Lively HSA Review: My Experience Using Lively

With high deductibles, health insurance doesn’t always cover your medical expenses. That’s where Health Savings Accounts (HSAs) come in to save the day!

Lively is a brokerage offering HSAs for a variety of needs—whether you want to save, spend, or invest for larger returns.

If you are worried that your health insurance won’t cover all of your medical expenses, give Lively a chance to help you protect your health and your bank account.

Lively

Lively is a company devoted to Health Savings Accounts (HSAs) that has flexible, competitive options for savers, spenders, and investors. Lively let individuals set up HSAs on their own. Contributions are pre-tax—you won’t pay taxes on your HSA funds as long as they’re used for qualified medical expenses.

Pros:

• No individual account fees
• Bank partnership
• Online receipt storage

Cons:

• Fund transfer lag time
• No pre-selected investments

Open Account

A Health Savings Account (HSA) is a savings account specifically for medical expenses. HSAs are often sponsored by employers who add money on top of employee contributions, similar to retirement accounts.

If your employer doesn’t offer this option, services like Lively let individuals set up HSAs on their own. Contributions are pre-tax—you won’t pay taxes on your HSA funds as long as they’re used for qualified medical expenses. The IRS has an ongoing list of expenses that qualify.

Employers or individuals can participate in Lively plans. Individuals have the option to invest their Lively funds in a self-directed investment account with Lively partner, TD Ameritrade.

To qualify for a Lively HSA you’ll need either

• A current HSA with funds to roll over to Lively.
• A high-deductible health insurance plan.

This is about the first question Lively asks you.

HSAs are meant to supplement high-deductible insurance plans, not replace them. Insurance policyholders usually have to pay a certain amount called a deductible before their coverage kicks in, and HSA money covers these expenses.

For all HSAs, not just lively, your deductible should meet the minimum of:

• $1,400 for an individual.
• $2,800 for a family.

You don’t need an employer-sponsored plan, however; people in diverse financial situations, including the self-employed, can open a Lively HSA as long as their insurance meets the criteria. And your HSA doesn’t have to carry a minimum balance.

The enrollment process is quick for an individual account, and I could set up a fund transfer from my bank. Lively HSAs are FDIC insured up to $250,000 for extra peace of mind.

As with most HSAs, the Lively account has maximum annual contribution limits. The IRS increases these limits slightly every year, by about $50 for individual accounts and $100 for accounts covering couples or families. Individuals have a limit of $3,600 for 2021, up to $3,650 in 2022. For couples and families, the limit is $7,200 in 2021, up to $7,300 in 2022. These include both employer contributions and any money you add yourself.

Lively recommends hitting the limit every year if you can since funds are tax-deductible. And HSA savings, unlike the savings in flexible spending accounts (FSAs), can be carried over from one year to the next.

I specified how I’d contribute funds — individually rather than through an employer payroll. Then I set up initial and ongoing contribution amounts.

Fees

Individual and family HSAs come with no fees. The fee-free structure plus the absence of a minimum balance make Lively one of the more affordable options for a solo HSA.

Employers who want Lively HSA coverage for their employees pay a fee of $2.95 per employee per month.

Investment options

Lively offers two investment options for both individuals and employers (and their employees) with no cash minimum requirements. Lively does not charge a monthly fee to access investment capabilities.

• TD Ameritrade’s Self-Directed Brokerage Platform. Account-holders can leverage a variety of investment options, including individual stocks, bonds, CDs, ETFs, and more than 13,000 mutual funds. With TD Ameritrade’s recent announcement to reduce their fees, Lively’s account holders now have access to $0 commissions for online stock, ETF and option trades at TD Ameritrade. And there are no fees from Lively to access this option.
• Guided Portfolio (Powered By Devenir) – is an industry-leading solution for investing HSA funds. It provides account holders a recommended allocation mix based on their risk tolerance and time horizon to simplify the process and provides auto-rebalancing to help ensure they stay on track.

If you want to invest with your Lively HSA through TD Ameritrade you’ll pay a $2.50 monthly fee or $30/year. TD Ameritrade may tack on additional fees if you start trading, depending on the kind of trading you’re doing (some exchange-traded funds (ETFs) and mutual funds come with no transaction fees or commissions).

Interest rates

Your Lively HSA functions as interest-bearing savings account with a tiered rate based on your balance. All the money is tax-deductible.

Automatic deposits

You can easily set up a regular contribution amount and have it move seamlessly from your bank to your HSA.

