A health savings account, or HSA, is quickly becoming a requirement in today’s world of high out-of-pocket medical costs. Because out-of-pocket expenses can add up to thousands of dollars each year, an HSA allows you to budget for those costs while also receiving a tax deduction. And, similar to an IRA, any funds not spent can be retained and invested tax-free. Lively distinguishes itself from other HSA providers in that it specializes in HSA plans. As a result, they provide more options than most HSA providers. This includes the ability to invest your money in either safe, interest-bearing investments or self-directed investing in any asset class you desire.

About Lively

Lively, based in San Francisco and founded in 2018, is a company dedicated to bringing health savings accounts (HSAs) to the masses in order to alleviate some of the sting of rising healthcare costs. By specializing in HSAs, Lively assists consumers in budgeting for rising out-of-pocket medical costs while receiving a tax benefit.

Many financial institutions, particularly banks and credit unions, provide HSA accounts. However, there are only a few companies that specialize in this highly specialized tax-sheltered financial account.

Lively HSAs are available to individuals as well as through employer plans. If your company does not provide an HSA option, it may be worthwhile to recommend the service to human resources or employee benefits.

Lively has a “A-” rating from the Better Business Bureau on a scale of A+ to F. It has a rating of 4.7 stars out of five on the App Store and 4.9 stars out of five on Google Play, despite the fact that both ratings are based on a small number of reviews. Still, a good review is a good review!

What is a Health Savings Account (HSA)

The simplest way to describe an HSA is to compare it to a medical IRA. It functions similarly to an IRA in that contributions to the plan are tax-deductible. Any income you earn from the money in the plan is tax-free. Furthermore, if funds are withdrawn from the HSA to pay for qualified medical expenses, there is no tax due on the distributions.

Furthermore, any funds in your HSA that you do not use in a given year can be carried forward indefinitely. You can invest the funds in either interest-bearing securities or equity-type investments such as stocks and mutual funds.

In theory, if you contribute the maximum amount to an HSA each year and never take withdrawals, you can accumulate hundreds of thousands of dollars after decades of steadily investing the funds.

You can contribute up to $3,550 for singles and $7,100 for families in 2021. However, taxpayers 55 and older are eligible for an additional $1,000 catch-up contribution.

To be eligible for an HSA, you must have a high-deductible health insurance plan (HDHP) that meets the following limits:

  • Singles with an HDHP have a $1,400 minimum deductible and a $6,900 maximum out-of-pocket limit.
  • Families with an HDHP have a minimum deductible of $2,800 and a maximum out-of-pocket limit of $13,800.

You are eligible to participate in an HSA if you meet the above criteria. There are few provisions that would prevent you from opening your own account, unlike in most tax-sheltered plans. However, you should be aware that once you enroll in Medicare, you will no longer be eligible for an HSA.

Why You May Want to Open Your Own HSA

With healthcare costs as high as they are, even having health insurance is frequently insufficient. Copayments, high deductibles, and coinsurance provisions can result in out-of-pocket costs in the thousands of dollars per year. An HSA allows you to a) budget funds in advance of those costs and b) receive a tax break for your contributions.

That second part is crucial. Since the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction, itemizing deductions is nearly impossible for the average household. It’s even more difficult with medical expenses, because they can only be deducted up to 10% of your adjusted gross income (AGI).

However, you can avoid this issue by using an HSA. It allows you to claim a tax credit for out-of-pocket medical expenses even if you don’t itemize on your tax return. For example, if you have a family plan and contribute $7,100 in 2021, you will be able to deduct the full amount of the contribution. You can take that deduction even if you don’t itemize or use any of the funds for medical expenses.

Not only will you reduce your tax bill, but you’ll also be putting money aside for both current and future out-of-pocket medical expenses. What you don’t spend from the account can be saved and invested. As a result, it is a medical expense account and a retirement plan rolled into one.

If you want to open an HSA account, Lively is a great place to start.

How Lively Works

You can set up either one-time or recurring contributions with Lively. There will be no paperwork to fill out, and you can fund your account by linking your bank account or through your regular employer payroll contributions. They also allow you to transfer HSA accounts from other trustees into your Lively account.

When you deposit funds into a Lively HSA account, you will have two investment choices. One option is to put the money in an interest-bearing account at an FDIC-insured bank. The other option is to keep the funds in a TD Ameritrade self-directed brokerage account.

Your funds will be held at Choice Financial if you choose the fixed-income bank investments. It will include FDIC insurance, which will protect your account up to $250,000.

