Best Health Savings Accounts of July 2024
Updated July 8, 2024 at 3:13 pm
One of the most unique savings accounts is the Health Savings Account. It provides triple tax advantages by reducing your taxable income, growing tax-deferred and allowing tax-free withdrawals. Like other tax-advantaged accounts, there are certain rules and contribution limits you need to follow in order to maximize its benefits. Learn the rules of health savings accounts, who can benefit from an HSA and the best HSAs for different types of investors.
Methodology Newsweek Vault’s experts select the best health savings accounts based on numerous criteria, including overall value, interest rates, investment options, minimum balance and fees. These factors impact our rankings and choice of the best HSAs for each type of customer. Whether you’re interested in starting a new health savings account or are looking to transfer from an existing account, our research spans all the top HSA providers, banks and investment companies.
Our Picks - Best for Low Fees: Lively
- Best for No Minimum Balance Requirement: HSA Bank
- Best for Investment Options: Fidelity Investments
- Best for Savings Rates: Liberty Federal Credit Union
- Best Traditional Bank HSA: Bank of America
- Best Credit Union HSA: Consumers Credit Union
- Best for Employers: HealthEquity
Vault’s 7 Recommended HSAs of 2024
Best For Low Fees
Lively
Vault Verified
Why We Chose It
Lively doesn’t charge fees and offers a simple dashboard to track contributions, investments and spending. Clients can choose self-directed investment options through a Schwab brokerage account or a pre-defined portfolio from Devenir.
Pros
- Open a free account online with no paperwork requirements
- No fees for transferring HSA from another provider
- Simple dashboard tracks account activity, health plan deductibles and out-of-pocket costs
Cons
- Schwab charges a $24 annual fee if balance is under $3,000
- The Devenir HSA Guided portfolio charges 0.5% annually
- Savings account interest rates are much lower than other accounts
Best for No Minimum Balance Requirement
HSA Bank
Vault Verified
Why We Chose It
When you’re first starting out, you may not have enough money in your HSA to open some accounts. HSA Bank is an excellent choice for small-balance HSAs because it has no minimum balance requirements and does not charge monthly fees. You’ll earn a small amount of interest on your savings account, then you can invest in self-directed investments once your account reaches $1,000.
Pros
- No minimum balance requirements or monthly fees
- Invest in a brokerage account or professionally managed portfolios
- No trading fees for U.S. stocks and select mutual funds
Cons
- Tiered interest rates on savings balances are 0.50% or less
- May incur trading fees in some investments
Best for Investment Options
Fidelity Investments
Vault Verified
Why We Chose It
Fidelity Investments has an established reputation as one of the best investment companies in the industry. HSA clients can choose from a self-directed portfolio where they can choose their own investments or have Fidelity choose and manage investments on their behalf. Self-directed accounts benefit from commission-free trades on U.S. stocks and ETFs, while managed portfolios under $25,000 have no management fees.
Pros
- Offers self-directed investing or managed portfolios
- No minimum to open an account
- Reduced fees for eligible accounts
Cons
- Withdrawals may take up to three to 10 days to sell investments
- Underlying investments may require minimum investment amounts
- Higher commissions are charged when trades are handled by a Fidelity representative
Best for Savings Rates
Liberty Federal Credit Union
Vault Verified
Why We Chose It
HSA customers who want to earn the highest interest rates on their money should consider Liberty Federal Credit Union. While it does not offer investment choices, customers earn 2.01% APY on their Health Savings Checking account and can lock in CD rates on excess funds for up to five years.
Pros
- Offers high interest rates on HSA checking and CDs without monthly or annual fees
- Check writing and debit cards are available
- No minimum balance to open an account
Cons
- Must have a minimum balance of $500 to earn dividends
- Requires $1,000 minimum balance to open CDs ranging from one to five years
- Does not offer stock, mutual fund or ETF investment options
Best Traditional Bank HSA
Bank of America
Vault Verified
Why We Chose It
Many investors have never heard of the companies that run health savings accounts. Instead, they prefer to stick with a traditional bank where they can have all of their accounts at one institution. Bank of America is one of the largest financial institutions in the U.S., and it offers HSAs as well as deposit accounts, loans, credit cards and other bank products.
Pros
- No minimum balance is required to open a health savings account
- Customers can choose between automatic or manual investing
- Can have all of their banking, borrowing and investment accounts at one company
Cons
- Limited mutual fund investment choices
- Self-directed brokerage option is not available
- Low interest rates on HSA savings accounts
Best Traditional Bank HSA
Consumers Credit Union
Vault Verified
Why We Chose It
Investors who prefer a credit union over a big bank should consider Consumers Credit Union. Its health savings account has no minimum balance requirements to open an account or earn dividends, and there are no account fees. Through its partnership with DEVENIR, participants have access to almost 20 investment options. A wide selection makes it easier for investors to diversify their investments to reduce risk. You can easily access your money through a debit card or free checks.
