HSA Bank began offering Medical Savings Accounts (MSAs) in 1997. In 2004, the Bank provided an exclusive focus on Health Savings Accounts (HSAs) and quickly gained a nationwide reputation. In 2005, HSA Bank became a division of Webster Bank, N.A., a subsidiary of Webster Financial Corporation, incorporated in Connecticut. HSA Bank currently administers HSAs for 3 million members and has over $11.1 billion in assets. 

Investment Threshold

The ideal investment HSA has no investment threshold, allowing the very first dollar you contribute to be invested. If you're using an HSA for investment purposes, seek an administrator that does not hold your dollars hostage in a checking account earning little to no interest. 

HSA Bank has established an investment threshold of $1,000. You must always have $1,000 in the HSA checking account. Any excess dollars over this amount can be transferred to the investment account.

Keeping funds in a low-interest cash account means accountholders miss out on those funds’ potential investment returns; this is known as opportunity cost. In a way this is a hidden fee because the opportunity to earn money on those dollars is lost. In HSA Bank’s case, one could argue that investors are missing out on $59 of earnings, assuming a 6 percent rate of return on $1,000 held in the checking account which only yields $1. The aforementioned numbers are just for one year. Stretch that out to 10, 20, or 30 years and the potential earnings lost are in the thousands. Use the calculator below to estimate the potential earnings lost on univested cash.

Investment Account

HSA Bank offers investors a pre-selected investment lineup and/or a TD Ameritrade self-directed brokerage account.

Pre-Selected Mutual Fund Lineup

HSA Bank offers participants a pre-selected investment lineup with a guided portfolio option that allows HSA investment account holders to personalize their asset allocation, using a variety of criteria including; general health, HSA financial metrics, and risk appetite. Once an allocation has been selected, participants are then given the opportunity to implement and automatically rebalance those changes in their HSA investment account.

The HSA Bank pre-selected investment lineup is composed of 31 mutual funds with 11 different fund families represented. 54% (19) of the funds in the pre-selected lineup are from Vanguard. The other fund families represented in the lineup are illustrated in the chart below.

The table below displays the number of funds offered for each asset class in the HSA Bank investment lineup.

Mutual Fund Breakdown

Active vs Passive

At the The HSA Report Card we are big proponents of passive index investing and thus rate highly administrators that offer low cost index funds for each of the major asset classes. In the table above, you can see that HSA Bank offers investors low-cost index funds for every major asset class, save emerging markets.

How expensive are the funds in the HSA Bank investment lineup?

In the chart below you can see that when we look at HSA Bank’s investment lineup as a whole, the average expense ratios for the major asset classes are slightly higher than other top administrators.

TD Ameritrade Self-Directed Brokerage Account

HSA Bank offers a TD Ameritrade self-directed brokerage account which gives investors access to stocks, bonds, CDs, ETFs, and more than 13,000 mutual funds. 

Even better, you now have access to $0 commissions for online US stock, ETF and option trades at TD Ameritrade. This is truly a wonderful development for investors as they will now be able to dollar cost average into ETFs and stocks.

Interest-Bearing Account

HSA Bank offers participants an FDIC-insured, interest-bearing account. Interest bearing accounts make sense for participants who are uneasy about investing their HSA dollars in the equity markets. Interest is credited monthly and based on the balance in your cash/debit card account. The interest rate available on different balances is as follows.

Condensed Schedule of Fees for Standard Plan (Non-Employer Group)

The HSA Bank pre-selected investment offering now includes a 0.30% annual fee, invoiced quarterly (0.075% or $0.75 per $1,000). The fee is assessed only on the first $50,000 of the investment account balance. There is a minimum fee of $1.50 per quarter.

Projected Fees

In this section, we have a little fun projecting fees for each administrator. Our goal was to find the path to the lowest possible fees for each administrator. Keep in mind, we are assuming the HSA is being used solely for investment purposes, therefore only certain fees will apply. Given that every HSA is different, there is no perfect way to compare the top 10 administrators in our study. Nonetheless, we gave it a shot and believe there is value in presenting our findings.

In order to compare fees, we made a few simple assumptions:

• Every dollar above the investment threshold was invested.

• Current and future contributions were invested in a single fund.

  • Total Stock Market Index (VTI / VTSAX / SPTM/ FZROX) or S&P 500 index (IVV / VIIIX / VFIAX). We believe these two index funds are one and the same.

• No transaction fee (NTF) or commission-free ETF programs were utilized to buy the index funds.

• If these index funds were not available under the NTF and/or commission-free ETF programs, we turned to the open market and executed a single trade per calendar year in order to keep transaction costs down.

For HSA Bank we made the following assumptions:

1. TD Ameritrade Brokerage

2. All assets were invested in SPTM ETF (expense ratio 0.03%)

3. SPTM is a commission-free ETF. No transaction costs incurred.

4. Annual Investment Fee: $0

5. Annual Maintenance Fee: $0

The chart below illustrates the projected fees on different investment balances for HSA Bank.

The following chart shows where HSA Bank stands in terms of fees compared to the other top 10 investment HSA administrators. 

HSA Bank's fees are among the lowest in the industry, especially as investment balances grow. In our study of the top 11 investment HSAs, HSA Bank ranked as the 2nd lowest cost provider. Remember, these costs are attained only when users invest in SPTM via the TD Ameritrade brokerage window.

Features

In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. The HSA Bank HSA is definitely a feature-rich offering in that it gives investors all the necessary tools to easily manage their account. The investment platform is easy to navigate, automated account transfers can be instituted and a receipt storage tool is made available to "shoeboxers."

Personal Finance App Integrations

In this modern age of personal finance consumers want the ability to bring together information from multiple accounts and institutions in order to get a 360-degree of their finances and make better spending and saving decisions. The two best personal finance data aggragators are Personal Capital and Mint. HSA Bank integrates with Personal Capital and Mint.

Pros & Cons

An HSA Bank HSA may be right for you if:

• You are happy with the investment options in the TDA commission-free ETF lineup

• You desire an online receipt storage tool

• You are also planning on spending some of those HSA dollars. HSA Bank is on our short list of the best HSAs for spenders.

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