The following are the current interest rates paid on the Choice Financial Account:

  • Less than $2,500 – 0.25% APY
  • $2,500 to $4,999 – 0.35% APY
  • $5,000 to $14,999 – 0.45% APY
  • $15,000 or more – 0.60% APY

The TD Ameritrade account has no fees and no minimum balance requirement. You can manage your account entirely online (or through your mobile app), and you can set up recurring fund transfers to various investments. The TD Ameritrade account will be simple to manage and will provide you with all of the tools you’ll need to invest successfully.

While TD Ameritrade does charge fees for some investment types, such as bonds, real estate investment trusts, and some mutual funds, they do not charge fees for trading stocks, options, and exchange traded funds. They also have a selection of mutual funds with no transaction fees. In total, TD Ameritrade will provide you with access to over 13,000 mutual funds.

SIPC protects all TD Ameritrade accounts for up to $500,000 in securities and cash, including up to $250,000 in cash. SIPC protects your account against broker failure, not losses incurred as a result of market factors.

Accessing Your HSA for Medical Expenses

To make it easier to access your HSA account when paying for medical expenses, you’ll be given an HSA Visa debit card that can be used anywhere Visa is accepted. The card can be used at any qualified medical expense provider, including a doctor’s office, pharmacy, or hospital.

You will be given up to three debit cards for free.

Lively HSA Fees & Pricing

There are no fees for keeping your HSA account with Lively as an individual. This includes no account opening or closing fees, monthly maintenance, funds transfers, and up to three debit cards.

According to Lively, its account holders have saved more than $1,378,858 in fees by using their service.

Lively Features and Benefits

Lively Marketplace: Through partnerships with various service providers, Lively is able to offer certain discounts. Service providers include:

  • Access Labs – Lab testing for less at a location near you.
  • PlushCare – Online doctor service enabling you to get prescriptions in 15 minutes.
  • HSA Store – Provides tools to manage your HSA.
  • Parasail – Offers affordable monthly payment plans to help pay for health care expenses with tax-free money.
  • SimpleContacts – Renew and order contact lenses from home.
  • Jonas Paul – Offers designer children’s glasses, with every frame sold contributing toward preventing childhood blindness in the developing world.
  • Zendy Health – Provides tools to help you diagnose, find, and price compare medical and dental services.
  • Candid Co. – Offers custom clear aligners to make straightening your teeth easy, convenient and affordable.
  • Audicus – The most affordable way to get quality hearing aids, including online testing and expert support.
  • Pill Pack – Offers pre-sorting of your medications by day and time, then delivered right to your door.
  • Mobile app: You can monitor and run your Lively HSA account from your mobile device. The Lively app is available at the App Store for iOS devices 11.0 or later, and is compatible with iPhone, iPad, and iPod touch. The app is also available for Android devices 5.0 and up, at Google Play.

You can use the mobile app to set up contributions, track HSA spending, check your account balance, monitor your investments, or even search the HSA marketplace to find retail partners for the qualified services and products you need.

Customer contact: Available by email and toll-free phone, Monday through Friday, from 6:00 am to 6:00 pm, Pacific time. There’s also an extensive HSA Guide that will answer many of your more common questions.

Account security: Lively takes the following steps to ensure the security of your account:

  • Since an HSA is a health-related account, Lively keeps sensitive personal health information safe, in compliance with HIPAA regulations.
  • They prevent unauthorized access to your information by encrypting data using the AES 256 disk encryption standard.
  • Use of two-factor authentication as an extra layer of security when accessing your account.
  • All sensitive servers are hosted in a private subnet which is not accessible over the Internet.
  • SSL/TLS past passwords and encrypted access are employed, encrypting all data transmitted over the internet and internal networks, with passwords hashed in the database using industry best practices.

And as mentioned earlier, bank account funds are fully protected by FDIC insurance for up to $250,000, while investment funds are protected up to $500,000 through SIPC.

How to Sign Up with Lively

With a single page application, you can open a Lively HSA account entirely online. You’ll need to enter your full name, email address, and mobile phone number, as well as a password. You must also agree to the Terms & Conditions and Privacy Policy before you can sign up.

The following step is to link your bank account to your Lively account. As soon as you start transferring money, it will be available for paying medical bills.

You’ll also be given the option of opening an interest-bearing bank account or a self-directed investment account with TD Ameritrade.

You can also set up automatic deposits from your bank account or your paychecks.