Pros
- Competitive interest rates
- No monthly fees
- Numerous investment options with no-load or waived fund fees
Cons
- Credit union membership required to open an account
- Almost half of its investment choices have expense ratios higher than 0.40%
- Minimum savings account balance of $1,000 is required to invest
Best for Employers
HealthEquity
Vault Verified
Why We Chose It
Employers often look for cost-effective ways to provide benefits to employees. HealthEquity offers low-cost health savings accounts with easy-to-use integration tools. It is the largest HSA provider with more than 5.5 million HSA members across more than 50,000 organizations.
Pros
- Fast onboarding and custom integrations make implementation easier
- 24/7 member support
- Employees can invest in low-cost mutual funds from Vanguard with only $500
Cons
- Charges a monthly admin fee of $6 per account
- Low HSA cash balance tiered interest rates
Reliable Rates From Vault
Please note that any annual percentage yields (APYs) listed are accurate as of the date of publication. As financial rates can fluctuate, the current APYs may differ. We strive to update our data regularly to reflect these changes. For our complete methodology, please refer to the “Methodology” dropdown above.
What is a Health Savings Account?
A health savings account (HSA) is a tax-advantaged savings account available to consumers participating in a high-deductible medical insurance plan. To qualify, you must be covered by a high-deductible health plan, which has insurance deductibles between $1,600 and $8,050 for individuals and $3,200 to $16,100 for families. HSAs are the only tax-advantaged account that offers triple tax advantages for contributions, growth and withdrawals.
Contributions are deducted from paychecks on a pre-tax basis, lowering taxable income. The money grows tax-deferred, which means that participants don’t pay taxes on the interest and gains each year. Withdrawals are exempt from income taxes as long as they are used for eligible expenses.
Eligible medical expenses include:
- Medical expenses used to meet deductible
- Dental care
- Vision care
- Prescription drugs
- Over-the-counter drugs prescribed by your doctor
- Select types of medical equipment, supplies and diagnostic services
You are unable to use your HSA funds to pay for insurance premiums except in select cases. Instances where you can use HSA funds include long-term care insurance, health care continuation coverage (eg.: COBRA), health care coverage while receiving unemployment compensation and qualified Medicare expenses or other health care coverage after turning 65 years old.
Maximum contributions vary based on individual versus family accounts. In 2024, annual maximum HSA contributions grow to $4,150 for individuals and $8,300 for families. Additionally, savers ages 55 and older can use a “catch-up contribution” of an additional $1,000 per year.
The money can stay in a savings account to earn interest, or it can be invested in a variety of investment options. Some HSA companies or workplace plans require participants to maintain a minimum balance in the savings account while investing the rest.
Who Should Get a Health Savings Account?
Health savings accounts are an ideal type of savings account for people in good health. In order to participate in an HSA, you must be signed up for a high-deductible medical insurance plan. These plans offer lower premiums, but they do not start paying out benefits until you’ve met the deductible. By avoiding costly medical expenses, you can invest your contributions to grow over the long term.
“HSAs are an excellent way to save for future medical expenses through triple-tax advantage savings. I’ve been investing through an HSA for many years to reduce my taxes and grow tax-free money when I have medical expenses.”
— Lee Huffman
For people with recurring or high medical expenses, HSAs are not a good idea because they won’t be able to benefit from investing their contributions. In many cases, the out-of-pocket expenses for medical care, prescriptions, co-pays and deductibles are more than their HSA contributions. They may be better off with an HMO or low-deductible PPO medical insurance plan.
People who can afford it can choose to pay their medical costs out of pocket. This allows their contributions to stay invested and grow tax-deferred. At a later date, they’ll submit receipts for eligible expenses to withdraw money tax-free.
Can You Have a Health Savings Account if You Are on Medicare?
Yes, you can keep your HSA even if you’re on Medicare. But you’re no longer able to make new contributions to your Health Savings Account. So the account is still available for use, but you won’t be able to put new money into your HSA once you’re enrolled in Medicare.
You can use HSA funds to pay for premiums for Medicare Parts A, B and D, as well as for Medicare Advantage. But you’re not allowed to use HSA money to cover the cost of premiums for Medigap or Medicare Supplemental policies. You can use your HSA for copays and other eligible out-of-pocket medical expenses.
