Lively is a San Francisco based financial technology company that provides a healthy savings account without a minimum initial deposit or current account fee. There is also no minimum balance required to start investing. Individuals and families with eligible health plans can make tax-free contributions every calendar year. Each withdrawal is tax exempt for eligible medical expenses.
HSA is basically a savings account for medical expenses. It can only be used for health-related expenses and has a contribution limit set by the IRS. In 2020, the amount of HSA you can contribute in this year is limited to a separate $3550 and a family $7100. Your contributions are 100% tax-free up to these limits. In addition, HSAs are owned by individuals (not your employer), similar to 401k and IRA, because they can be transferred to other financial institutions, no matter where you first opened them.
Why You Need A Health Savings Account
However, this is the exciting part: unlike the FSA (flexible spending account) that your employer may provide, you do not have to use HSA within a specific time frame. In addition, you can invest your money in it and use it to pay for medical expenses at any time – even years after the operation, as long as you keep the receipt
When you have high deductible health insurance, HSA is a way to save out of pocket medical expenses. This account can be used to pay deductibles, CO payments, CO insurance and other expenses, and has the additional advantage of reducing taxable income. More and more people see HSA not only as a source of funds to pay for medical expenses, but also as a way to save for retirement.
Lively is an innovative HSA company that allows you to set up an HSA without providing individuals with monthly or annual service fees and no minimum balance requirements. This is how it works. You first visit the lively website and open your personal HSA. After completing this operation, you can set up the transfer through the wage contribution deducted by the employer. Or you can make personal or automatic contributions through your bank account. The funds deposited into lively HSA are deposited in the FDIC insurance account, which can earn interest. However, you can also choose to invest your HSA funds.
Lively works with TD Ameritrade to enable you to manage and invest your HSA funds online. TD Ameritrade charges zero for many online transactions, so you are likely to avoid fees there. You can decide how much HSA capital to invest. There is also no minimum balance for TD Ameritrade’s investment.
Your lively HSA account can also receive up to three free debit cards. You can then use these debit cards to pay at your doctor’s office, pharmacy or anywhere else. You can transfer HSA funds from other accounts to lively. Lively operates on a paperless basis, so you can manage your account completely online.
Each live HSA program offers two different investment options – self guided TD Ameritrade and HSA guided porfolio (we do not consider the cash account balance “option”, but we explain it below). When joining lively, new members can choose how to invest their HSA balance.
The low-risk option for your HSA funds is to keep the balance in the cash account of FDIC insurance. However, the interest rate is only 0.01% apy (from March 6, 2020), similar to most entity banks. Because HSA investment income can be withdrawn tax-free and the cash yield is low, you may only decide to keep enough cash in the cash account to pay recent medical expenses. Despite the additional risks, long-term investment in cash can increase your HSA balance and exceed inflation.
This is an example. You are 25 years old. You have decided to set up HSA and start donating up to $3550 a year to individuals. You immediately start investing in a fund with an average annual return of 7%. You do this for 40 years until you are eligible for Medicare. So far, your HSA has increased to $761864. In fact, as the annual contribution limit is increased to keep pace with inflation, the total may eventually be higher.
Once you are 65 and older, you can use the funds in the HSA to pay Medicare premiums. You can also withdraw any funds without paying a 20% fine, but you still have to pay income tax.
advantage ↗
No account fees or minimum balance
Flexible investment options
Simple self reimbursement options
Upload receipts and sort them
weakness ↗
Low interest rate of cash account
HSA guided portfolio annual fee is 0.50%
It’s no exaggeration to say that almost everyone needs an HSA account today – at least if you have a high deductible, high out of pocket health insurance plan. Even if you have health insurance, high out of pocket expenses can seriously damage your financial situation. This is especially true if you have a medical condition that requires ongoing treatment and costs.If you want more information, or if you want to sign up for the service, please visit the lively website.
