Should You Use Lively to Manage Your HSA Account?

Lively is a health savings account (HSA) provider that works well for anyone looking for a self-managed HSA account with low fees and robust investment features. It has a savings feature built in and offers investments through a partnership with Charles Schwab.

You can use Lively HSA if you’re self-employed or eligible for an HSA and don’t get one directly through your employer.

It’s also great for rollovers and as a long-term investment account for retirement. Follow along with this Lively HSA account review to learn more.

Pros & Cons

What Is Lively?

Lively is an HSA account provider. It enables you to make pre-tax contributions and tax-free withdrawals when you follow Internal Revenue Service (IRS) rules and use the account as intended. As with all HSA accounts, tax-free withdrawals are only available to pay for or reimburse yourself for qualified medical expenses.

Lively is based in San Francisco, with employees throughout the U.S. In addition to direct-to-consumer accounts (what we’re focused on in this Lively HSA account review), the company offers HSAs to workers through a relationship with employers.

Lively Features

What Does It Offer?

Lively has plenty of valuable features to help you build and track your HSA balance. Here are some core offerings to consider when deciding if Lively HSA makes sense for you:

⚕️Contribution and Expense Tracking

Key features include automatic recurring contributions, the ability to invest in nearly anything listed on a major investment market or exchange, contribution tracking, and expense tracking. There’s no rule stating that you have to reimburse yourself for medical expenses immediately or within the same year or decade.

Using the expense tracking features, you can effectively use your Lively HSA as a super-powered retirement account with the best tax benefits of any type of account. You can use the account’s debit card to pay for expenses directly if you choose, or type in details from receipts to reimburse yourself for medical costs made with another card or payment method.

⚕️Tax Benefits

While these features apply to all HSA accounts, it’s important to highlight the tax benefits of using an HSA. Pre-tax contributions and tax-free withdrawals make the HSA arguably the most tax-advantaged account available to those in the U.S. It’s the only legal way to earn and invest completely tax-free.

To contribute to an HSA, you’ll need a qualifying high-deductible health plan (HDHP). For 2022, the IRS defines an HDHP as a plan with a deductible of at least $1,400 for an individual or $2,800 for a family. It must have a maximum out-of-pocket limit of $7,050 for individuals or $14,100 for a family.

⚕️Optional Automated Investing

When you pick the self-directed Schwab account, you can choose your investments, paying only Schwab fees, which are pretty low. That includes an extensive menu of stocks, ETFs, mutual funds, bonds, and other investments.

If you don’t want to pick your investments, Lively offers a service for a 0.50% management fee. This is fairly competitive against robo-advising services but not the cheapest way to handle automatic investing.

⚕️Lively Marketplace

Lively partners with pharmacies, contact lens and eyeglasses companies, lab testing facilities, and other medical providers for convenient and sometimes discounted access to a wide range of products. Partners include PlushCare, HSA Score, Zendy Health, Jonas Paul, Candid Co., Audicus, Pill Pack from Amazon Pharmacy, Accesalabs, and Fem Patch Co.

⚕️Expense Scout

Expense Scout is a unique tool that scans your linked credit card and bank accounts, looking for medical transactions you have not added to Lively for reimbursement. Forgetting a qualified expense means you can’t use it for a tax-free withdrawal in the future.

Who Is Lively HSA For?

Lively HSA is for anyone with a qualifying HDHP for health insurance and doesn’t have to use a specific HSA provider picked by an employer. If your employer doesn’t offer an HSA or you’re self-employed and have the right health insurance, you can open an account at Lively on your own to manage your HSA needs.

Very few HSA companies come close to offering such great value at such a low cost, so anyone on the hunt for an HSA could find a good fit at Lively. Like other HSA companies, Lively is only for people with qualifying health insurance plans or an existing HSA to roll over.

What We Like About Lively

We like almost everything about Lively. It is extremely low cost, with most users paying nothing for self-directed features or a modest 0.50% for automated investing. The app is simple and focused on solely HSA needs. It covers everything you’ll need without extra fluff to confuse you.

The connection to Charles Schwab is also a great feature, as it’s one of our top-rated brokerages.

Where Lively HSA Could Improve

A few areas come to mind where Lively HSA accounts could improve. These are small gripes, but there’s always an opportunity for financial products to improve.

