As long as you have an eligible high-deductible health insurance plan, you can open a health savings account with many banks and brokerage firms.
Caveat: If your employer limits payroll deduction of your HSA contributions to its recommended HSA provider, use that account so that your contributions avoid the 7.65% Social Security and Medicare (FICA) taxes and to ensure you get any company match. Once you’ve taken advantage of those benefits, though, you can transfer your funds to another HSA.
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Consider these deals for different types of HSA savers:
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For long-term goals
If you use money outside of the HSA to pay medical bills now, you can build up cash tax-free in your HSA for future medical expenses, such as health care in retirement.
HSA Bank offers a large menu of mutual funds and other investments through TD Ameritrade. The monthly account-maintenance fee of $2.50 is waived if you maintain a balance of $5,000 or more.
For near-term expenses
Credit unions offer the most-competitive rates. For example, Lake Michigan Credit Union, which is open to anyone who donates $5 or more to the West Michigan chapter of the ALS Association, is paying 1.5% — or 2% on savings of $5,000 and up.
For a complete list of rates on HSAs, go to www.hsarates.com.
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