:
Wed Mar 13, 2019 10:39 pm
MotoTrojan wrote:
Wed Mar 13, 2019 9:51 pm
Just opened an HSA for the first time. So I don't have to use the bank provided by my employer?
Nope. The only potential downside of going with a different HSA custodian is it might be harder to do your contributions under a “cafeteria plan” which would reduce your income for FICA and Medicare tax.
Thank you for this clarification. My sponsoring employer made it sound mandatory to use their provider.

InMyDreams
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Re: HSA with no fees and max investments?

Post by InMyDreams » Thu Mar 14, 2019 9:28 am

Participating in your employer's HSA means you may withdraw thru payroll deduction, which means saving both the income tax and the FICA (but not everyone may want that?)

Direct contributions from you to an HSA saves on income tax but not FICA.

Some people contribute thru employer and move it to their own, non-employer HSA.

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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Sat Mar 16, 2019 5:20 pm

Thanks everyone. Just opened an account with Fidelity.

Couple more questions:

1) Assuming you have the cash, any reason not to max the 2019 contribution limit with one deposit? That would be $7,000 for me and I'd love to deposit that ASAP so the money can be invested and go to work. (This HSA lives outside my employer so the contribution would be after-tax now, and I assume would finally get deducted when we file our personal taxes for 2019.)

2) My new HDHP officially starts on April 1. Do I have to wait until that plan technically starts in order to contribute and invest the funds. Or can I do so now?

Blandrew
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Re: HSA with no fees and max investments?

Post by Blandrew » Sat Mar 16, 2019 8:25 pm

pepperz wrote:
Sat Mar 16, 2019 5:20 pm
Thanks everyone. Just opened an account with Fidelity.

Couple more questions:

1) Assuming you have the cash, any reason not to max the 2019 contribution limit with one deposit? That would be $7,000 for me and I'd love to deposit that ASAP so the money can be invested and go to work. (This HSA lives outside my employer so the contribution would be after-tax now, and I assume would finally get deducted when we file our personal taxes for 2019.)

2) My new HDHP officially starts on April 1. Do I have to wait until that plan technically starts in order to contribute and invest the funds. Or can I do so now?
I believe the main downside would be potentially not having your FICA taxes reduced. Although from my searching it doesn't seem there is a consensus on whether this is true or not.

Eno Deb
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Re: HSA with no fees and max investments?

Post by Eno Deb » Sat Mar 16, 2019 8:31 pm

pepperz wrote:
Sat Mar 16, 2019 5:20 pm
1) Assuming you have the cash, any reason not to max the 2019 contribution limit with one deposit?
If you are reasonably sure that you will have HDHP coverage through the entire testing period (see below) than no. If you lose coverage during that period you may have to request a return of excess contributions from Fidelity, or otherwise you may incur a 10% penalty in addition to losing the tax deductibility of part of the contributions.

Personally, I make my contribution towards the end of the year (to save me the trouble in case I lose the HDHP coverage e.g. due to taking a new job).
2) My new HDHP officially starts on April 1. Do I have to wait until that plan technically starts in order to contribute and invest the funds. Or can I do so now?
The contributions are accounted by tax year, so you could contribute immediately. But if you want to make the full contribution for the year (last month rule) rather than pro-rating for April-December, remember that you must have qualified HDHP coverage through the testing period, in this case the end of 2020.

Eno Deb
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Re: HSA with no fees and max investments?

Post by Eno Deb » Sat Mar 16, 2019 8:33 pm

Blandrew wrote:
Sat Mar 16, 2019 8:25 pm
I believe the main downside would be potentially not having your FICA taxes reduced. Although from my searching it doesn't seem there is a consensus on whether this is true or not.
It is true. However, when it comes to the Social Security component of FICA, it's not necessarily an advantage to avoid the tax since it may reduce your SS benefits in retirement. Also, if your income is above the taxable maximum for SS plus the HSA contribution, you'll pay the maximum amount of SS tax regardless. The Medicare component of FICA is rather small (about 1.5%).

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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Mon Mar 18, 2019 9:55 am

Eno Deb wrote:
Sat Mar 16, 2019 8:31 pm
The contributions are accounted by tax year, so you could contribute immediately. But if you want to make the full contribution for the year (last month rule) rather than pro-rating for April-December, remember that you must have qualified HDHP coverage through the testing period, in this case the end of 2020.
Thanks for clarifying. I don't plan on changing this plan through the testing period. Doesn't going "all in" now (by contributing entire amount for the year) give our funds the best chance for growth over time. Obviously anything can happen but as far as we all know, it's more likely. Do I have that right?

Eno Deb
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Re: HSA with no fees and max investments?

Post by Eno Deb » Mon Mar 18, 2019 2:11 pm

pepperz wrote:
Mon Mar 18, 2019 9:55 am
Thanks for clarifying. I don't plan on changing this plan through the testing period. Doesn't going "all in" now (by contributing entire amount for the year) give our funds the best chance for growth over time. Obviously anything can happen but as far as we all know, it's more likely. Do I have that right?
Yes. What you would gain by contributing immediately is tax-free growth for the rest of the year (as opposed to paying tax for any interest/dividends if you keep the money invested outside the HSA). However, given the relatively small HSA contribution amounts and short time frame, this will probably not make a substantial difference.

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FelixTheCat
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Re: HSA with no fees and max investments?

Post by FelixTheCat » Mon Mar 18, 2019 3:13 pm

Is the HSA worth it?

I pay for a chiropractor (1,440 a year) and prescription drugs (350 a year). I normally charge these items on Fidelity's 2% Rewards Card. I pay off the credit card using cash from a 2% money market fund.

