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Updated on Saturday, August 1, 2020
So, you need to choose a health savings account (HSA) to go along with your new health insurance plan. There are plenty of options out there, and it’s easy to get overwhelmed. The best savings accounts help you save money with high interest rates and low fees—your HSA should be no different. With a high-yielding HSA, you can cover your out-of-pocket medical expenses and boost your savings at the same time.
We’ve taken the work out of finding the best health savings accounts on the market. Using data from DepositAccounts.com (similar to MagnifyMoney, a LendingTree-owned company) we scoured more than 17,100 nationwide banks and credit unions to find the highest health savings account rates available. To ensure quality and availability, we excluded institutions with a DepositAccounts health rating below a B and credit unions with restrictive membership requirements.
Health savings account deposits at all of the institutions listed below are insured by the FDIC or NCUA.
The 10 best health savings accounts in July 2020
|Institution||APY||Minimum balance to earn APY|
|Evansville Teachers FCU||2.01%||$500|
|Connexus Credit Union||2.00%||$15,000|
|First Technology Federal Credit Union||1.00%||$0.01|
|The Adirondack Trust Company||1.00%||$1|
|Lake Michigan Credit Union||1.00%||$5,000|
|Matadors Community Credit Union||0.75%||$5,000|
|NASA Federal Credit Union||0.75%||$25,000|
|Thrivent Federal Credit Union||0.60%||$15,000|
1. Evansville Teachers FCU: 2.01% APY, $500 minimum deposit
Evansville Teachers FCU’s Health Savings Checking account earns at a great interest rate on all balances of $500 and over. Plus, there’s no maintenance fees. You can also benefit from check writing abilities, debit card access and payroll deductions with an ETFCU HSA.
ETFCU also offers five HSA share certificates with term lengths ranging between one to five years. Each require $1,000 to open and earns a competitive interest rate. However, ETFCU doesn’t recommend you use HSA share certificates unless you’ve had an HSA established for a while, since locking money in share certificates make it much harder to to dip into your funds.
You can find Evansville Teachers Federal Credit Union locations in Indiana and Kentucky. The credit union is also a member of the Alliance One ATM network, which offers fee-free access to about 5,000 ATMs. ETFCU was started by several teachers in Evansville, Ind. in 1936 — but you don’t have to be a teacher to qualify for ETFCU membership, though.
2. Connexus Credit Union: 2.00% APY, $15,000 minimum deposit
Connexus Credit Union also offers a high health savings account rate, but you’ll need at least $15,000 in your account to earn at that rate. Still, you can earn at decent rates on all other balances larger than $100, with higher balances benefiting best. The account doesn’t require a minimum balance or charge a monthly fee. You can request an HSA debit card when you open your account for use at Connexus ATMs.
You can find Connexus branches and ATMs in Wisconsin, Minnesota, Ohio and New Hampshire. Connexus is also part of the CO-OP Shared Branch network, which gives you access to more than 5,600 Shared Branches and more than 54,000 surcharge-free ATMs through both CO-OP and MoneyPass. To open an account with the credit union, you’ll need to become a Connexus Credit Union member.
3. First Technology Federal Credit Union — 1.00% APY, $0.01 minimum deposit
First Technology Federal Credit Union’s HSA Checking account is easy to open and own. In addition to its decent rate, it doesn’t charge HSA setup or monthly service fees, nor are there any minimum balance requirements. You just need at least $0.01 to open the account and to start earning interest. To open this HSA, you can call First Technology FCU at 855-855-8805.
You’ll receive a free HSA debit card with the account, which you can use at over 30,000 CO-OP ATMs. You can also visit over 40 First Tech branches and access more than 5,000 CO-OP Shared Branch locations.
You can qualify for a First Tech membership depending on your employment or residence. First Technology Credit Union was founded in 1952 by members of Hewlett-Packard and Tektronix. You can find First Tech branches, known as Experience Centers, in California, Colorado, Georgia, Idaho, Massachusetts, Oregon, Puerto Rico, Texas and Washington.
