Optum Bank started operating on July 21, 2003, in Salt Lake City, Utah, as a Utah state-chartered industrial loan corporation. Optum Bank is part of the financial services unit of Optum, a health and wellness company serving more than 115 million people. Optum is part of the United Health Group (NYSE:UNH) family of companies. Optum Bank services close to 5.6 million HSAs and holds more than $12 billion in assets, making it one of the largest administrators in the industry.

Investment Threshold

The ideal investment health savings account (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. 

The investment threshold for an Optum Bank HSA varies from $0 - $2,000 if you are part of an employer group plan. For individuals and families enrolling on their own, the investment threshold is $2,000.

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 Optum Bank’s case, one could argue that investors are missing out on $118 of earnings, assuming a 6 percent rate of return on $2,000 savings account which only yields $2. 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

Optum Bank offers investors a pre-selected investment lineup, digitally managed investments with Betterment and a brokerage account with Charles Schwab.

Pre-Selected Mutual Fund Lineup

The Optum Bank investment lineup is composed of 31 mutual funds with 11 different fund families represented. In the chart below you can see the number of offerings from each fund family.

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 Optum Bank does not offer investors low-cost index funds for 2 major asset classes (foreign developed and emerging markets). 

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

As you can see in the chart below, Optum Bank offers participants some reasonably priced funds when compared to the other 9 administrators with pre-selected investment lineups in our study.

The international offerings in the Optum Bank investment lineup are a bit expensive. The rest of the asset classes are reasonably priced.

Digitally Managed Investments with Betterment

Optum Bank is offering automated online advice and investing through Betterment, the largest independent online financial advisor. Betterment combines low-cost, tax-efficient investment strategies with technology and personalized advice to empower you to achieve your financial goals. 

Betterment starts by gaining an understanding of your HSA investment goals. For example, you may be using your HSA to save for medical costs during retirement or to be prepared to pay for expenses now and in the near future. Once Betterment understands your goals, they will build you a personalized portfolio with a risk level and investments mix that suits your needs. And if you'd like to adjust that mix, you can. The Betterment portfolio is a globally diversified mix of exchange-traded funds (ETFs), chosen to help earn better returns at various levels of risk. 

When the time comes to use the invested HSA funds, Betterment automatically sells the right investments, allowing you to access your funds for eligible medical expenses without the hassle of needing to choose which investments to sell. Betterment knows it sometimes takes multiple accounts to save for a goal and can provide holistic advice across all accounts — including combined external accounts like employer-sponsored 401ks — so you can easily track your progress and they can help you maximize your after-tax retirement income. 

Charles Schwab Brokerage Account

Optum Bank wants to help make investing easy and more accessible for users by offering a health savings brokerage account (HSBA) option with one of the leaders in self-directed brokerage, Charles Schwab. An HSBA within the HSA can satisfy the more sophisticated, demanding investors who want more investment opportunity.

A Charles Schwab brokerage account means more choices, plus zero commissions and fees for online trades for the DIY investor. After receiving an account number, Employees can invest and trade commission-free ETFs, stocks and options listed on the U.S. or Canadian exchanges across all mobile, automatic phone and web trading channels. Participants can also access more than 8,500 no-load mutual funds from over 630 well-known fund families. Over 4,000 mutual funds are available with no-loads and no-transaction fees. Other investment options include bonds and other fixed income investments, CDs,and money market funds.

Condensed Schedule of Fees (Non-Employer Group)

In our study of the top 10 investment HSAs, Optum Bank ranks as one of the most expensive administrators. Optum Bank charges its investment participants a maintenance fee and an asset-based fee. The maintenance fee is reasonable, but the 36 basis point annual asset based fee is steep.

Optum Bank has a unique asset-based fee structure. Investment accounts are charged 0.03% per month up to a maximum of $10 (which it hits at $33,000). Thus, at the $33,000 mark, the most Optum Bank will charge an investor is $10 per month.  

Optum Bank participants can evade the maintenance fee by leaving $5,000 in the HSA checking account. Before opting to leave $5,000 in the checking account, take into consideration the opportunity cost of not investing this money.

Projected Fees

In this section, we have a little fun projecting fees for each administrator. Our goal was to keep fees as low as possible 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 offering 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/VITSX) or S&P 500 index (IVV / VIIIX / VFIAX). We believe these two index funds are one in 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 Optum Bank we made the following assumptions:

1. Every dollar was invested in VTSAX (expense ratio 0.03%)

2. Annual Maintenance Fee: $33

3. Annual Custodial Fee: 0.36% (capped at $10 per month)

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

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

On investment balances from $0 - $15,000, Optum Bank fees are reasonable and in line with those of other top administrators. However, once investment balances reach the $20,000 mark and beyond, the fees are substantially higher than other top HSA administrators. For this reason, Optum Bank earned a poor grade on this measure.

In our search for the very best investment HSAs we looked for administrators that offered a hassle-free investment experience. The Optum Bank HSA is definitely a feature-rich offering in that it gives investors all the necessary tools to easily manage their investment account.

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. Optum Bank’s HSA integrates with Personal Capital, but not with Mint.

Pros & Cons

An Optum Bank HSA may suit you if:

• You are satisfied with the investment options in the pre-selected lineup

• You desire an online receipt storage tool

• You have less than $15,000 in the investment account

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

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