Charles Schwab has launched integrations with prominent Health Savings Account (HSA) providers Optum Bank and Discovery Benefits LLC, to enable advisors to invest and manage their clients’ HSA investments.
These Advisor-Managed Consumer-Direct HSA programs use Schwab’s Health Savings Brokerage Account (HSBA), a brokerage window within an HSA that delivers broad investment capabilities for advisors and their clients.
Health Savings Accounts continue to grow in popularity, with 28 million HSAs holding nearly $66 billion in assets as of year-end 2019, including $50.2 billion in deposits and $15.7 billion in investments, according to the 2019 Devenir Year-end HSA Research Report.
The idea behind it is to make it possible for advisors to maximize the value of these triple-tax-advantaged accounts for their clients by offering the ability to invest through a brokerage window designed specifically for HSAs. Financial advisors are in an ideal position to educate clients about the role HSAs can play in helping manage health care costs in retirement.
“Paying for health care in retirement is a top concern for Americans. This HSA program offers advisors a powerful tool to address this challenge, and can also help them deepen client engagement, increase referrals, and achieve a competitive advantage,” said Mark Coffrini, senior vice president, Schwab Retirement Business Services.
The integrations Schwab has developed with Optum Bank and Discovery Benefits LLC make opening an HSBA electronically easy, Schwab says. The HSBA offers access to thousands of investment options including mutual funds, exchange traded funds, REITs, individual stocks and bonds, and more.
Portability and flexibility
Like individual retirement accounts, HSAs are portable, so even if an investor is not currently with an HSA provider with access to Schwab’s HSBA, they can open an additional HSA and transfer their existing HSA savings to an Optum Bank or Discovery Benefits HSA.
They can continue making contributions as long as they remain covered by a high deductible health plan. Importantly, individuals can have multiple HSAs. For example, an individual can contribute to their workplace HSA via payroll deduction and transfer funds to a separate HSA managed by their advisor.
HSBAs work like other Schwab brokerage accounts. They are accessible to advisors through Schwab Advisor Center (SAC), and to investors through Schwab Alliance or Schwab.com. Account data downloads are available through Schwab’s Data Delivery (SDD) process. And, they can be incorporated in Schwab OpenView gateway, as well as integrated with third party software. Additionally, advisors can leverage the standard custodial billing process for management fees through SAC.
Schwab is already an established leader in the HSA marketplace. Charles Schwab Trust Bank custodies $7.4 billion in HSA investments, representing nearly half of all HSA investments as of Dec. 31, 2019. In addition, many leading HSA providers rely on Schwab Retirement Technologies for advanced recordkeeping and administration services to support workplace HSA benefit programs.