The Best HSA Providers of 2022

If you’re looking for a way to stretch your healthcare dollars, you might consider a health savings account, or HSA.

Thanks to its flexible withdrawal rates and powerful tax benefits, an HSA can be a powerful tool. It can be used as a healthcare checking account, or a long-term investment vehicle, and varying degrees in between. But the slew of HSA providers out there, with differing account features and characteristics, can make it a daunting task to sort through all your options. That’s why Morningstar evaluates the top HSA providers that offer retail accounts for those looking to shop around.

Even if you already have access to an HSA provider through your employer, our assessments can help you get the most out of your HSA.

We cover the inner workings of HSAs, address frequently asked questions, and rate HSA providers for different uses. If you decide that an HSA is right for you, or you want to see how your employer-sponsored plan stacks up, consider our list of the best HSA providers for 2022.

IN THIS ARTICLE

• What is an HSA?
• The Best HSAs for Spending
• The Best HSAs for Investing
• HSA Providers
• HSA FAQs
• How We Evaluated HSA Providers

What is an HSA?

An HSA is an account that allows you to spend and invest money for healthcare expenses. An HSA is only available with a high-deductible healthcare plan, and it’s subject to annual contribution limits.

While there are rules around who can qualify and how you contribute to and use the money in an HSA, you don’t have to worry about using all the funds in the account in any given year. Unspent funds are not forfeited, unlike a flexible spending account, and you can keep the same account even if you change employers or leave the workforce.

You can use an HSA like a spending account to help cover current medical expenses, or you can use it as an investment account to help plan for future costs. Either way, HSAs offer a triple tax advantage: Money enters tax-free, grows tax-free, and can be withdrawn tax-free if spent on qualified medical expenses.

People who use their HSA dollars on current healthcare expenses benefit because HSA contributions are excluded from income, Medicare, and Social Security taxes. People who invest and grow their HSA dollars to pay for future medical costs further benefit from the tax-free growth of HSA dollars. Based on the tax merits alone, HSAs are more attractive than other retirement-savings vehicles like IRAs and 401(k)s.

Using your HSA for “qualified medical expenses” is key to getting the full tax advantage of the account. These qualified expenses generally include dental, vision, and prescription costs for you, your spouse, and your dependents. You can see a full list of qualified medical expenses on the IRS website.

People who are younger than 65 are subject to a 20% tax penalty plus ordinary income taxes on withdrawals for non-qualified expenses. Those older than 65 can withdraw funds without the 20% penalty, but will still pay income tax if the money is not used for healthcare expenses.

The Best HSAs for Spending

When using an HSA as a spending account to cover current healthcare costs, the best HSAs do the following:

• Offer spending accounts without maintenance fees regardless of account size.
• Pay reasonable interest rates on deposits.
• Eliminate or limit additional fees.
• Offer FDIC insurance on the spending account.

The Best HSAs for Investing

When using an HSA as an investment account to cover future healthcare expenses, the best HSAs follow these practices:

• Offer investment strategies in all core asset classes while limiting overlap.
• Provide strong investment strategies that earn Morningstar Medals.
• Charge low fees for active and passive strategies.
• Don’t require investors to keep money in spending accounts before investing.

HSA Providers

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Spending account comes free of charge and pays an exceptional interest rate.
• Low-cost investment account with no investment threshold.

Cons

• The investment account has some redundancies in its fund lineup.

Fidelity is the only provider to receive the top billing for either the spending or investment account, let alone both.

The Fidelity spending account cemented its place as the industry’s top offering by delivering significantly larger returns on cash balances. Fidelity’s 1.19% interest rate, regardless of account balance, stands far above rates paid by other providers: The next-highest is HSA Bank, with an interest rate that’s still less than half of what Fidelity offers (and is only paid on balances over $50,000). Fidelity has also shunned both maintenance and additional fees since first offering its HSA to individuals in 2018.

The investment offering checks the key boxes, too. Fidelity follows industry best practices by not charging an investment fee—it is the only provider that doesn’t levy any expenses outside of the underlying fund fees—and by not requiring an investment threshold, meaning investors don’t need to retain a balance in the spending account in order to invest. The investment menu, the selection of funds offered up for investment, is also sensible. It covers all the broad asset classes and mixes in Parnassus Core Equity PRBLX, which earns a Morningstar Medalist Rating of Gold, and Calvert International Equity CIESX for investors prioritizing sustainability.

