Health Savings Accounts (HSAs) have become a game-changer for small businesses looking to offer competitive health benefits while controlling costs. With the right HSA approach, small businesses can empower employees to take charge of their healthcare spending, reduce their tax burden, and build long-term retirement assets.
This guide will walk you through the basics of HSAs, explain why they’re a good option for small businesses, and provide a head-to-head comparison of three leading HSA providers—HealthEquity, Fidelity, and Lively—across key decision-making criteria.
What Is an HSA and How Does It Work?
An HSA is a tax-advantaged savings account that allows individuals to set aside pre-tax dollars for qualified medical expenses. These accounts are only available to people enrolled in a high-deductible health plan (HDHP). Contributions, investment growth, and withdrawals (for eligible expenses) are all tax-free, making HSAs “triple tax advantaged”.
Summarizing Key HSA Benefits:
- Triple Tax Advantage: Pre-tax contributions, tax-free earnings, and tax-free withdrawals for eligible expenses.
- Portability: The employee owns the account and keeps it if they change jobs.
- Long-Term Savings: Funds roll over year to year and can be invested like a retirement account.
- Lower Payroll Taxes: Employer contributions are tax-deductible and reduce payroll tax obligations.
Why HSAs Make Sense for Small Businesses
For small employers, HSAs offer flexibility and cost savings. When paired with HDHPs, they can significantly reduce premium costs while still offering competitive benefits. Additionally, HSA contributions can be made by the employer, employee, or both, allowing businesses to tailor contributions to their budget and benefits strategy.
HSA Provider Comparison: HealthEquity vs. Fidelity vs. Lively
To help you choose the right HSA partner, we’ve compared three top providers—HealthEquity, Fidelity, and Lively—across the most relevant categories for small businesses:
Note: Exact pricing and features may vary based on business size and setup. Always confirm with the provider.
Key Considerations When Choosing an HSA Provider
When evaluating HSA providers for your small business, here are a few questions to guide your decision:
1. What is the total cost to my business?
Look beyond monthly admin fees. Are there setup charges, hidden employee fees, or investment minimums that might limit value?
2. How seamless is the employee experience?
The value of an HSA depends on how easy it is to use. Look for modern interfaces, mobile tools, and accessible support.
3. What kind of investment flexibility is offered?
Some employees want to use their HSA like a retirement account. Make sure your provider allows investments without high barriers.
4. How well does the platform integrate with your payroll or benefits stack?
Avoid manual headaches. Choose a provider that plays nicely with your existing software stack.
5. What support is available to you and your employees?
Small teams often don’t have dedicated benefits admins. A responsive provider makes a big difference.
Final Thoughts
HSAs can be a powerful part of your small business benefits strategy—reducing costs while helping employees plan for future healthcare expenses. But not all HSA providers are created equal.
Let’s Make a Plan Together
We know that no two businesses are alike. Some of our clients are bootstrapped startups with five employees. Others are family-owned shops with 30+ team members. And some are high-growth ventures with 100+ employees, and counting. What they have in common is this: all businesses need to attract and retain talent within limited payroll and benefits budgets.
LegUp Health offers free consultations for Utah and Texas-based businesses. We’re happy to review your current benefits strategy, explore new approaches, or just talk through your goals. Whether you’re looking to cut costs, increase flexibility, or just get peace of mind—we’re here.
