Fidelity HSA review

About Fidelity

Fidelity is one of the world’s largest asset managers. It offers various investment products and services, including investment accounts such as taxable brokerage accounts, 529 college savings plans and retirement accounts (e.g. Roth IRAs), and funds such as mutual funds and ETFs. It also offers other financial products, such as HSA, a cash management savings account, a credit card, and life insurance.

What are the benefits of Fidelity’s HSA?

No maintenance fee

Fidelity does not charge a maintenance fee (aka administration fee) for a HSA.

Invest regardless of account size

Some HSA firms require that you have a minimum of your HSA saved in a checking account before you may start investing. With Fidelity, you may start investing regardless of how much you have in your HSA.

Wide range of investment options

There are many investment options available for a Fidelity HSA. Fidelity provides a list of funds it has selected for HSA investing. Among these are a fund designed specifically for HSA, target date funds that are created to balance risk and returns based on when (target date) you plan to start to use the savings in your HSA, and other options. If you’d like to invest in something specific, you could also invest in stocks, bonds, ETFs, mutual funds, and CDs of your choice.

What’s Fidelity’s HSA interest rate?

One of the most compelling benefits of Fidelity's HSA was its high interest rate. Before March 2020, if you decide to not invest your money in something specific, your savings will be invested in the Fidelity® Government Cash Reserves, which had a yield (interest or dividends earned) of around 1.20% (as of February 29, 2020).

As of March 2020, the Fidelity® Government Cash Reserves yield is down to 0.01%. In an effort to keep the economy stable in response to COVID-19, the Federal reserve cut its benchmark interest rates to nearly zero. This rate change has affected rates for many financial products, including the Fidelity® Government Cash Reserves fund.

Note: while we aim to keep our reviews updated, we cannot guarantee that the rates information here is the latest. Refer to Fidelity's site for the latest information.

Drilling into Fidelity’s fees

Maintenance fees

Fidelity offers HSA without any maintenance fees.

Fund fees

If you decide to invest in ETFs and/or mutual funds, they generally come with fund fees (aka expense ratios). These fees are for managing a fund. These management fees vary depending on the fund and is a percentage of your investments. For example, for a $1,000 investment, a 0.15% fund fee is $1.50. The fees are automatically deducted by the fund. Fidelity offers some ETFs and mutual funds without any fees.

Trading fees

Fidelity does not charge a commission fee for online US stock, ETF, and option trades. There’s a $1 trading fee per bond or CD, but US Treasuries traded online are free. Fidelity mutual funds and hundreds of other mutual funds also do not have any transaction fees. Some mutual funds that you can invest through Fidelity do come with trading fees.

Transaction fees

Fidelity does not charge a fee for spending your HSA amount.

Account transfer fees

Fidelity does not charge a fee for transferring your outside HSA to Fidelity or for transferring your Fidelity HSA to another provider.

Note: while we aim to keep our reviews updated, we cannot guarantee that the fee information here is the latest. Refer to Fidelity's site for the latest information.

How easy is it to do things at Fidelity?

Opening a Fidelity HSA

You may open a Fidelity HSA online. You’ll be asked to provide some personal information, such as your Social Security number, date of birth, and contact information to verify your identity. These questions are standard questions.

Spending your Fidelity HSA

There are many ways to spend your HSA funds through Fidelity. You may request for a HSA debit card for free. You do have to request for one, but this may be done quickly online. There is a daily spending limit of $10,000 and a limit of 10 debit card transactions per day. You may also pay for medical expenses by using Fidelity BillPay, writing a check, or paying out of pocket and then reimbursing yourself through Fidelity BillPay, by writing a check, or by sending an electronic fund transfer.

Investing your Fidelity HSA

With a Fidelity HSA, you may trade stocks, mutual funds, and ETFs online by logging into your Fidelity account. Stocks, mutual funds, and ETFs trade differently. Stock and ETF trades are executed throughout the day when the market is open. Fidelity also offers extended hours for its clients after market hours. Trading for stocks and ETFs closes at 4 p.m. ET, but you can continue trading stocks and ETFs in the after-hours market. Note: the difference between the price at which you sell and the price at which you buy tends to be wider after hours and there are fewer shares traded, so only the most experienced traders might want to consider trading after market hours.

Mutual funds are executed once a day after the market closes at 4 p.m. ET. If you buy or sell shares of a mutual fund, your trade will be executed at the next available share price for the fund, or net asset value (NAV), which is calculated after the market closes and typically posted by 6 p.m. ET. This is the standard process for all mutual funds and not just those traded through Fidelity.

Transferring your outside HSA to Fidelity

After you open a Fidelity HSA, you may transfer your outside HSA to Fidelity by submitting a transfer request online through Fidelity. Once the request is put in, Fidelity contacts your current HSA firm to complete the transfer. Depending on the outside firm, the transfer may take between a few days to a few weeks to arrive at Fidelity.

How is your HSA protected at Fidelity?

If Fidelity financially fails (i.e. goes bankrupt), your investments are insured by the Securities Investor Protection Corporation (SIPC). Each “separate capacity” account is protected up to $500,000 with a limit of $250,000 for uninvested cash. For more details on what’s a “separate capacity” account, visit the SIPC site. The SIPC is a U.S. government creation but not an agency of the U.S. and insures all brokerage accounts up to $500,000. SIPC is funded by all of its member brokers/dealers. In some cases, it also protects against unauthorized trading or theft in the account. Market losses and promises of investment performance are not covered.

Any uninvested cash balance in a Fidelity HSA is also swept to one or more Fidelity program banks that are eligible for The Federal Deposit Insurance Corporation (FDIC) insurance. FDIC is a U.S. government agency that insures cash deposits at FDIC member banks, generally up to $250,000 per account.