For some, building an HSA over time can be a way to build up enough money to help with healthcare costs during retirement. With planning, it’s possible to coordinate your HSA with Medicare benefits.
Plus, if you have a Medicare Part C (Medicare Advantage) plan, you might be able to use a Medicare Savings Plan (MSA). It works similarly to an HSA and allows you to set aside money to help pay for costs even if you can no long contribute to a Health Savings Account.
What Is the Penalty For HSA Contributions on Medicare?
If you’re planning to enroll in Medicare, it makes sense to consider stopping your HSA contributions at least six months before your enrollment. This gives your employer time to adjust your paycheck withholdings so you don’t accidentally continue making contributions to your account.
When you make contributions to your HSA after Medicare enrollment, you could be stuck with an excise tax of up to 6% of your excess contributions. On top of that, you might be responsible for paying income taxes on the contributions and earnings resulting from those contributions.
If you realize you’ve contributed to your HSA after enrolling in Medicare, you can remove the excess contributions. Contact your HSA provider to find out the procedure to document taking the money back out of the HSA before tax day.
Can I Use My HSA for Weight Loss Medication?
Depending on the situation, you might be able to use your HSA for weight loss medication. Many people are interested in getting access to semaglutide weight loss aids, such as Wegovy and Ozempic.
Ozempic was originally approved for diabetes, so when using it under doctor’s orders to treat this specific health issue, semaglutide medications are eligible for HSA funds. But things are a little different with weight loss.
Because Wegovy and Ozempic are used for cosmetic weight loss, they might not be covered as eligible medical expenses with your HSA. In order to have semaglutide considered eligible for your HSA money, you need to have a letter of medical necessity from your healthcare provider.
As a result, if you’re hoping to get your HSA to cover your weight loss medication, it needs to be considered medically necessary for your health. If you’re hoping to drop a few pounds for cosmetic purposes or to kickstart a new diet, you likely won’t be able to use HSA money to pay for semaglutide treatments like Ozempic and Wegovy.
What Are Health Savings Account Rules?
Like most tax-advantaged accounts, there are rules that govern who can participate, how much you can contribute and how the money can be withdrawn. These rules also govern how and when contributions and withdrawals are taxed.
- Who can participate: In order to contribute to an HSA, you must be enrolled in a high-deductible medical insurance plan.
- Annual contribution limits: HSAs have contribution limits for individuals, families and participants age 55 and older.
- How is money taxed: Contributions are tax-deductible from your Federal income each year. Payroll contributions are also exempt from FICA tax and state income taxes (in most states). Interest, dividends, capital gains and other income grows tax-deferred. Qualifying withdrawals are tax-free.
- Where you can invest: You can invest in any of the HSA’s chosen investment options to potentially earn higher returns in the long run. Investment options include stocks, bonds, and exchange-traded funds (ETFs).
- Withdrawal rules: Participants can withdraw money tax-free when used for eligible medical expenses. These withdrawals can be done with a linked debit card or by submitting receipts. Some wait to submit receipts until a later date to allow the investments to grow over time. When you reach the age of 65, you can withdraw the money for any reason without paying a penalty. But you will owe income taxes on the gains if the withdrawal isn’t for an eligible expense.
How To Choose the Best Health Savings Account
Opening a health savings account provides numerous financial benefits, but it can be challenging to know how to select the best health savings account. There are many HSA providers to choose from, each with its own unique pros and cons. Focus on these factors to choose the best HSA for your situation.
- How will you use the account? Some people use the account to cover current medical expenses, while others focus on an HSA’s tax-free growth to cover healthcare in retirement. Knowing which approach you’ll take can narrow down which HSA providers to select from.
- How much will you contribute? Some HSA providers require a minimum balance to open an account or access its investment options. Keep annual contribution limits in mind when planning how you’ll fund the account.
- What fees does the HSA provider charge? Health savings accounts often charge annual fees to cover their costs. These fees may be waived based on your balance. However, some providers may require that you keep a certain amount in the savings account in order to waive fees. Examples of additional fees include management fees for investment options, paper statement fees, excess contribution fees and more.
- Comparing interest rates. Interest rates allow savers to earn interest on their HSA balances that are not invested. However, interest rates offered by health savings accounts can vary widely. This factor is important for savers who plan on keeping larger balances in savings instead of investing the money.
- What investment options are available? Investors who want to take advantage of an HSA’s tax-free growth should focus on the investment choices that are available. Having a diverse array of investment options allows you to diversify your HSA like you would your 401(k), IRA or brokerage account. Review the investment funds’ historical performance and fees to determine if they meet your investment criteria.
