Many people have questions about investment options in choosing an independent HSA administrator that allows you to purchase stocks, bonds, and mutual funds. While no HSA account offers 100% free investment options (at least not until you have a balance of at least $3,000), there are some simple ways to set yourself up to invest when initially enrolling in an HSA plan. Low fees are an important consideration until you have built up some money in your account.
If you are planning to open an HSA account and slowly fund it, we recommend that you start out using an account that charges no fees at all, no matter what your balance. When you have funded your account to $3,000, you can then review your no fee options for investing. First American Bank is a solid option, offering a standard HSA account with a small, but guaranteed, interest rate. First American does not charge any start up fees, monthly fees, or annual fees. (They do charge a $3 monthly fee if you want a paper statement mailed (until your balance is over $2,000), but you can avoid that charge by opting to receive your monthly statement via email.)
First American also offers an upgraded account, which they call their Health Savings Plus Account. It does have a $4 monthly fee, but offers unlimited trading with no load fees.
Another option you may want to consider, when you have accumulated $3,000 in your account, would be HSA Bank. They offer more investment options (over 11,000) than any other HSA account on the market. They do charge a $2.25 monthly fee if you have less than $3,000 in your account. If you plan to actively trade with funds in your HSA, HSA Bank may not be the best option as they do have trading fees associated with most of their investment options.
If you plan to select a single investment option, and to leave your money there for a while, start out with First American, and take the small interest rate until you have at least $3,000 in your account. At that time, you could roll over the funds to HSA Bank and pay a one-time fee for your first investment. This way you would not incur any additional fees, unless your balance dropped below $3,000 or you made additional trades. Strictly from the perspective of making sure you pay the least fees possible, this last option is your best route to take. Our experience with HSA Bank and First American Bank has been very positive.
To recap, there is no reason to pay any monthly administration fees on your HSA account until you’ve reached the $3,000 mark. We suggest you start with First American, and then make the move to HSA Bank once you’ve accumulated over $3,000. When you use an independent administrator, there is no charge to roll over funds from one HSA to another.