The Lively HSA

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sophie
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Re: The Lively HSA

Post by sophie » Fri Apr 20, 2018 7:28 am

Lively sent out an email yesterday announcing a brilliant but maybe questionable HSA "hack": if you are under age 26 and covered under your parents' high deductible family plan but not a dependent on your parents' tax return, you can make the full family contribution to your own HSA. It seems the HSA criteria don't include any test to guarantee one HSA per HDHP; all HDHP covered members, according to Lively, can contribute to their own HSA as long as they meet the letter of the IRS's list of 4 tests.

This seems unlikely to stand a real test from the IRS. Not to mention that I don't really want them to be drawing attention to HSAs, which as it is are almost too good to be left intact in future budget negotiations.
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Re: The Lively HSA

Post by ochotona » Sat Apr 21, 2018 9:21 am

I found a ultrashort bond ETF on the TD Ameritrade side of Lively HSA that I am going to stick new money into until I rebalance. It's iShares floating rate bonds, symbol FLOT. The dividend is 1.54%, which will adjust upward as the Fed tightens, and the share price is much more stable than regular bonds.

It trades commission free if you hold it for more than 30 days at TD.
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Re: The Lively HSA

Post by sophie » Sun Apr 22, 2018 9:08 am

Nice, thanks ochotona!

Gives me a bit of incentive to tackle the periodic Optum to Lively transfer (my employer uses Optum). Has anyone tried this yet? I remember someone else's employer uses Optum.
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Re: The Lively HSA

Post by foglifter » Sat Apr 28, 2018 1:02 am

sophie wrote:Nice, thanks ochotona!

Gives me a bit of incentive to tackle the periodic Optum to Lively transfer (my employer uses Optum). Has anyone tried this yet? I remember someone else's employer uses Optum.
My employer uses Optum and while I haven't tried recurring transfers I did a couple of manual transfers per year in 2016-2017 and Optum didn't charge me anything. I actually called Optum and asked them about transfer fees, they said they only charge for the full account transfer combined with account closure. They don't charge for partial transfers.

Good news: as was promised, Lively finally added the ability to set up transfers and rollovers to their website. No more PDF form filling/signing. I'll try the new feature later this year.
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Re: The Lively HSA

Post by ochotona » Thu May 03, 2018 4:01 pm

The IRS changed the HSA limit again
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Re: The Lively HSA

Post by sophie » Sat May 12, 2018 8:38 am

I used the new transfer form to snarf funds from my employer (Optum) account. It was super easy, just had to provide the account info online and then e-sign it, then the funds magically appeared. No fee that I'm aware of from Optum, but I was careful to leave some money in the account to prevent them closing it. The fund transfer took a little over a week.

Hopefully they'll keep the account info handy so next time will be even easier, but even so it sure beats the usual process of printing out and mailing a form, waiting 6 weeks, calling to ask what became of it, and re-sending because it got lost.
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Re: The Lively HSA

Post by ochotona » Sat May 12, 2018 6:26 pm

I'm liking the TD Ameritrade trading platform. The conditional orders are cool.
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Re: The Lively HSA

Post by foglifter » Mon May 14, 2018 12:46 pm

sophie wrote:
Sat May 12, 2018 8:38 am
I used the new transfer form to snarf funds from my employer (Optum) account. It was super easy, just had to provide the account info online and then e-sign it, then the funds magically appeared. No fee that I'm aware of from Optum, but I was careful to leave some money in the account to prevent them closing it. The fund transfer took a little over a week.

Hopefully they'll keep the account info handy so next time will be even easier, but even so it sure beats the usual process of printing out and mailing a form, waiting 6 weeks, calling to ask what became of it, and re-sending because it got lost.
Thanks for sharing your experience, Sophie! Good to know they didn't charge for the partial transfer. I'm planning to move my balance soon, just have to be careful and leave a few bucks in the Optum account.
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Re: The Lively HSA

Post by ochotona » Wed May 30, 2018 10:39 pm

HealthEquity to Lively HSA took 3 weeks end-to-end
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Re: The Lively HSA

Post by ochotona » Fri Oct 26, 2018 7:39 pm

I had a change of employers... looks like the new employer offers an FSA, but no HSA! Darn it!
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Re: The Lively HSA

Post by foglifter » Sat Oct 27, 2018 12:42 am

ochotona wrote:
Fri Oct 26, 2018 7:39 pm
I had a change of employers... looks like the new employer offers an FSA, but no HSA! Darn it!
Are you sure? These days almost everyone offers HDHP plans. Sometimes plan names include something like "HDHP" or "HSA compatible"...
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Re: The Lively HSA

Post by ochotona » Sat Oct 27, 2018 6:27 am

That is true, they do have an HDHP. But, if the employer does not do the HSA funding by a payroll deduction, you don't get that contribution shielded from tax. If I decide not to use the FSA then I can make my own HSA contributions, but then HSA is like a Roth IRA, I don't get all of the tax benefits.