Is the tax deduction worth the hassle of switching to an HSA?
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mervinj7
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Re: HSA with no fees and max investments?

Post by mervinj7 » Mon Mar 18, 2019 3:42 pm

FelixTheCat wrote:
Mon Mar 18, 2019 3:13 pm
Is the HSA worth it?

I pay for a chiropractor (1,440 a year) and prescription drugs (350 a year). I normally charge these items on Fidelity's 2% Rewards Card. I pay off the credit card using cash from a 2% money market fund.

Is the tax deduction worth the hassle of switching to an HSA?
You can still pay your bills out of pocket and leave the HSA for investing. Save your receipts and you can reimburse yourself anytime. For me, the triple tax advantages are too good to pass (i.e. tax deductible contributions, tax-free growth, tax-free withdrawals for medical expenses).

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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Wed Mar 20, 2019 4:07 am

I just noticed Merrill Edge offers an HSA account as as well. We are Platinum Honors tier and therefore get free trades.

I presume the trades at Fidelity or Lively are not free; correctly?

Might this work out to be a better deal than Fidelity or Lively because of the trades being free? I already have a regular brokerage account with them.

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RickBoglehead
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Re: HSA with no fees and max investments?

Post by RickBoglehead » Wed Mar 20, 2019 5:16 am

pepperz wrote:
Wed Mar 20, 2019 4:07 am
I just noticed Merrill Edge offers an HSA account as as well. We are Platinum Honors tier and therefore get free trades.

I presume the trades at Fidelity or Lively are not free; correctly?

Might this work out to be a better deal than Fidelity or Lively because of the trades being free? I already have a regular brokerage account with them.
Fidelity is 100% free unless the fund has fund specific fees. Or you trade stocks.
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pepperz
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Re: HSA with no fees and max investments?

Post by pepperz » Wed Mar 20, 2019 5:40 am

RickBoglehead wrote:
Wed Mar 20, 2019 5:16 am
pepperz wrote:
Wed Mar 20, 2019 4:07 am
I just noticed Merrill Edge offers an HSA account as as well. We are Platinum Honors tier and therefore get free trades.

I presume the trades at Fidelity or Lively are not free; correctly?

Might this work out to be a better deal than Fidelity or Lively because of the trades being free? I already have a regular brokerage account with them.
Fidelity is 100% free unless the fund has fund specific fees. Or you trade stocks.
Wow - so how the heck will they make any money from me assuming I’m only investing in Index Funds?

If Fidelity is 100% free and Merril Edge trades are also free because we are Platinum Honors status, does that mean it doesn’t matter which we choose or is there another recommended factor we look at when comparing?

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Tamarind
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Re: HSA with no fees and max investments?

Post by Tamarind » Wed Mar 20, 2019 6:15 am

RickBoglehead wrote:
Wed Mar 20, 2019 5:16 am
pepperz wrote:
Wed Mar 20, 2019 4:07 am
I just noticed Merrill Edge offers an HSA account as as well. We are Platinum Honors tier and therefore get free trades.

I presume the trades at Fidelity or Lively are not free; correctly?

Might this work out to be a better deal than Fidelity or Lively because of the trades being free? I already have a regular brokerage account with them.
Fidelity is 100% free unless the fund has fund specific fees. Or you trade stocks.
Trades of TDAmeritrade's list of commission-free ETFs are also free through Lively. There are low ER equivalents to everything you need for the 3-fund portfolio in that list.

cas
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Re: HSA with no fees and max investments?

Post by cas » Wed Mar 20, 2019 8:43 am

pepperz wrote:
Wed Mar 20, 2019 4:07 am
I just noticed Merrill Edge offers an HSA account as as well. We are Platinum Honors tier and therefore get free trades.
Is there a publicly available web page on this "Merrill Edge" HSA? If it is a new (free/low fee) response to the Fidelity HSA, then that would likely be interesting information to people.

But...

As a Merrill Edge account holder, you are in a position to have 1000% more accurate information that I am, but this "free" Merrill Edge HSA account didn't sound quite right to me, so I did a quick google of "Merrill Edge HSA".

The page that came up (https://www.merrilledge.com/article/hea ... ical-costs) redirected me to open a Bank of America HSA. This makes a certain amount of sense, since Bank of America owns Merrill Lynch. Are you certain that there is a now a separate "Merrill Edge" HSA?

Googling "Bank of America HSA fee schedule" quickly revealed that there is a $2.50 monthly ($30 annual) maintenance fee. (https://healthaccounts.bankofamerica.co ... fees.shtml) The fee schedule says nothing about waiving the fee for Platinum Honors Merrill Edge account holders. Are you certain the monthly fee is waived for Platinum Honors Merrill Edge account holders?

Clicking back to the top level of the BOA HSA page and looking for their investment options, it says that there is a (limited) menu of mutual funds available, with $1000 minimum required to be held in the minimal-interest cash account ( = a shadow "cash drag" fee). Searching a bit more over to the HSASearch BOA HSA page , it says that no self-directed brokerage is available (which would imply that your Platinum Honors free trades aren't relevant to the account). (https://www.hsasearch.com/hsa_providers ... entoptions ) Are you getting information that there is now a (new?) "Merrill Edge" HSA that does have a self-directed brokerage option and no minimum cash account requirement?

Or maybe I've run off on a rabbit trail and there is a "Merrill Edge" HSA that is different from the Bank of American HSA. Can you confirm or deny?

azianbob
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Re: HSA with no fees and max investments?

Post by azianbob » Thu Mar 21, 2019 6:39 pm

Is there a limit to the Fidelity HSA for it to be free? Or can I have like $100 in it and it is free?

My current company uses Benefit Wallet for its HSA, but if I ever change jobs, I would need somewhere to roll the HSA over to.

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