Criteria for Evaluating HSA Plans
AS AN INVESTMENT VEHICLE
In evaluating the best investment HSAs, we focused primarily on fees, investments, investment thresholds, and investor-friendly features.
When you open an HSA, you are subject to a long list of potential fees. However, in this study we concentrate on the fees investor’s are most likely to encounter:
Maintenance / Administrative
Custodial (asset based fees)
The best investment HSAs:
have transparent fee disclosures.
have low maintenance fees (less than $3.00 per month).
charge low flat/fixed/static investment fees.
At The HSA Report Card we are big believers in passive index investing. Thus, we believe the best investment lineups, at a minimum, should allow participants to build globally diversified, low cost indexed portfolios . When examining the investment lineups of HSA plans we graded them on the following:
In the wacky investment world you don't always get what you pay for. Expensive funds are not guaranteed to outperform their less expensive peers. Lineups with low overall expense ratios received favorable grades, while those with high overall expense ratios received poor grades.
We believe each investment lineup should offer the following:
At least 1 low-cost domestic index fund
At least 1 low-cost foreign developed markets index fund
At least 1 low-cost emerging markets index fund
At least 1 low-cost short-term or intermediate term index fund
4-6 low-cost allocation/target date funds
Predicting which asset class or mutual fund is going to outperform in a particular year is simply impossible. For that reason we don't care about past performance. We don't factor past performance into our grades.
Some HSA administrators require account holders to keep a certain amount of money in a (usually) low paying checking account before they can invest their funds. Keeping funds in a low-interest cash account means accountholders miss out on those funds’ potential investment returns; this is known as opportunity cost.
The best investment HSAs offer first dollar investing. In other words, the best investment HSAs let their account holders invest right away without having to leave any money in the checking account. Thus, administrators with low investment thresholds received the best grades, while those holding HSA dollars hostage, received poor grades.
Lastly, we scoured the universe for HSA plans that spoiled investors with great features. The best investment HSAs offer:
Intuitive websites/apps with hassle-free investment management capabilities
Automatic recurring account to account transfers (external and internal)
Receipt storage tool for "shoeboxers"
The Top 10 Investor HSAs
Standard Plan (Non-Employer Group)