The lineup has some redundancies, though, including two active strategies each in the large-growth and mid-value Morningstar Categories. It also comprises Fidelity Health Savings, which is not covered by Morningstar analysts. Fidelity is one of five providers covered to offer a brokerage window for those looking for additional investment choices.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• No maintenance fees on the spending account.
• Investment account comprises cheap strategies and has a relatively small investment threshold.

Cons

• Smaller balances are stuck with meager interest rates.
• Investment menu would benefit from more breadth.

HealthEquity is a solid, low-cost HSA provider.

Like other topnotch spending accounts, HealthEquity does not levy a maintenance fee. While it pays interest rates of up to 0.36%, savers at HealthEquity only receive that rate on balances greater than $10,000, far greater than the $722 median spending account.

Further, it’s one of only a few providers that increases its interest rate on a schedule, rather than once balances reach certain thresholds.

Though its 0.36% charge on investment accounts is higher than the 0.30% norm, HealthEquity’s lineup of cheap Vanguard strategies more than makes up the difference. The 0.08% average expense ratio of its underlying funds is 23 basis points cheaper than that of the average provider, and HealthEquity allows account holders to invest immediately.

There is some room for improvement, though. HealthEquity’s lineup, while compact and cheap, is narrow. It is almost made up entirely of index funds and is in the minority by not offering a target-risk series.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• No fees, maintenance or otherwise, on its spending account.
• Investment account has no investment threshold and comes with an exceptionally designed investment menu.

Cons

• Spending account offers subpar interest rates.
• Hefty custodial fee on the investment account.

Lively is the second of three providers to receive positive marks for both account types.

The spending account comes without a maintenance fee or any additional fees, such as account transfer charges. Lively’s recently updated interest rate schedule, however, starts out at 0.01% on smaller plan balances and peaks at just 0.10%.

Lively’s investment account, meanwhile, scores well thanks to its compact yet well-rounded investment menu and lack of investment threshold, meaning investors don’t need to retain certain balances in the spending account in order to invest. Yet, Lively’s hefty 0.50% investment charge overwhelms its relatively cheap group of funds and waters down its investment offering.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Spending account doesn’t charge maintenance fees.
• Does not require investors to keep money in spending accounts before investing.

Cons

• Excessive additional fees and trivial interest rates on the spending account.
• Poorly designed investment menu.

Rounding out the trio of providers that receive Above Average on both accounts is The HSA Authority.

Its spending account stands out for not charging a maintenance fee since we first started covering the space in 2017. However, investors should consider that The HSA Authority does have excessive additional fees, like an account transfer charge, and its meager interest-rate schedule maxes out at just 0.05% once balances reach $10,001.

The positives of The HSA Authority’s investment account overwhelm its drawbacks, too. Though it levies a $36 annual investment fee that cannot be waived, The HSA Authority’s underlying fund fee of 0.26% and administrative charges are lower than the norm. It is also one of only three providers that does not require spending account balances prior to investment.

The HSA Authority’s menu design has several flaws, though. Its selection of funds includes complicated offerings like derivative-laden Pimco StocksPLUS Small PSCSX, and the 30-fund lineup is the largest surveyed, leading to considerable redundancies. Most notably, it includes eight U.S. large-cap options.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Spending account comes with no maintenance fees, very few additional fees, and decent interest rates.

Cons

• Requires a $1,000 spending account balance before using the investing account, which includes both holes and redundant offerings in the lineup.

HSA Bank’s move to eliminate its maintenance fee bolstered its spending account offering last year, and it has adjusted its interest-rate schedule in line with rising rates. Starting Oct. 1, 2022, it will pay out 0.05% initially and jump to 0.15% once plan balances reach $5,000.

Its investment offering, though, doesn’t fare as well. The price tag remains middle of the road despite the elimination of the maintenance fee, as it still levies a 0.30% investment charge, and the expense ratio of its underlying funds is merely average. The investment menu offers all but the most conservative of Vanguard’s four target-risk funds and Vanguard Target Retirement funds at 10-year increments rather than the industry standard of five years.

The menu also has some overlap—two strategies in the foreign large-blend category—and inexplicably comprises two real estate funds as well, though HSA Bank removed a niche healthcare sector fund this year. HSA Bank offers a brokerage window, but savers must keep at least $1,000 in the spending account before investing either way.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• No maintenance fees and reasonable interest rates on the spending account.