First, the connection to Schwab can be a bit cumbersome. You need a separate account at Schwab and use the Lively app or website to transfer funds between the Lively savings account and the Schwab investment account. It would be nice to have a tighter integration requiring fewer logins.

The 0.50% fee for automated investing is also a little high. Some robo-advisors don’t charge management fees; the typical fee is around 0.25% to 0.50%. That puts Lively on the higher end of the spectrum for automated investment costs. But those only apply to customers who opt-in for that product.

Finally, you earn very low interest rates if you have cash in a Lively HSA savings account. It’s better than the big, traditional banks paying as little as 0.01%, but rates are much lower than the average high-yield online savings account.

A quick note: Previously, investment accounts were with TD Ameritrade, which has been acquired by Charles Schwab. According to Lively, the transition has already started and should be complete by the fall of 2023. Fortunately, Schwab is also an excellent, low-fee investment brokerage and will be integrating TD Ameritrade’s best features.

What Are the Fees & Limits?

Employees can enjoy the benefits of Lively without any fees when you handle your own investments. Employers pay $2.95 per employee per month with a $50 minimum if they offer Lively HSA as a benefit. There’s no account minimum to get started with Lively.

The automated investment product runs through Devenir’s HSA Guided Portfolios, which costs 0.50%. Schwab fees are subject to its fee schedule. If you make too many contributions or unqualified withdrawals, you may incur fees, taxes, or penalties from the IRS.

How To Open an Account

Opening an account is quick and easy for computer-savvy individuals with their personal contact and tax information handy. To start, you’ll go to the “open account” link at Lively to choose your account type and establish your account.

In the account opening process, you’ll need to enter your name, address, phone number, Social Security number, and connect to a funding source. The easiest option is to link to your existing checking account. Your taxpayer information is necessary to generate annual HSA tax forms and reporting for you and the IRS.
Opening a new account takes 10 minutes or less if you have everything ready to go.

An HSA is a tax-advantaged account authorized by the government. As a result, it’s important to understand the penalties associated with the account. If you use the money for nonqualified expenses, you have to pay tax on the amount spent, as well as a 10% penalty levied by the IRS.

However, when you reach age 65, you can treat your HSA like a traditional IRA. You can withdraw money for any purpose without paying the 10% penalty. However, you still have to pay tax on the amount.

How Do I Contact Lively?

Lively customer service is open Monday through Friday from 6:00 am to 6:00 pm Pacific. You can get help by phone, email, or chat support. The only drawback here is that customer service isn’t available during night or weekend hours. But support is generally very responsive and helpful during business hours.

How Safe Is Lively?

Lively accounts are safe if you follow online best practices for passwords and security. Logins require a third-party authentication app like Google Authenticator with a (too short) 15-day window before entering a verification code. It would be nice to have a month or 90-days here instead of needing the authenticator every couple of weeks, but the requirement does enhance your account security.

Cash funds are held with partner bank Choice Finance, the source of FDIC insurance for cash balances. Investment account cash balances are covered by SIPC insurance from Schwab or Devenir.

Best Alternatives

While Lively is an excellent option, it never hurts to compare products with the competition before making a final decision.

Fidelity

Fidelity is the best alternative to Lively HSA and a good choice for those who already use Fidelity for their investment accounts. Its HSA accounts are also fee-free for most typical use and have access to the entire suite of Fidelity investments.

Read more about Fidelity >>> Fidelity Review 2022: Is This the Best All-Around Stock Broker?

Optum HSA

Optum HSA is an HSA provider affiliated with United Healthcare, though you can use it even with other health insurance providers. Accounts may incur monthly maintenance fees, and investment choices are more limited than Lively with Schwab or Fidelity.

Read more about Optum HSA >>> Optum Bank HSA: Is It Right For You?

Bottom Line

Lively HSA is a great choice for anyone in the market for a new HSA account. With low fees and excellent investment choices, there’s a lot to like and little to complain about when you use Lively.

Fidelity is the best alternative when you’re shopping around. If you don’t already use Fidelity, Lively could be the better choice.

Overall, it’s easy to give Lively HSAs a strong endorsement. If you need an HSA account with useful features and low fees, look no further.

Further reading: