Best HSA?

[michaeljc70]

It's absolutely not done electronically. It took a while for me to transfer from HealthEquity to Fidelty

After 10 days I got an email from Optum saying they cannot complete my transfer as they don't do in kind transfers with securities. I guess I have to sell everything, transfer the cash, and then buy it back. I really don't like doing that because if there is a big swing in the market to the upside I lose out. Obviously, I know it could go the other way. If this is a couple days, less important. But who knows how long it will take if it took 10 days for them to tell me they can't do a transfer. The account is $135k so not a fortune, but a few percent to the upside during the transfer and the $50 a year I save isn't worth it.

Can you rebalance in another account during the transfer? I.e. sell the bond and buy the stock while HSA is liquidated.

Sure, but what happens if the bonds move? It's not like they don't fluctuate. I'll probably just take my chances and hope for the best.

Yes, but probably an order of magnitude less sensitivity than stocks.

This year the standard deviataion for BND is 9% and VTI is 12%. Bonds have been more volatile in the last couple of years than typical.

[dcabler]

It's absolutely not done electronically. It took a while for me to transfer from HealthEquity to Fidelty

After 10 days I got an email from Optum saying they cannot complete my transfer as they don't do in kind transfers with securities. I guess I have to sell everything, transfer the cash, and then buy it back. I really don't like doing that because if there is a big swing in the market to the upside I lose out. Obviously, I know it could go the other way. If this is a couple days, less important. But who knows how long it will take if it took 10 days for them to tell me they can't do a transfer. The account is $135k so not a fortune, but a few percent to the upside during the transfer and the $50 a year I save isn't worth it.

Can you rebalance in another account during the transfer? I.e. sell the bond and buy the stock while HSA is liquidated.

Sure, but what happens if the bonds move? It's not like they don't fluctuate. I'll probably just take my chances and hope for the best.

Yes, but probably an order of magnitude less sensitivity than stocks.

Unless you're doing this in the year 2022 or your bond durations are short.

Cheers...

[MrJedi]

This year the standard deviataion for BND is 9% and VTI is 12%. Bonds have been more volatile in the last couple of years than typical.

I don't disagree with your points. But the original concern was about being out of the market. Exchanging bonds for cash instead of stocks for cash will reduce that sensitivity. To your point, even in a time when bonds are more volatile than normal, it is still less than stocks.

[j41e]

For someone with over $25,000 in an HSA would Lively be better than Fidelity?

I see at https://www.fidelity.com/go/hsa/investing-hsa-your-way that Fidelity charges a (holding / maintenance ?) fee of 0.35% for account with $25,000 and above. Can someone confirm this is the case?

I don't like fees either, but wouldn't paying the $24/annual at Lively to use Schwab be better than paying the 0.35% at Fidelity?

[tj]

For someone with over $25,000 in an HSA would Lively be better than Fidelity?

I see at https://www.fidelity.com/go/hsa/investing-hsa-your-way that Fidelity charges a (holding / maintenance ?) fee of 0.35% for account with $25,000 and above. Can someone confirm this is the case?

I don't like fees either, but wouldn't paying the $24/annual at Lively to use Schwab be better than paying the 0.35% at Fidelity?

There is no fee for the Fidelity HSA, only the Fidelity Go HSA. I'm not sure why you are confused because your link is very clear on the differences between the two types of accounts.

[j41e]

There is no fee for the Fidelity HSA, only the Fidelity Go HSA. I'm not sure why you are confused because your link is very clear on the differences between the two types of accounts.

Somehow I missed that the page was divided down the middle. Thanks for the reply.

[comeinvest]

I'm at Optum and have no reason to change. They don't charge me any fees. $1000 had to stay in the account at the beginning and the rest could be invested. However, I can take out the $1000 (for qualified health expenses). I may be grandfathered in as my account was previously with Wells Fargo. My money is invested in a Vanguard institutional fund.

With $1k in the cash account you pay a > $50 p.a. hidden fee, at current risk-free interest rates.

[comeinvest]

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[comeinvest]

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[michaeljc70]

I'm at Optum and have no reason to change. They don't charge me any fees. $1000 had to stay in the account at the beginning and the rest could be invested. However, I can take out the $1000 (for qualified health expenses). I may be grandfathered in as my account was previously with Wells Fargo. My money is invested in a Vanguard institutional fund.

With $1k in the cash account you pay a > $50 p.a. hidden fee, at current risk-free interest rates.

At the time it was more like $5. I've since moved to Fidelity

[asif408]

I have a TDA HSA through HSA bank from my employer, I wonder when that will be rebranded to Schwab, and if it'll be visible through my Schwab login. I also have a fidelity HSA. For whatever reason, none of the other brokerages have decided to compete with fidelity in this space and therefore fidelity is the only one that gets recommended.

Just as an update, I have my HSA through Lively. It was transitioned from TDA to Schwab late last year and it was consolidated with my current 457 account at Schwab so I am able to view them both with one login. So one less account to deal with, which I like.

Certainly if you are just starting out looking for the best HSA and don't already have a Schwab or Lively account I'd go with Fidelity. But if you already have a Lively account and/or a Schwab account and you want simplicity you might be willing to pay the $24 annual fee to have one less account to deal with. Something to consider.

[Incognito]

I transferred 2/3 of my HSA money from HealthEquity to Fidelity. Took 2 full weeks for HealthEquity to debit my account and another week for the funds to show up in my Fidelity account.

[shahhere]

Anyone do this: Sell their Betterment funds on the Optum side and get the Cash in Optum? I had most of mine in Betterment so I need to do that step so i can then move Optum to Fidelity.

There were some issues with what is the right amount but now since Friday the funds are in Limbo? I assume its being settled and I will see them in Optum at some point....

Shahhere

[RogerRabbit]

I think it’s possible to grade HSA purveyors by their efficiency of inter-institutional funds transfer. Some make it as difficult and slow as possible for seeming short-term gains to their bottom line.

I’ve found Fidelity to be a good HSA per the broader investment options, no-to-nominal fees, and ease of use when we need it. In contrast, the (shall remain nameless) HSA used by our employer charges fees for everything and has limited options for investment.

Every other month we transfer all but ~$15 out of our employer HSA to Fidelity, wait 3+ weeks for the transfer to complete, then invest. If we issue the request within Fidelity it often takes a month.

RR

[MangoSmoothie]

Based on this thread, I started a transfer from Optum to Fidelity. It said it should take 6 days on average. It has been more than a week and now says the estimated completion date is 7/16! That is crazy. Isn't this done electronically? That being said, I don't use or make changes to the account so it is sort of moot. But I will be investing the $1k that I can't invest at Optum at Fidelity.

It's absolutely not done electronically. It took a while for me to transfer from HealthEquity to Fidelty

After 10 days I got an email from Optum saying they cannot complete my transfer as they don't do in kind transfers with securities. I guess I have to sell everything, transfer the cash, and then buy it back. I really don't like doing that because if there is a big swing in the market to the upside I lose out. Obviously, I know it could go the other way. If this is a couple days, less important. But who knows how long it will take if it took 10 days for them to tell me they can't do a transfer. The account is $135k so not a fortune, but a few percent to the upside during the transfer and the $50 a year I save isn't worth it.

I have transferred from numerous HSAs, including Optum, to Fidelity. It always seems far more difficult than it should be, but I have found it was well worth the effort, if for nothing more than reducing account fees. When I transferred my assets from Optum, I was able to do it online using the Fidelity website. I do recall needing to convert investments back to the cash account which seems to align with what Optum is telling you to do.

[Caleb4387]

Absolutely Fidelity for me. You may get someone eventually who says Lively as an alternative.

Ever since Schwab acquired TDA (and thus investment servicing for Lively) and added the cash minimum or annual fee to invest, I think that group of people has seriously dwindled.

Can confirm. I've closed my Lively account In favor of fidelity.

[dcabler]

Hello,
I currently have an HSA with HealthEquity from a former employer. Unfortunately this HSA, requires I keep $2,000 minimum before investing. Just curious if there is a better option out there? I hold my personal accounts with Vanguard. It seems like a lot of people here like Fidelity?

My HSA was with HealthEquity at my former employer as well. Even when I was still employed there, I was doing a trustee to trustee transfer to Fidelity about every 3 paychecks. No more minimum in cash. No more having to choose from among investments I didn't like. And no more added on fees for investing. You can't move anything invested to Fidelity in-kind. For the first transfer, I sold everything and moved almost all of it over to Fidelity, leaving just enough to keep the account open. Then the regular every-three-paycheck transfers started.

You have a couple of ways of doing this - you can initiate it from either the HealthEquity side (simple online form) or Fidelity can take care of it from their side. I tried both ways and starting from the HealthEquity side was a little faster. Average time from request to the money showing up at Fidelity was about 3 weeks. HealthEquity literally cuts a check and mails it to Fidelity.

Note that HealthEquity is set up differently with every employer. My former employer's plan started with a $1000 minimum before investing could begin but they then changed to the minimum amount required to keep the account open. Based on postings on this forum and my own experience, the only constant appears to be that $25 is required to keep the account open.

Cheers.

[HockeyFan99]

I read through this very helpful thread, and as somebody who also has a Health Equity HSA through their employer, I wanted to ask a couple of quick follow up questions.

1) If I were to transfer my investments from Health Equity to Fidelity, it seems likely I would need to liquidate them at Health Equity in order to move them to Fidelity. Would that be a taxable event?

2) Can the recurring transfers out of Health Equity to Fidelity (e.g., every three paychecks or whatever) be automated? The fact that it could take weeks does not bother me, but I would really like to avoid having to manually effect the transfer (even if it can be done online; doubly so if it requires mailing something). I didn't see any explicit references to automating this process so it could be "set it and forget it."

3) Are the investment options at Fidelity really so much different / better than at Health Equity? Right now I have my Health Equity investment allocated between VEMPX and VIGIX. It looks like Health Equity charges 0.0003% AUM each quarter. Are the Fidelity fees significantly improved from that?

I do have a $2,000 cash balance minimum at Health Equity before I can invest, so I'm trying to determine what the Fidelity cost savings are - balanced against the administrative costs of recurring transfers to Fidelity - to determine whether creating yet another account to track and manage makes sense for me.

Thank you!

(Edited to add - if it matters, my goals for the HSA are to treat it purely as a retirement account for right now. I will continue to pay my medical expenses with post-tax money, and am hoping to use the HSA to have an additional savings option for medical expenses in retirement.)

[Money_Badger]

Moved mine from Health Equity to Fidelity. HE was charging me a maintenance fee because it was left over from a previous employer. Fidelity has been great.

[fetch5482]

I read through this very helpful thread, and as somebody who also has a Health Equity HSA through their employer, I wanted to ask a couple of quick follow up questions.

1) If I were to transfer my investments from Health Equity to Fidelity, it seems likely I would need to liquidate them at Health Equity in order to move them to Fidelity. Would that be a taxable event?

Depends on the state you reside in. CA and NJ considers HSA as taxable accounts for state taxes, so if you reside in one of those two then selling equity in HSA is a state taxable event. For other states it is not a taxable event at either federal or state level.

2) Can the recurring transfers out of Health Equity to Fidelity (e.g., every three paychecks or whatever) be automated? The fact that it could take weeks does not bother me, but I would really like to avoid having to manually effect the transfer (even if it can be done online; doubly so if it requires mailing something). I didn't see any explicit references to automating this process so it could be "set it and forget it."

I don't believe you can automate this, unfortunately. HE is all online for partial rollover-out. I usually frontload my HSA at the beginning of the year from employer, then transfer out in one shot; so this has not been a problem for me.

3) Are the investment options at Fidelity really so much different / better than at Health Equity? Right now I have my Health Equity investment allocated between VEMPX and VIGIX. It looks like Health Equity charges 0.0003% AUM each quarter. Are the Fidelity fees significantly improved from that?

If you are happy with the available options in HE, that seems like a good consideration on whether to stay or not. My employer's HE plan requires us to keep $25 to keep the account at HE open for future contributions, and no other fees besides the index fund fees. However once I leave the employer, the fees on the account are rather large. As a CA resident, I prefer to move things now when there are no capital gains than in the future when I would have to pay state taxes to transfer out of HE when fees are introduced upon my exit from the employer.
I also prefer ETFs over MF, so Fidelity has worked out perfectly for me here.

I do have a $2,000 cash balance minimum at Health Equity before I can invest, so I'm trying to determine what the Fidelity cost savings are - balanced against the administrative costs of recurring transfers to Fidelity - to determine whether creating yet another account to track and manage makes sense for me.

The transfers are "free", so its mostly a time cost to transfer from HE to Fidelity. There is a small "opportunity cost" of 2 weeks or so during which your cash is not invested for inflight transfers.

Generally speaking, as long as you are not investing in Fidelity-exclusive funds (like FZROX and others), staying with Fidelity gives you the flexibility to keep your money there or move it to another provider in the future if Fidelity increase the fees on their HSA accounts.

[HockeyFan99]

Thank you!

1) If I were to transfer my investments from Health Equity to Fidelity, it seems likely I would need to liquidate them at Health Equity in order to move them to Fidelity. Would that be a taxable event?

Depends on the state you reside in. CA and NJ considers HSA as taxable accounts for state taxes, so if you reside in one of those two then selling equity in HSA is a state taxable event. For other states it is not a taxable event at either federal or state level.

Unfortunately, I reside in NJ.

Do you know if I were to move from NJ (which I hope to do in retirement - I would love to do away with winter!) and waited until that point to transfer out, would the taxability be determined by my state of residence at the time of sale, or at the time that the funds were deposited (pre-tax)?

2) Can the recurring transfers out of Health Equity to Fidelity (e.g., every three paychecks or whatever) be automated? The fact that it could take weeks does not bother me, but I would really like to avoid having to manually effect the transfer (even if it can be done online; doubly so if it requires mailing something). I didn't see any explicit references to automating this process so it could be "set it and forget it."

I don't believe you can automate this, unfortunately. HE is all online for partial rollover-out. I usually frontload my HSA at the beginning of the year from employer, then transfer out in one shot; so this has not been a problem for me.

This is a good idea, and I front-load my contributions (first two paychecks), but my employer's contribution ($3K) is spread equally across the year.

It seems like the financially efficient thing to do is to bite the bullet on the state taxes now, move to Fidelity, and then continue to move funds over as they come in. But it does seem like a reasonable amount of work for - at least at my HSA size - is a fairly small amount of savings. I wonder, half seriously, if this is the type of thing an AI agent will soon be able to automate for me...

[fetch5482]

Do you know if I were to move from NJ (which I hope to do in retirement - I would love to do away with winter!) and waited until that point to transfer out, would the taxability be determined by my state of residence at the time of sale, or at the time that the funds were deposited (pre-tax)?

I'm not a tax professional, but I believe if you move out then sell as a non-resident of NJ you'll only be subject to the rules of the new state you moved into.

This is a good idea, and I front-load my contributions (first two paychecks), but my employer's contribution ($3K) is spread equally across the year.

It seems like the financially efficient thing to do is to bite the bullet on the state taxes now, move to Fidelity, and then continue to move funds over as they come in. But it does seem like a reasonable amount of work for - at least at my HSA size - is a fairly small amount of savings. I wonder, half seriously, if this is the type of thing an AI agent will soon be able to automate for me...

It's some effort, but frankly it's under 5 minutes of work to submit the partial transfer form online. Just login to HE, click on general forms, then online form, then the form for partial transfer out. Fill in the amount you want to transfer (I leave $25 to keep the account open), and the address to mail the check (Fidelity Investments, P.O. Box 770001, Cincinnati OH 45277-0036). I keep this information and my Fidelity HSA account number in a place from where I can easily copy/paste so I'm done in 2-3 minutes. HE temporarily closes my account after a couple days, then sends the check to different and unlocks my account again a few days later. Then a few days after that money shows up in my Fidelity HSA account.

[fetch5482]

It seems like the financially efficient thing to do is to bite the bullet on the state taxes now, move to Fidelity, and then continue to move funds over as they come in. But it does seem like a reasonable amount of work for - at least at my HSA size - is a fairly small amount of savings. I wonder, half seriously, if this is the type of thing an AI agent will soon be able to automate for me...

Adding to my response above, I guess if the effort seems high, you can consider a hybrid approach:
a) For already invested existing assets, keep it at HE for now. In the future, whenever you leave NJ you can transfer those in one shot without incurring capital gain taxes.
b) For new money that comes to HE, frontload and move your contributions in one shot at the beginning of the year.
c) For new money that is employer contribution, you can keep it as cash until the new year and do it along with next years' frontloaded contributions.

This minimizes your money movement to once a year and minimizes your tax bill.

[HockeyFan99]

It seems like the financially efficient thing to do is to bite the bullet on the state taxes now, move to Fidelity, and then continue to move funds over as they come in. But it does seem like a reasonable amount of work for - at least at my HSA size - is a fairly small amount of savings. I wonder, half seriously, if this is the type of thing an AI agent will soon be able to automate for me...

Adding to my response above, I guess if the effort seems high, you can consider a hybrid approach:
a) For already invested existing assets, keep it at HE for now. In the future, whenever you leave NJ you can transfer those in one shot without incurring capital gain taxes.
b) For new money that comes to HE, frontload and move your contributions in one shot at the beginning of the year.
c) For new money that is employer contribution, you can keep it as cash until the new year and do it along with next years' frontloaded contributions.

This minimizes your money movement to once a year and minimizes your tax bill.

This is a really good idea. I think I should do that with new money, on the assumption that Fidelity is a better long-term bet than HE. And then I can decide whether to wait for a potential move or just bite the bullet on the taxes with the money that is already at HE. Thank you!