I hope I'm wrong. I have not seen the formal enrollment materials yet, I've had a verbal offer. I will find out next week.
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Re: The Lively HSA

Post by sophie » Sat Oct 27, 2018 7:34 am

That is annoying, but the tax benefit is small potatoes. You can partially make up for it by making your full contribution on January 1, but don't let this dissuade you from the HDHP.

Just to make sure I'm still picking the right health plan, I made myself a little excel calculator and plugged in numbers for premiums, deductions, expenses, copays, and of course, the tax benefit of the HSA contribution. The difference was astounding, and it didn't even account for the future benefits of the HSA. No matter how much I fiddled with potential expenses, the HDHP cost me thousands less than the non-HDHP plans. Going with a non-HDHP plan at my employer is seriously failing the IQ test. You might try something similar with your plan options.
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Re: The Lively HSA

Post by ochotona » Sat Oct 27, 2018 9:49 am

It's a small firm I'm going to, and I can talk to the owner about it, I'm sure he wants to get wealthier also.
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Re: The Lively HSA

Post by foglifter » Sat Oct 27, 2018 1:50 pm

ochotona wrote:
Sat Oct 27, 2018 9:49 am
It's a small firm I'm going to, and I can talk to the owner about it, I'm sure he wants to get wealthier also.
Sophie is right, I came to the same conclusions over and over again. I'm in a small firm as well and they even asked me to do a presentation on HSAs since I was the only one with a substantial experience using HSA. We don't have employer match but still HDHP plan works the best for almost anyone. People who used traditional low deductible plans for years sometimes have hard time to get used to higher deductibles, although they are shelling out tons of money in premiums - regardless of the amount of healthcare they use in a year.

I'd say it might be even easier to champion things like HSA or 401k at a small firm. I successfully did the latter a couple years ago by convincing my boss to move our retirement plan from the lousy plan offered by our benefits provider to Employee Fiduciary.

I think it might be a matter of getting your boss better educated on the options available, I doubt there is any roadblock to adding HSA-qualified high-deductible plan into your medical insurance benefits. My daughter works as an underwriter for a major medical insurance company and as employees they are offered only HDHP plans.

Regarding funding your HSA from the bank account vs. payroll contributions: if your AGI is less than the IRS threshold for social security contributions you miss out on FICA tax deduction (SS and Medicare). However if you AGI exceeds the threshold by at least the annual HSA contribution limit you only lose tax deduction on 1.45% Medicare contribution (which has no threshold) - this could be a wash or you might even come ahead if your employer-provided HSA is a 0-earning cash account with no investment options (you could contribute a lump sum in January in your Lively HSA and invest the whole amount at TDA). You need to assess the costs as well - my employer-provided HSA charges me $2.50 monthly fee, but Lively charges the same for TDA brokerage.
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Re: The Lively HSA

Post by ochotona » Sat Oct 27, 2018 8:09 pm

So if I have an HDHP, can't I contribute to my Lively HSA by myself, report on Form 8889, enter amount on Form 1040 Line 25, and have my AGI reduced by $8000 for 2019? I am old enough to do the catch-up.
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Re: The Lively HSA

Post by Xan » Sat Oct 27, 2018 8:30 pm

ochotona wrote:
Sat Oct 27, 2018 8:09 pm
So if I have an HDHP, can't I contribute to my Lively HSA by myself, report on Form 8889, enter amount on Form 1040 Line 25, and have my AGI reduced by $8000 for 2019? I am old enough to do the catch-up.
That's how I've always done it. I didn't know there was another way, actually.
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Re: The Lively HSA

Post by ochotona » Sat Oct 27, 2018 9:35 pm

Xan wrote:
Sat Oct 27, 2018 8:30 pm
ochotona wrote:
Sat Oct 27, 2018 8:09 pm
So if I have an HDHP, can't I contribute to my Lively HSA by myself, report on Form 8889, enter amount on Form 1040 Line 25, and have my AGI reduced by $8000 for 2019? I am old enough to do the catch-up.
That's how I've always done it. I didn't know there was another way, actually.
Good. The other way is employer payroll deduction, which then reduces the FICA bite. If my health plan is as below, then I'll refuse the FSA, and do my own HSA:

2019:

HDHP Minimum Deductibles. The 2019 minimum annual deductible is $2,700 for family HDHP coverage.