Cons

• The investment account features a complicated investment menu comprised of overly complex and questionable funds and a $1,000 investment threshold.

One of two newcomers to this year’s report, First American Bank offers a compelling spending account as it shuns maintenance charges. It also offers a decent interest-rate schedule, which starts at 0.05% and from providers that play next to nothing on the average plan balance.

Its investment account, however, is merely average. First American Bank has a relatively expensive group of funds and levies a 0.30% investment fee. Its subpar investment menu includes the Vanguard Target Retirement series in 10-year increments and strategies in risk-heavy parts of the market like emerging markets and high yield.

It also comprises strategies that are either too specialized or overly complex for the typical HSA investor. For instance, First American offers Virtus Duff & Phelps Water AWTIX, the only Negative-rated strategy offered by the providers surveyed, and Pimco All Asset PAAIX, a Neutral-rated tactical allocation strategy. Like HSA Bank, First American requires savers maintain a $1,000 spending account balance before investing and offers a brokerage window.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Spending account maintenance fee waived once account balances reach $2,000.
• Relatively small investment threshold on the investment account.

Cons

• Interest rate stuck at 0.01%.
• Excessive fees weigh on the investment account, and the investment menu has room for improvement.

Optum improved both of its accounts on the margins over the past year. It decreased the spending account maintenance fee to $33 annually from $45 and now waives it when account balances reach $2,000 (versus $5,000 previously). The fee reduction is positive but still looks high compared with peers that don’t charge anything. That, plus its meager 0.01% interest rate, limits the overall attractiveness of the spending account.

On the investment account, Optum slashed the investment threshold to $500, down from $2,000, and the 0.23% average expense ratio of funds offered is also below the group average of 0.31%. There’s still room for improvement, though. The middling investment lineup includes three of the four Vanguard target-risk funds and the Schwab Target Index series at 10-year increments, rather than the preferred five-year steps. Its relatively deep menu also has redundancies—two actively managed strategies apiece in the large-value and global large-stock blend categories—and gratuitous positions like Gold-rated Vanguard Real Estate Index VGSLX and Bronze-rated Lord Abbett High Yield LHYRX. Optum is the last of the five providers to feature a brokerage window.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Well-rounded investment lineup and relatively small investment threshold highlight the investment account.

Cons

• Spending account interest rate peaks at 0.02%.
• Investment account comes with relatively pricey underlying funds and administrative fees.

Associated Bank has some pockets of strength but needs work elsewhere.

Spending account holders must maintain an account balance of $2,500 or above to have the yearly maintenance fee of $36 waived. The spending account also pays a relatively scant interest rate.

While a thoughtfully designed investment menu gives the investment account an edge, excessive costs weigh on the account’s overall score. It features well-regarded investment managers including American Funds, T. Rowe Price, and Vanguard while giving investors enough choice between passive and active options. It also includes simple and straightforward allocation funds, and Associated Bank halved the investment threshold to $500 over the past year. Still, the investment account charges hefty maintenance ($36) and investment ($24) fees, though it waives the former once spending account assets surpass $2,500, and its fund lineup is pricey.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Investment account has a top-notch menu design.

Cons

• Subpar interest-rate schedule on the spending account, especially on smaller plan balances.
• Investment account has the highest cumulative price tag of providers surveyed.

UMB, which was last covered in 2019, is a merely decent HSA provider.

With its $35 maintenance fee that’s waived only when account balances reach $3,000, plus interest rates that start at 0.01% and move up marginally on relatively high balances, it offers a middle-of-the-pack spending account.

The features of its investment account run the gamut. The investment menu is exceptional: The lineup is easy to navigate, it provides access to core asset classes, and it includes both Vanguard’s target-risk and Target Retirement series. It also features a solid environmental, social, and governance option in Gold-rated Parnassus Core Equity PRILX.

UMB, however, rings in with the worst price tag across providers. It does not levy the highest administrative or underlying fund fees, but scores poorly when combining the two components. UMB charges a $35 maintenance fee (which is waived once spending account assets surpass $3,000), a $36 investment fee, and its underlying funds average 0.34%. UMB also mandates a $1,000 investment threshold. In all, it has an average investment offering.

Fees and interest rates assume a $2,000 spending account and $14,000 investing account balance.
Data as of Aug. 31, 2022.

Pros

• Investment account offers higher-quality strategies.

Cons

• The spending account is the only offering to receive a Below Average overall score due to its rigid maintenance fee.
• Relatively large fund lineup in the investment account has overlapping positions.