4. The Adirondack Trust Company: 1.00% APY, $1 minimum deposit
To get started with an Adirondack Trust Company Health Savings Account, you’ll only need to deposit $1 — after that, there’s no other minimum balance requirement to earn interest. To access your health savings account, you can take advantage of free unlimited check writing and free ATM access with your ATC HSA Visa debit card. Getting paper statements on this account will cost $4, while using online banking will still cost you $2.
Founded in 1901 in upstate Saratoga Springs, N.Y., ATC maintains 13 branches along the Adirondack Mountains area and offers access to two Amsure branches in Saratoga Springs and Albany, N.Y.
5. Lake Michigan Credit Union: 1.00% APY, $5,000 minimum deposit
While you’ll only need $5 to open a Lake Michigan Credit Union account, you’ll need at least $5,000 in your HSA to earn at the listed APY; balances below $5,000 will have a much lower rate. The account doesn’t charge a monthly service fee and comes with a free debit card. You can use this debit card to pay for your medical costs and withdraw cash at any LMCU branch. You can also access your LMCU HSA funds through unlimited check writing and online banking.
Founded in 1933, Lake Michigan Credit Union offers open and free membership. As you might expect, you can find LMCU branches in Michigan, but there are also several branches in Florida. Plus, in addition to LMCU ATMs, you can also take advantage of over 55,000 Allpoint ATMs.
6. Matadors Community Credit Union: 0.75% APY, $5,000 minimum deposit
The HSA from Matadors Community Credit Union requires a minimum opening deposit of $100, but you’ll need at least $5,000 to earn the highest rate tier on the account — you’ll still earn interest with balances of $100 and over, just at lower rates. There’s also a $3 monthly fee on the account.
In addition to a free MasterMoney Debit Card, you’ll also have use of unlimited check writing abilities to use your HSA money. You can use your debit card to make your medical purchases, and at Matadors Community CU and 30,000 fee-free CO-OP ATMs. You can also visit two Matador branches in Chatsworth and Northridge, California, or over 5,000 CO-OP Shared Branches. MCCU offers membership to employees of partner employer groups in the San Fernando, Simi and Santa Clarita valleys of California.
7. IncredibleBank — 0.75% APY, $25,000 minimum balance
While there’s no minimum deposit or balance requirement, you’ll want to keep a balance of $25,000 and above in the account to snag the worthwhile 0.75% APY. Balances from $1,000 and up still earn interest, just at much lower rates.
IncredibleBank traces its history back to 1967 as River Valley Bank. Today, it is headquartered in Wausau, Wisc. and has 15 locations in Wisconsin and Michigan.
8. NASA Federal Credit Union — 0.75% APY, $25,000 minimum deposit
NASA Federal Credit Union offers a service fee-free Health Savings Account to its customers. While a $25,000 balance will snag you this competitive rate, higher balances can earn higher rates, while lower balance tiers earn lower rates. You can contribute funds to this account through direct deposit, ATM, online or at a branch. The account includes a NASA Federal HSA Debit Card to quick access to your money.
NASA Federal started in 1949 when seven NASA employees received a credit union charter to serve fellow employees. Today, the credit union serves over 140,000 members. Its membership is open to employees or retirees of NASA, the credit union’s partner companies and relatives of current members. Even if none of this applies to you, NASA Federal also allows you to join through a complimentary membership to the National Space Society.
NASA Federal has branches in the Washington, D.C. area and also provides access to branches and ATMs through the CO-OP network.
9. Elements Financial: 0.60% APY, $10,000 minimum deposit
You can benefit the most from Elements Financial’s HSA if you have $10,000 available to set aside for future medical expenses; lower balances still earn interest, but at lower rates. The account does charge a $4 monthly fee, but you can avoid it by averaging a daily balance of at least $2,500.
The account includes a free Visa debit card, which you can use for purchases and to access your funds with over 78,000 ATMs worldwide through the Allpoint, CO-OP and Alliance One networks. In addition to these ATMs, you can visit Elements Financial branches and over 5,000 CO-OP Shared Branches in all 50 states and 50 countries.
Elements Financial is a credit union that requires membership before you open an account. Founded in 1930, it currently serves employees from over 135 companies in the U.S. If your company is an Elements partner, you can open a checking or savings account or complete an application for a loan or credit card to start the application process.
