A health savings account (HSA) is an easy, tax-advantaged way to save for future medical expenses. Lively can be one of your best options to avoid common HSA fees to maximize your savings potential. There are also flexible and low-cost investment options for self-directed and managed portfolios.
As you’re likely looking for smart ways to pay medical bills, this Lively HSA review focuses on how easy it can be to start saving with no minimum initial deposit. If you already have an HSA, you may also decide to transfer to Lively.
What is Lively HSA?
Lively is a San Francisco-based fintech company offering health savings accounts with no minimum initial deposit or recurring account fees. There is also no minimum balance necessary to start investing.
Individuals and families with an eligible health plan can make tax-deductible contributions each calendar year. Each withdrawal is tax-free for qualified medical expenses.
Account holders can deposit their cash into an FDIC-insured interest-bearing savings account, a self-directed TD Ameritrade brokerage account, or a guided portfolio that investment firm Devenir manages. All investment gains can grow tax-free like a Roth IRA – but for medical bills.
It’s also possible for employers and brokers to offer a Lively HSA. Employers can also make HSA contributions to help their employees.
Members can pay for qualified medical bills with a linked Lively debit card. Users can also pay for purchases with a credit card or checking account and get reimbursement. Lively tracks medical spending in real-time as users can upload and categorize receipts.
Who Can Join Lively HSA?
Individuals or families with a high deductible health plan (HDHP) can open a free Lively HSA. The Lively HSA account holder must be at least 18 years old.
Not every health insurance plan is HSA-eligible but many employer-provided and Health Insurance Marketplace plans are.
Also, you must not be enrolled in Medicare or a dependent on another person’s tax return.
2021 HDHP Minimum Deductible
A medical insurance plan’s minimum deductible and its maximum out-of-pocket amounts determine if the plan is HSA-eligible.
Below are the minimum plan requirements to qualify for an HSA in 2021:
- Individuals: $1,400 (Maximum out-of-pocket amount of $7,000 or less)
- Family plans: $2,800 (Maximum out-of-pocket amount of $14,000 or less)
If your health plan meets both thresholds, you qualify for an HSA.
How to Contribute to a Lively HSA
Individuals can make one-time or recurring deposits from a linked bank account when their employer doesn’t partner with Lively. These contributions “after-tax” contributions are tax-deductible when filing income taxes.
Employers that partner with Lively can withhold “pre-tax” contributions from participating employees. It’s also possible for employers to make matching contributions.
Existing HSA accounts can transfer to Lively fee-free via rollover or trustee-to-trustee transfer.
2021 HSA Contribution Limits
Like tax-advantaged retirement accounts, the health savings accounts have an annual contribution limit. The IRS reviews the contribution limits yearly.
- Individuals: $3,600 ($4,600 if age 55 or older)
- Family plans: $7,200 ($8,200 if age 55 or older)
Individuals that make “after-tax” contributions without an employer make “after-tax” contributions but deduct the contribution amount on a federal tax return. However, after-tax contributions are subject to Social Security and Medicare payroll taxes.
Employers that offer a Lively HSA can deduct the HSA contributions directly from each paycheck as a pre-tax deduction for instant tax savings. As pre-tax contributions are not subject to payroll taxes or federal income tax, it can be worth asking an employer to partner with Lively.
Either HSA contribution type may be exempt from state income taxes. The rules vary by state.
Lively provides a free Visa debit card to pay for medical costs in-person. Families can request up to three debit cards. The daily spending limit for Lively HSA debit card purchases is $2,000. Members can contact Lively to make larger purchases.
The “reimburse yourself” feature is the second withdrawal option. Members can pay medical bills by credit card or personal check and request reimbursement. Lively transfers the HSA reimbursement amount to a linked bank account.
While Lively doesn’t require a receipt or medical bill to make a withdrawal, it’s wise to keep eligible receipts for tax purposes. Ineligible withdrawals are subject to a 20% penalty plus taxes.
