But if you have a Health Savings Account (HSA), like I do, you’ve probably asked yourself more than once whether your account is in the right place and whether you’re getting the most mileage out of it.
HSA accounts haven’t been around all that long, and it hasn’t been easy to compare various alternatives.
I know that all too well. I’ve often been frustrated and dissatisfied dealing with my HSA account provider.
Getting on the website is like trying to break into the CIA, involving multiple login screens and confusing account menus. Want to change investments? Good luck with that. It took me several tries before finally succeeding at getting excess funds out of cash and into the investment options (and keep in mind this is kinda what I do all day). If I had to rank my HSA account provider, I would grudgingly give them no better than a “C.”
(Note: just to clarify, the company holding your HSA Saving Account is totally separate from the insurance company issuing the HSA-qualifying high-deductible health policy).
Now, help is here. Investment analysts at Morningstar recently completed their 2nd annual ranking of HSA accounts. They spent hours sorting out all the options so you don’t have to. If you’re in the market for a new HSA account, or are interested in moving your existing HSA account (like I might!), check out their research to get pointed in the right direction.
But first some background. What’s an HSA?
A Health Savings Account (or HSA) is a great way to save for current or future medical expenses on a tax-free basis.
You can set up a HSA if you have a high-deductible medical insurance plan. For your health plan to qualify as a high-deductible policy, it needs a minimum deductible of $1,350 for self-only coverage, and a minimum deductible of $2,700 for a family plan.
You may hear HSA accounts being called “triple tax-free.”
They are, and here’s why. You get a deduction for funds you contribute to a HSA, you can withdraw funds to pay medical expenses on a tax-free basis, and the account grows tax-free until you use the money. That’s three levels of tax benefits.
What can I contribute to an HSA each year?
In 2019, you can contribute up to $3,500 to an HSA if you have self-only coverage or up to $7,000 if you have family coverage. Over age 55 by the end of 2019? You can contribute an extra $1,000 to your single or family plan.
And the HSA winner is….
Morningstar ranked HSA accounts on two dimensions – how easy it is for you to pay medical bills using HSA dollars, and how well you can invest and grow the dollars you’ve saved to cover future bills. Their research revealed one clear winner (not the company I’m currently using, by the way) and a few runner-ups. Their top choice was The HSA Authority, although the best option for you will depend on your individual circumstances and priorities.