Bank of America’s spending account is the only offering, investment or spending, that received a Below Average assessment this year. It charges account holders a yearly maintenance fee of $30 no matter the account size. And while it provides somewhat higher interest rates on larger balances, the typical accountholder will earn just 0.01% annually.

The investment account is mostly average. Bank of America’s relatively large menu includes several redundancies, including three small-cap funds (down from four previously) with two in the small blend category. The plan also includes Pimco Commodity Real Return Strategy PCRPX, which, while Silver-rated, is too far afield for an HSA. Over the past year, though, Bank of America demonstrated the resolve to include quality options by removing Nuveen Small Cap Value FSCCX, which receives a Negative Morningstar Quantitative Rating.

Bank of America’s nonexistent investment fee makes it relatively attractive, especially for those with larger plan balances, though its investment lineup is one of the priciest.

HSA FAQs

Who qualifies for an HSA?

HSAs are available to people under 65 with HDHPs, or high-deductible healthcare plans (at least $1,400 for individuals or $2,800 for families). Your health insurance plan’s out-of-pocket maximum also cannot exceed $7,050 (or $14,100 for family coverage).

You also cannot be a dependent on a tax return, enrolled in Medicare, or enrolled in another health insurance plan (unless permitted under other health coverage).

What are the HSA contribution limits?

In 2023, the combined contributions of you and your employer must be at or below $3,850 for a self-only insurance plan and $7,750 for a family plan. (That’s up from $3,650 and $7,300, respectively, in 2022.) If you’re over age 55, you can contribute $1,000 more each year.

How is an HSA different than an FSA?

Both HSAs and FSAs offer tax advantages. You can elect for your employer to defer pretax dollars into the account, and you can withdraw these funds tax-free to cover qualified medical expenses. FSAs and HSAs have some key differences, and even if you qualify for both, the IRS only lets you have one given their overlapping tax benefits.

What if my company-provided HSA isn’t the best?

Even if it isn’t your first pick, don’t abandon your company-provided HSA. Take advantage of the option to defer pretax dollars to the account as well as any company match your employer offers. From there you can periodically transfer money out to your HSA of choice. Assuming the money stays within the HSA, you won’t have to worry about taxes on the transfers.

How We Evaluated HSA Providers

Our report on the HSA landscape was designed to provide useful information to individuals either enrolled in or considering an HSA. Morningstar evaluates the largest and most popular HSAs available to individuals and also smaller HSAs if their features merit attention. The report does not include HSAs available through employers, as fees in such plans can vary, making comparisons difficult.

Morningstar’s analysts evaluated the providers on two use cases: as spending accounts to cover current medical costs, and as investment accounts to save for future medical expenses. Morningstar scored both account types on a 5-point scale (High, Above Average, Average, Below Average, and Low).

Three factors potentially drive the quality of HSA spending accounts: interest rates, maintenance fees, and additional fees. Morningstar evaluated the spending accounts along two dimensions: maintenance fee (70% weighting) and interest rates (30%). Morningstar weighted each category score and summed it to arrive at an overall score, which was then used to rank the providers.

In assessing HSA investment accounts, Morningstar’s analysts prioritized low, transparent fees; sound investment menus that steer clear of questionable asset classes and limit overlapping positions; high-quality investment strategies that earn Morningstar Medals; and no required spending account balance in order to invest. Morningstar scored each investment account on four criteria: price (40% weighting); menu design (20%); quality of investments (20%); and investment threshold (20%). Morningstar weighted and combined each category score to arrive at an overall score and rank the providers.

In our evaluation of each provider, we assumed a $2,000 spending account balance and a $14,000 investment account balance for ease of comparison, and have noted providers whose fees increase or decrease for higher investment amounts.

More About HSAs

ABOUT THE AUTHORS

Tom Nations is an associate director, multi-asset and alternative strategies for Morningstar.
Margaret Giles is a data journalist for Morningstar.

CONTRIBUTORS

Research contributors: Megan Pacholok, Janet Yang Rohr
Design editors: Nura Husseini-Yoon, Alex Skoirchet
Editors: Emelia Fredlick, Ann Sanner King

These research authors and research contributors are employees of Morningstar Research Services LLC.

This content is not intended to be individualized investment advice, but rather to illustrate possible factors that can impact financial decisions. Investors should consider this information in the full context of their own financial decisions.

Read our editorial policy to learn more about our process.