How can you access the funds? While many use HSAs to save for future medical bills, others need to withdraw money to pay for today’s healthcare expenses. Evaluate how quickly and easily you can access your money. Many HSAs offer a debit card, online billpay or checks to cover medical expenses. If you pay the bills in cash or with a credit card, what is the process for getting reimbursed, and how long does it take?
What Is the Interest Rate for HSAs in 2024?
Interest rates for the savings accounts within HSAs vary widely depending on which company hosts your account. These rates change with economic conditions, so it’s wise to regularly compare interest rates and investment options. Factor in fees when comparing interest rates because you might be better off with an account that offers a lower rate and no fees versus one with high rates that are offset by recurring fees.
| HSA Provider | APY | Monthly fee | Account transfer fee |
| Lively | 0.02% to 0.12% | $0 | $0 |
| HSA Bank | 0.05% to 0.50% | $0 | $25 |
| Fidelity Investments | 2.72% | $0 | $0 |
| Liberty Federal Credit Union | 1.60% to 3.05% | $0 | $25 |
| Bank of America | 0.10% to 0.70% | $2.50 | $25 |
| Consumers Credit Union | 0.55% to 1.16% | $0 | $0 |
| HealthEquity | 0.05% to 0.75% | $0 | $25 |
How To Open a Health Savings Account
If an HSA fits into your financial plans, follow these steps to choose a company and open an account.
- Step 1. Research HSA companies to find one that matches your goals.
- Step 2. Sign up for an eligible high-deductible medical insurance plan.
- Step 3. Determine how much you can save in your HSA and set up payroll contributions.
- Step 4. Complete the application to open your health savings account with your preferred company.
- Step 5. Tell your employer where to direct your contributions.
- Step 6. Select the investments where your excess contributions are invested.
Pros and Cons of Health Savings Accounts
To make it easier to decide whether they are right for your finances, take a look at the pros and cons of health savings account providers.
Pros
- Triple tax advantages: contributions, growth and withdrawals
- Contributions are portable and unused money rolls over to the following year
- Unused contributions can be invested for long-term growth
Cons
- Must participate in a high-deductible medical insurance plan
- Taxes and penalties if money is used for ineligible expenses
- Participants may not be able to max out contributions
Health Savings Account (HSA) vs. Flexible Savings Account (FSA)
During your annual enrollment, you may be offered the choice between a health savings account (HSA) and a flexible spending account (FSA). Both accounts allow consumers to pay for medical expenses on a pre-tax basis. While HSAs require participants to have a high-deductible medical plan, anyone can have an FSA. In fact, there are different types of FSAs, including those for medical and childcare expenses.
Each type of account has different contribution limits as well. In 2024, participants can contribute a maximum of $3,200 per year to Healthcare Flexible Spending Accounts (HCFSAs). HSAs allow much larger contributions with 2024 annual maximums of $4,150 for individuals and $8,300 for families.
FSA contributions must be spent each year. If you don’t use the money on eligible expenses, you forfeit the unused balance. But some plans allow you to carry over a certain amount: up to $640 in 2024. With this in mind, people often contribute less to an FSA than they expect to spend each year to avoid forfeiting unused money. By comparison, money in HSAs can be carried forward indefinitely so participants are encouraged to contribute the maximum.
Contributions to FSAs do not earn interest and can’t be invested. Since HSAs offer a longer-term approach, they offer either interest or investment returns, depending on how they’re saved.
Frequently Asked Questions
What Are the Downsides to Health Savings Accounts?
An HSA is an excellent option for people who don’t visit the doctor very often because you can set aside money for the future. However, these accounts require a high-deductible health insurance plan, which can be disastrous for people with larger medical expenses. Additionally, interest rates on HSAs tend to be lower than average, and many health savings accounts require minimum savings balances before you can invest. The account may have limited investment options or high annual expenses that eat into your returns.
Which HSA Has No Fees?
Several HSA providers have no monthly maintenance or application fees. Lively has a free account. HSA Bank does not charge monthly fees but offers low interest rates and requires a minimum balance of $1,000 before you can invest. Liberty Federal Credit Union offers attractive interest rates with no fees, but it doesn’t have any investing options.
How Does a Health Savings Account Work?
A health savings account allows people with high-deductible medical plans to contribute money on a pre-tax basis. This money grows tax-deferred through interest and investments. Withdrawals for eligible medical and other expenses are tax-free.
Newsweek writer Miranda Marquit contributed to this post.
Editorial Note: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors’ opinions or evaluations.