A Lively HSA can remain open indefinitely and there is no inactivity penalty. For instance, you may no longer have an HSA-eligible plan next year. While you can no longer make tax-advantaged HSA contributions, Lively continues to maintain your balance and let you make penalty-free withdrawals.
Per federal law, adults age 65 or older and the disabled can make penalty-free withdrawals. But these withdrawals are subject to federal and state income taxes.
The primary account holder can name beneficiaries in the “account settings” section of Lively.
Lively HSA Fees
Lively doesn’t charge any platform fees for individual and family HSA plans. There also isn’t a minimum balance requirement to avoid hidden fees.
It costs $0 for these Lively HSA actions:
- Account opening
- Account closing
- Debit cards (up to three)
- Debit card point of sales
- Fund transfers (deposits and withdrawals)
- Excess contributions
- Monthly maintenance
Depending on which investments you choose, you may pay brokerage fees. The FDIC-insured cash savings account is fee-free.
The self-directed TD Ameritrade brokerage account offers commission-free stock and ETF trades. Other investment products, such as mutual funds, may incur transaction and load fees.
There is a 0.50% annual fee for the HSA Guided Portfolios that Devenir manages.
Employers providing an HSA pay $2.95 per employee. There is no additional cost to the employee for this job perk.
Each Lively HSA plan offers two different investment options – self-directed TD Ameritrade and HSA Guided Porfolio (we don’t consider the Cash Account balance “option” per see, but we explain it below). When joining Lively, new members have the option of choosing how to invest their HSA balance.
The low-risk option for your HSA funds is keeping the balance in an FDIC-insured cash account. But the interest rate is only 0.01% APY (since March 6, 2020) similar to most brick-and-mortar banks.
As HSA investment gains can be withdrawn tax-free and the low cash yields, you may only decide to keep enough cash in the cash account for near-term medical bills. Despite the additional risk, investing your cash long-term can grow your HSA balance and outpace inflation.
Self-Directed Brokerage Account
Lively partners with TD Ameritrade for a free, self-directed brokerage account. This investment option can be good for DIY investors that want to invest in these assets:
- Individual stocks
- Mutual funds
There are no trade commissions for online US stock and ETF trades. Additional fees apply for phone trades ($5) and broker-assisted trades ($24.99).
Mutual fund investors can expect a $25 fee for no-load funds. Fees vary by fund family for no transaction fee mutual funds and load funds. Auto-investing in mutual funds is available.
It’s best to use TD Ameritrade for its commission-free investment products like stocks and ETFs. Investors can enroll in dividend reinvestment programs (DRIP). Also, TD Ameritrade has powerful research tools and educational resources that can benefit novice and expert investors.
There are some potential downsides to using Lively and TD Ameritrade. The first downside is that it can take several business days to transfer funds between Lively and the brokerage account. Also, TD Ameritrade currently doesn’t offer fractional investing meaning some cash sits on the sideline until the investor can purchase a whole stock or ETF share.
Another point to ponder is the ongoing acquisition of TD Ameritrade by Charles Schwab. Few details are currently available. As 2021 progresses, Lively may transition to offering a Schwab brokerage account. There should be similar investment options and potentially fewer investing fees.
HSA Guided Portfolio
The second investment option is an HSA Guided Portfolio by Minneapolis-based brokerage firm Devenir. This portfolio invests in mutual funds, has no minimum investment balance, and automatically rebalances your asset allocation.
Devenir (see their BrokerCheck) has been managing health-based accounts since 2004.
The HSA Guided Portfolio currently offers a variety of mutual funds for several US and foreign asset classes. It’s possible to invest the full investment balance to avoid having uninvested cash.
Devenir can recommend a model portfolio and auto-rebalance your portfolio. Once you choose your funds, Devenir manages the day-to-day tasks of your portfolio. Most of the offerings are Vanguard mutual funds and Vanguard target-date retirement funds.
The annual advisory fee is 0.50% for all invested assets plus the mutual fund fees. This fee amounts to $50 per $10,000 you invest in a Guided Portfolio. There are no additional trade commissions to buy or sell positions.
