What is Lively HSA?
A Health Savings Account (HSA) is an account designed primarily for saving money for medical costs. Similar to retirement accounts, HSAs are often sponsored by companies that make additional contributions on top of employee payments.
HSAs may be created independently using sites like Lively if your company doesn’t provide this option. You won’t pay taxes on your HSA savings as long as they’re utilized for eligible medical costs since contributions are pre-tax. The IRS maintains a current list of allowable costs.
Plans offered by Lively are open to both employers and individuals. Individuals have the option to invest their Lively money with Lively partner TD Ameritrade in a self-directed investment account.
How does Lively HSA work?
In order to be eligible for a Lively HSA, you must:
- an existing HSA with money that Lively may transfer.
- a health insurance policy with a high deductible.
- This relates to the first question Lively poses to you.
Instead of replacing high-deductible health plans, HSAs are designed to complement them. Before their coverage begins, insurance policyholders often have to pay a certain sum known as a deductible, and HSA funds are used to pay for these costs.
Your deductible for all HSAs, not just lively, should be at least:
- $1,400 for a single person.
- For a family, $2,800.
However, as long as your insurance satisfies the requirements, anybody, even the self-employed, may create a Lively HSA without the need for an employer-sponsored plan. Additionally, there is no required minimum amount for your HSA.
A personal account can be opened quickly, and I could arrange a bank transfer of funds. For further security, active HSAs are FDIC insured up to $250,000.
The Lively account has maximum yearly contribution restrictions, much like the majority of HSAs. Each year, the IRS raises these restrictions by around $50 for individual accounts and $100 for accounts covering families or couples. Individuals are only allowed to spend $3,600 in 2021 and $3,650 in 2022. The cap for families and couples is $7,200 in 2021 and increases to $7,300 in 2022. Both company contributions and any money you provide yourself are included in these.
Lively advises reaching the annual cap if you can since the money is tax deductible. Additionally, HSA funds may be carried over from one year to the next, in contrast to FSA savings.
Fees
HSAs for individuals and families are free to use. One of the less expensive choices for a single HSA is Lively due to the fee-free setup and lack of a minimum balance.
Employers that wish to provide Lively HSA coverage to their staff must pay a monthly charge of $2.95 per employee.
Investment options
Lively provides two investing choices with no capital minimum requirements for both private investors and businesses (and their workers). There is no monthly cost for using Lively’s investing features.
The Self-Directed Brokerage Platform at TD Ameritrade. Account users have access to a wide range of investment alternatives, including more than 13,000 mutual funds, individual stocks, bonds, CDs, and ETFs. Lively’s account users now have access to $0 commissions for online stock and ETF purchases thanks to TD Ameritrade’s recent move to lower its rates. Additionally, Lively doesn’t charge anything to use this option.
A market-leading option for investing HSA money is Guided Portfolio (Powered By Devenir). To make the process simpler, it gives account holders a suggested allocation mix based on their risk tolerance and time horizon, and it offers auto-rebalancing to ensure they remain on course.
You must pay a $2.50 monthly or $30 yearly fee to invest with your Lively HSA via TD Ameritrade. Depending on the kind of trading you conduct (certain exchange-traded funds (ETFs) and mutual funds come with no transaction fees or charges), TD Ameritrade may charge you more after you start trading.
Interest rates
Given that all of the money is tax-deductible, your Lively HSA acts as an interest-bearing savings account with quite competitive rates (the interest rate is 0.01%).
Lively HSA features
Automated payments
It is simple to set up a recurring contribution amount that will transfer automatically from your bank to your HSA.
Investment portfolio
You have the option of using your HSA funds for spending or saving, or you may go one step further and invest them. Lively has a partnership with TD Ameritrade, a stockbroker that serves both novice and experienced investors.
Although payments from an HSA to an investment account may be automated, investing is something you do on your own.
Independent brokerage
Prepared to invest? Active HSA owners have TD Ameritrade at their disposal to manage their own assets. You’ll have a variety of choices, including commission-free ETFs with the Money Under 30 seal of approval, individual equities, brokered Certificates of Deposit (CDs), and mutual funds.
First dollar investing
An uncommon but essential benefit of the Lively HSA investing account is this. You don’t need to invest a minimum amount in order to start earning interest; this is why the term “first dollar investing” was coined.
Taxes deductible
The HSA may be a significant tax saving in addition to a health fund buffer and an investment performance. An HSA is referred to be a “supercharged IRA” when it comes to taxes in the Lively resource manual. In addition to donations being tax-free, interest is also exempt from taxation. Withdrawals are also acceptable as long as you pay for an acceptable medical charge.
Anyone who has an ACA (Affordable Care Act) health plan should use this kind of account. It’s wonderful to have some pre-tax money in the bank to assist with my ongoing—significant but not excessive—medical bills because I pay my own ACA premiums with post-tax income.
Note that you will be taxed on any contributions you make that are more than the yearly cap ($3,550 for people). You may remove it before the tax deadline if you unintentionally contributed too much.
The dashboard for Lively makes things easy. When you log in, your HSA balance is shown, and each transaction is categorized by category so you can keep track of your healthcare expenses. Investors may see their transaction history and investment results.
There is also a helpful iOS or Android smartphone app.
When you join or at any point later, Lively enables you to “roll over” your HSA funds, or directly move them from one HSA provider to another. There may only be one tax-free rollover each year.
You are allowed an unlimited number of trustee-to-trustee transfers, which send money directly from one HSA holder to another without allowing you to physically access the money.
HSAs for workers may be added by small company owners and other employers. By connecting payroll data to Lively, there is a simple onboarding procedure and a means to automate employer donations. Pre-tax deductions for employees may also be made more easily. Larger businesses could be able to write off employee HSA costs against their own taxes.
Who is Lively HSA best for?
Spenders on health care
Lively is a standout choice for people expecting to use their HSA money for eligible costs, a simple task if you have frequent medical visits. You always have access to money. I want to have a lot of money put up for medical expenses since finding insurance with a low deductible is growing harder.
Individual investors
If you’re planning forward more, Lively’s alliance with TD Ameritrade positions investors to generate rewards in the future. The direction is entirely up to you, which experienced or independently-minded investors will appreciate. TD investors have a bewildering assortment of options.
Self-employed individuals
Without employment contributions, a lively HSA will optimize your savings and account development.
Summary
A Lively HSA may be useful for all types of HSA users, including those with continuing medical costs and seasoned investors. When looking for health savings, don’t forget Lively!