10. Thrivent Federal Credit Union — 0.60% APY, $15,000 minimum deposit
Thrivent Federal Credit Union offers a four-tier HSA starting at 0.30% APY with a minimum deposit of just $0.01 all the way up to 0.60% APY for deposits over $15,000. If you have many healthcare expenses per month make sure to try and bundle them as much as possible with this account, because you’re only allowed three withdrawals per month. After that, you’ll pay a $2 fee for each check written, starting with the fourth withdrawal per month.
If you’re religious, this Christian-based credit union might appeal to you. You can qualify for membership if you’re a member of certain churches, or if you become a member of Thrivent Financial.
How to use your HSA wisely
Health savings accounts are used only for medical expenses, and if you shop around you can earn interest on your balances with the right account. But did you know HSAs offer tax benefits, too? You fund an HSA with pre-tax dollars, which lowers your taxable income in the year you make the deposit. As long as you spend HSA funds on approved medical expenses, it doesn’t get taxed. If you do use your HSA funds for something other than approved medical expenses, you may get hit with a 20% tax penalty.
This HSA tax advantage can come in especially handy in retirement. Funding an HSA today reduces your tax burden come tax time. If you wait until retirement to make those withdrawals, you can turn your HSA into a significant retirement contribution. Not only has the balance been earning interest for years, but now you can use that money for medical expenses, which tend to pile up in retirement. Plus, after you reach age 65, you can use your HSA for non-medical expenses without triggering the 20% tax penalty, although the withdrawals are taxed like normal income, similarly to IRA withdrawals. This also applies in the event you become disabled or die.
You can generally open a health savings account if you’re already covered by a high-deductible health plan (HDHP). This works well since the HSA funds can help you cover the higher out-of-pocket costs that usually come with having an HDHP. To qualify for an HSA, you also can’t have other health coverage, be enrolled in Medicare or be claimed as a dependent on someone else’s tax return.
HSA contribution limits
As set by the IRS, the amount you can contribute to your health savings account will depend on your HDHP coverage, your age, the date you become eligible and the date you stop being eligible. For 2018, if you had self-only HDHP coverage, you can contribute up to $3,450 to your HSA. If you had family HDHP coverage, you can contribute up to $6,900.
For 2020, you can contribute up to $3,550 to your HSA as an individual with self-only coverage (up from $3,500 last year). Individuals with family coverage may contribute up to $7,100 (up from $7,000 last year).
For 2020, an HDHP is defined as a health plan where the annual deductible is greater than $1,400 for self-only coverage and $2,800 for family coverage. Additionally, the maximum annual deductible and for other out-of-pocket expenses is $6,900 for individuals and $13,800 for families.
HSA vs. FSA
A flexible spending account, or FSA, is another type of supplemental medical spending account. Like a health savings account, FSAs are also funded with pre-tax dollars to use towards qualified medical expenses like prescriptions and copayments. FSAs are employer-sponsored, however, and are usually funded through voluntary salary contributions, but your employer can also contribute. You cannot open an FSA if you’re self-employed. No taxes are deducted from your contribution. For 2020, you cannot contribute more than $2,750 to an FSA.
What further sets FSAs apart from HSAs is that you must use the money in an FSA by Dec. 31 of the contribution year, unless you’re granted a grace period or a $500 carryover option by your employer. A big drawback to FSAs is that if you don’t use the money in the account on time, your employer gets those funds. This is also true if you were to leave the company. To the opposite, the funds in an HSA are yours to keep even if you leave your company.
Health savings account vs. online savings accounts
While health savings accounts help you designate funds toward medical expenses, most HSAs don’t earn at the competitive rates we’ve come to see from online savings accounts. A $10,000 deposit into a health savings earning 2% APY would yield $200 after a year of annual compounding interest. This doesn’t fall too far behind some of the best online savings accounts. A savings account earning 2.45% would yield only $45 more than the HSA after a year.
Still, you’ll find plenty more high-yield options to really boost your savings by looking at online savings accounts, and not just for medical expenses. Plus, you typically don’t have to meet any requirements to open a savings account, like having an HDHP or meeting credit union membership qualifications.