HSA contributions and investment gains have a smaller tax burden than taxable brokerage accounts. Either the self-directed TD Ameritrade brokerage account or Devenir’s Guided Portfolio can be a good low-fee option to invest and build wealth.
Additional Lively HSA Features
Some of the best reasons to have a Lively HSA are the tax benefits, flexible investment options and no fees. Below are several other features that make Lively one of the best HSAs.
No Minimum Balance
Lively doesn’t require a minimum balance to open an HSA or start investing. Other platforms may require as much as $2,000 before being able to invest.
Young and healthy individuals that don’t see the doctor regularly can benefit by choosing Lively. They can invest small amounts of money to start earning passive income sooner and have more cash for future medical care.
HSA Deduction Search Engine
Knowing what medical, dental, and vision expenses are HSA-deductible can be confusing. The Lively dashboard has a deduction search engine to let you quickly see what expenses qualify.
Detailed Expense Tracking
It’s possible to track your annual deductible, out-of-pocket and HSA-deductible expenses. It’s possible to upload receipts by snapping a picture with your smartphone or with a scanner. From there, you can categorize expenses.
Lively HSA Debit Card
Lively provides up to three free Visa debit cards. These cards can be the easiest way to access your HSA cash for deductible expenses. There is a $2,000 daily spending limit though Lively is willing to temporarily suspending the limit for a one-time expense.
The debit cards also integrate with mobile wallets for contactless payments.
If you choose to pay for medical visits or purchases with a personal credit card or check, Lively offers paperless reimbursement. You may choose this option when combining deductible and non-deductible purchases. It’s free to transfer funds from your Lively cash balance to your linked bank account.
Lively is a feature-rich HSA provider. It’s possible to see the current cash balance, investment balance and expense tracking in real-time on the online dashboard.
Online calculators can help you compare health plan costs and estimate future HSA balances and potential tax savings.
The Lively mobile app works on Android and Apple devices. This app has all of the features of the web platform. In many instances, the mobile app can be easier to use than the online dashboard to upload receipts and request reimbursement.
Lively offers discount to select medical brands. You can save money on expenses like lab testing, contact lenses, telemedicine, and HSA Store purchases.
Lively offers several ways to speak with a customer service agent.
An online FAQs section is available and answers many account setup, receipt reimbursement, and investment questions. One can also get live chat and phone support from 6:00 am to 6:00 pm Pacific Standard Time. Email support is available too for non-urgent inquiries.
Online Resource Center
The online resource center can be helpful for new and experienced HSA members. Lively has several short articles about how HSAs work. This center and the online FAQs can answer most questions about HSAs.
Is Lively HSA Legit?
Yes, Lively is one of the best options for an HSA. There are no account fees and the investment options are flexible and low-cost whether you choose a self-directed brokerage account or a guided portfolio.
Lively also makes it easy to make contributions from a linked bank account or through a participating employer. It’s also easy to withdraw cash using the Lively HSA debit card or getting reimbursed when you pay with a credit card or check.
Also, Lively makes it easy to upload receipts, track investment balances, and retrieve year-end tax documents.
Is Lively HSA FDIC-Insured?
The Lively HSA cash balance has FDIC insurance up to $250,000.
Any investment balance in the TD Ameritrade brokerage account or Devenir HSA Guided Portfolio isn’t FDIC-insured. The investment balance can qualify for up to $500,000 in SIPC Insurance if the investment firm fails.
Positives and Negatives
- No account fees or minimum balance
- Up to three free debit cards
- Flexible investment options
- Easy self-reimbursement options
- Upload and categorize receipts
- Interest-bearing cash account has a low interest rate (0.01% APY)
- HSA Guided Portfolio has a 0.50% annual fee
- Must open a separate TD Ameritrade brokerage account
Lively HSA is one of the best HSA options as there are no fees and quality investment options for most investors. If you have an HSA-eligible health plan, Lively makes it easy to save for future medical costs in a tax-advantaged manner.
If you don’t think Lively is for you, here’s a list of other HSA options.