Qualifying For a Health Savings Account
HSAs are for people with high-deductible health insurance plans. To qualify, an individual’s plan must have a deductible of at least $1,250; a family’s plan must have a deductible of at least $2,500. If your plan meets those requirements, you are eligible to make tax-deductible contributions to a Health Savings Account this year of $3,300 for individuals or $6,550 for families.
When we first opened an HSA account several years ago, it was somewhat difficult to find a bank that offered such accounts. We ended up at First American Bank, which had a branch in the town where we used to live. Now that more banks are offering HSAs, and with some offering the ability to invest a portion of your savings, I thought this would be a good time to shop around. I was glad I did.
Searching for a Better Health Savings Account
First, I found a helpful web site called HSASearch that lists 59 HSA providers, giving details on fees and investment options. I quickly zeroed in on the Eli Lilly Federal Credit Union (ELFCU), which was listed as having a self-directed brokerage investment option and no fees. If you’re not an employee or member of the many organizations the credit union has a relationship with, you can still join by first joining Tru Direction, a non-profit that helps foster financial literacy. That step does involve a fee of $5. However, it’s paid back after then joining ELFCU in the form of a $5 deposit the credit union makes into a regular savings account, which is required in order to open an HSA.
Whereas First American paid an interest rate of just 0.1%, ELFCU pays 1.0%. Plus, if you have a balance of at least $2,500, you can invest through TD Ameritrade. While we’ve had years when we had more out-of-pocket healthcare expenses than we could save in our HSA, my hope is that we’ll be able to grow our balance over time and soon be able to invest some of those funds. It’s a tax-advantaged way to build reserves for healthcare expenses in the near or distant future, especially since the balance may be carried over from year to year.
If you have an HSA, what bank or credit union do you use and what are its benefits? Do you use it “just” to save for healthcare expenses, or are you also investing some of those funds?