Investment account

You can keep your HSA money for saving or spending, or you can take the extra step of investment. Lively partners with TD Ameritrade, an investment broker that caters to beginner and expert investors alike.

Though you can automate transfers from an HSA to an investment account, you do the work of investing on your own.

Self-directed brokerage

Ready to invest? Lively HSA holders get to direct their own investments through TD Ameritrade. You’ll have multiple options, including mutual funds, individual stocks, brokered Certificates of Deposit (CDs), and commission-free ETFs with the Money Under 30 stamp of approval.

First dollar investing

This is a rare but crucial perk of the Lively HSA investment account. You don’t have to meet a minimum threshold to invest—you’ll start earning interest with your first dollar, hence the phrase “first dollar investing.”

Tax deductions

Besides a health fund cushion and an investment performer, the HSA can be a major tax saver. The Lively resource guide describes an HSA as a “supercharged IRA” come tax time. Not only are contributions tax-free, but interest is also tax-free too. So are withdrawals as long as you use the money for a qualified medical expense.

This kind of account is ideal for anyone who has an ACA (Affordable Care Act) health plan. I pay my own ACA premiums with post-tax income, so it’s nice to have some pre-tax money in the bank to help out with my ongoing—significant but not excessive—medical expenses.

Note any contribution you make above the annual limit ($3,550 for individuals) will be taxed. If you accidentally contribute too much you can withdraw it before the tax deadline.

User dashboard

Lively’s dashboard makes everything simple. You see your HSA balance when you log in, and each transaction is broken down by type so you can track your health spending. Investors can check out their investment performance and transaction info.

There’s also a handy mobile app for iOS or Android.

Links to other apps

Lively HSAs integrate with Empower, the budgeting and wealth management app that stands out for its investment analysis. Link the two apps to keep all your financial info in one place.

If you’re investing, Lively partner TD Ameritrade offers integration with wildly popular budgeting app Mint.

Personal finance apps are helpful in so many ways, and this connection is an extra Lively perk.

Rollovers and transfers

Lively lets you “rollover” your HSA funds, or personally transfer them from one HSA provider to another, when you enroll or any time afterward. Rollovers are tax-free and limited to one per year.

You can make unlimited trustee-to-trustee transfers where the money goes straight from one HSA holder to another (you can’t personally access the funds during the transfer).

Employer accounts

Small business owners and other employers can add HSAs for their employees. There’s an easy onboarding process and a way to automate company contributions by linking payroll info to Lively. You can streamline employee pre-tax deductions too. Larger corporations may be able to deduct employee HSA expenses from their own taxes.

Lively HSA had my attention at first dollar investing. Every cent gets invested towards my goals—with interest!—and I don’t have to start with hundreds of dollars if I’m not ready for that commitment.

My main priority is health care spending. After years of four-digit medical bills for a chronic condition and high insurance deductibles, I assume I’ll be spending my HSA cash before investment returns roll in. If I’m lucky enough not to, I’ll earn more interest and keep the balance into the next year!

Lively is a great account for spenders (you even get a debit card to use at the pharmacy), and withdrawals are tax-free, so I can deduct HSA money even after it’s spent. Health care deductions are some of my biggest tax savings as a self-employed worker.

The site is easy to navigate and transparent about fees — both big pluses. Low fees are a priority for me in any investment-based account since this indicates the company understands users’ need to minimize costs. Even for a savings account, I’m less likely to go with a competitor, like Health Equity, who charges fees for low balances.

As a personal preference, I wouldn’t use a self-directed investment brokerage right now. I like the experts to narrow down some options ahead of time so I don’t get overwhelmed. If you’re a hands-on investor, though, I’d encourage you to go for it.

Health care spenders

For those planning to spend their HSA funds on qualified expenses, an easy feat if you have regular medical appointments, Lively is a standout option.

You can access cash at any time. I like to have plenty of money set aside for health care spending — it’s getting trickier to find an insurance plan without a high deductible!

Self-directed investors

If you’re thinking more long term, Lively’s partnership with TD Ameritrade sets investors up to earn returns down the line. TD investors have a dizzying array of choices, and the direction is up to you, which experienced or independently-minded investors will enjoy.

Self-employed workers

A Lively HSA will maximize your savings and account growth even without employer contributions.

Investors who want guidance

Newer investors may prefer some additional hand-holding to make smart choices with their first investments (I know I did). Lively investors are largely on their own.

People with lower-deductible insurance plans

If your insurance deductible isn’t at least $1,400 for an individual it’s not high enough to qualify for a Lively HSA. Unsure if this applies to you? Look at the fine print on your health insurance policy.