HDHP Out-of-Pocket Maximums. The 2019 limit on out-of-pocket expenses (including items such as deductibles, copayments, and coinsurance, but not premiums) is $13,500 for family HDHP coverage.
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Re: The Lively HSA

Post by sophie » Sun Oct 28, 2018 8:39 am

That's exactly right, ocho.

Since you already have a Lively HSA, this is very easy for you. Sounds like you might benefit from an employer-provided HSA, but I'm sure that's not free. Between the issues that foglifter described and the costs to your employer which would increase your overhead and effectively reduce your pay, an employer-sponsored HSA may not be in your best interests.

Also FSAs are evil. You have to guess your medical expenses in advance, and if you overestimate, you could stand to lose the balance at the end of the year.
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Re: The Lively HSA

Post by foglifter » Sun Oct 28, 2018 4:46 pm

It's important to remember that, like with IRAs, one can have multiple HSA accounts. I consider my Lively HSA as my "main" account and I only use the employer-provided HSA as a temporary location to move payroll contributions in a tax-friendly manner. The money in the employer account usually earns zilch, so I do partial transfers to Lively twice a year.

Another example when an employer HSA might make sense (even with fees): receiving employer contributions. Starting next year my new-old employer (we've just merged) will contribute 2K annually into the HSA (for family coverage). The only way to get these contributions is the employer HSA.

I heard that some employers offer an option to direct pre-tax payroll contributions into a non-employer-provided account, however it's rare. It would be awesome to contribute to Lively directly, but my employer said they could do that only as post-tax deductions (which defeats the key point of using an employer HSA).
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Re: The Lively HSA

Post by ochotona » Tue Dec 11, 2018 10:22 am

EARTH SHATTERING NEWS

Fidelity has an HSA offering. I just talked to them. No account maintenance fees of any kind. I think this will put Lively out of business.
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Re: The Lively HSA

Post by ochotona » Tue Dec 11, 2018 10:50 am

MangoMan wrote:
Tue Dec 11, 2018 10:28 am
ochotona wrote:
Tue Dec 11, 2018 10:22 am
EARTH SHATTERING NEWS

Fidelity has an HSA offering. I just talked to them. No account maintenance fees of any kind. I think this will put Lively out of business.
Doubtful. Lively was such a huge improvement over all of the previous offerings, yet none of them have gone out of business.

It's just like all the mutual funds with high fees. There will always be people willing (or forced) to pay the higher fees for some inexplicable reason.
Understood, but Lively is a new VC funded start-up, they might just melt under the heat. I want to consolidate to Fidelity, personally, Lively is my only use of TD Ameritrade.
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Re: The Lively HSA

Post by foglifter » Tue Dec 11, 2018 2:57 pm

There's a long thread on Fidelity HSA on BH forum:
https://www.bogleheads.org/forum/viewto ... &start=500

Sounds like the exodus from Lively, HSA Bank and other custodians is under way. Annoying part is lack of consistency in the responses people receive from different Fido reps regarding the ability of in-kind transfers from TDA and TDA account closure fee reimbursement. I'm waiting for 1-year anniversary of my Lively account to start the transfer process.

I think Lively could still compete for employer-sponsored accounts.
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Re: The Lively HSA

Post by foglifter » Tue Dec 11, 2018 6:35 pm

MangoMan wrote:
Tue Dec 11, 2018 4:12 pm
foglifter wrote:
Tue Dec 11, 2018 2:57 pm
I'm waiting for 1-year anniversary of my Lively account to start the transfer process.
Is there any particular reason for the wait?
Lively charges $25 closing fee if the account was opened less than a year ago.
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
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Re: The Lively HSA

Post by foglifter » Wed Dec 12, 2018 4:23 pm

MangoMan wrote:
Tue Dec 11, 2018 8:28 pm
foglifter wrote:
Tue Dec 11, 2018 6:35 pm
MangoMan wrote:
Tue Dec 11, 2018 4:12 pm


Is there any particular reason for the wait?
Lively charges $25 closing fee if the account was opened less than a year ago.
Interesting, thanks for the heads up. That is not listed in their fee schedule as far as I could tell. I guess I will have to wait until April as well.
If you go to Documents > Choice Financial Terms & Conditions and hit Download you'll see the following on page 15 of the PDF:
Effect of closing an account
An early closure fee of $25 will be assessed if your account is closed in the first 12 months.
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
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