[koolba]

HSAs are great but I don't see the secret sauce here?

There's plenty of HSA providers out there that don't charge bogus fees. Most don't charge any monthly fee if you have more than $1000. The great ones also let you either invest in a pool of mutual funds or in self-directed brokerage accounts.

If Lively plans on going after lots of small accounts then I doubt they can break even, let alone be profitable. There's no money to had. Employers usually don't bother setting up HSA plans as there's no tax advantage for them (it's employee money going in) and it's one of the few accounts that you can set up yourself and claim a tax credit for after the fact.

I don't see any indication of investments or brokerage options. Is Lively's angle to make money on the interest rate spread? (i.e. lend on the money market but offer to customers close to 0% to pocket the difference).

[suralil]

Thanks for your thoughts! You are correct in that investment options are not available right now. We will be launching investment capabilities by the end of Q2.

We are focused on allowing our users to get the most out of their HSA. While we have released our minimal functionality for the time being, we will be adding products and services on top of this to make the process of spending your HSA dollars much more streamlined.

We have focused on streamlining the onboarding and administrative process for employers and attempted to remove the clunkiness we have seen elsewhere. It is definitely an ongoing project, but appreciate your thoughts and welcome any feedback as to how to improve the process and product!

[koolba]

How will you make money off non corporate accounts?

Why should an employer pay to set up an account when the employee can do it for free? Generally speaking, the employee is better off anyway because they're in full control. It's not like a 401k where the account custodian is holding the assets.

Are cash balances in the non investment funds interest bearing? What are the rates?

[suralil]

We think individuals who have HSAs should be able to save their money without incurring a monthly fee. So many of our own family and friends have told us about how they have a small balance in their HSA account but are getting charged $3, $4, $5, etc. a month just for having that account. We don’t think that’s right so we won’t charge individuals for their basic HSA. Once we have investments up at the end of Q2 and an individual chooses to invest, we’ll charge a nominal flat monthly fee for that.

Since the most people get their HSA through their employer, we’ve built our product in a way that employers can sign up and administer an HSA easily. Things like automatic payroll sync, on boarding in under 10 minutes, viewing the status of where employees are in the process, etc. are all things to reduce the burden of administering HSAs that employers currently experience. For employers who have greater than 10 enrolled employees, we charge $4/month/employee.

And regarding employers, employee contributions to an HSA through an employer's payroll are not subject to FICA taxes (social security & medicare) so when employees contribute to their HSA, the employer saves 7.65% since those contributions are not subject to FICA.

To your question about interest rates, yes we have them available on our website in the Individuals and Families page (in the middle under the white box): https://livelyme.com/individuals-and-families/.

[koolba]

> We think individuals who have HSAs should be able to save their money without incurring a monthly fee. So many of our own family and friends have told us about how they have a small balance in their HSA account but are getting charged $3, $4, $5, etc. a month just for having that account. We don’t think that’s right so we won’t charge individuals for their basic HSA.

There's plenty of zero cost options for HSA. If your friends and family are being charged monthly fees, they haven't done their homework. Five minutes of Googling "best hsa" finds a bunch of options.

> Once we have investments up at the end of Q2 and an individual chooses to invest, we’ll charge a nominal flat monthly fee for that.

That's pretty standard. From what I've seen it ranges from $0 to $1-$1.50/month.

> Since the most people get their HSA through their employer, we’ve built our product in a way that employers can sign up and administer an HSA easily. Things like automatic payroll sync, on boarding in under 10 minutes, viewing the status of where employees are in the process, etc. are all things to reduce the burden of administering HSAs that employers currently experience. For employers who have greater than 10 enrolled employees, we charge $4/month/employee.

I really wonder if most people get HSAs through their employers. Personally I don't know anyone that does. Everybody I know that has one set it up on their own. Plus you need a high deductible plan which is typically the purview of relatively healthy people getting insurance on their own.

Most people I know who have employer provided insurance have plans that would not qualify for an HSA due to lower deductibles or max out of pockets.

> And regarding employers, employee contributions to an HSA are not subject to FICA taxes (social security & medicare) so when employees contribute to their HSA, the employer saves 7.65% since those contributions are not subject to FICA.

Sure it'd be about $200 per HSA employee assuming they maxed out the contribution (after taking out the $4/month x 12 fee). That could definitely add up for a large org but again I don't think most people on employer plans are on HSAs anyway.

> To your question about interest rates, yes we have them available on our website in the Individuals and Families page (in the middle under the white box): https://livelyme.com/individuals-and-families/.

Ah I didn't see it at first. The font blends in with the background. For the curious:

>> Note: interest rates vary based on tiers of daily balances and are paid on the entire balance.Tier 1: 0.05% (APY of 0.05%) for daily balances less than or equal to $2,499.99. Tier 2: 0.15% (APY of 0.15%) for daily balances of $2,500.00 or more, but less than or equal to $4,999.99. Tier 3: 0.30% (APY of 0.30%) for daily balances of $5,000.00 or more, but less than or equal to $14,999.99. Tier 4: 0.55% (APY of 0.55%) for daily balances of $15,000.00 or more. The interest rates and annual percentage yields may change at any time. Interest will be compounded monthly and credited into your account monthly.

Honestly those are pretty bad. The top tier is only .55% and it starts with at a $15K balance. There's plenty of competitors that offer individual accounts with no fees and higher rates. As an example, Lake Michigan Credit Union[1] offers .5% for balances up to $5K, and 1% on anything above that.

Wish you guys the best on this endeavor but honestly I don't see anything special here. I don't see how this can be a going concern in the long run. There's just not enough money to be made and arguably your offering is worse than what's already out there. It's just packaged in a modern website. An informed consumer (at least on an individual basis) wouldn't sign up as there are better options from every angle.

[1]: https://www.lmcu.org/banking/savings/savings_hsa.aspx

[kc10]

>I really wonder if most people get HSAs through their employers. Personally I don't know anyone that does. Everybody I know that has one set it up on their own.

I have had all my HSA accounts through my employer, usually tied to my medical insurance (HDHP). Every time I switch employer or the insurance changes or the HSA provider changes, I consolidate the money from my older account to my new HSA account.

IMO I think lively is good for individuals as there is no fee (I know there are other providers with no monthly fee). But I wonder why would my employer use this service if my insurance provider offers linked HSA and auto-pay for the claims?

[suralil]

Good question. That is functionality that we will be coming out with. We have some interesting ideas of making that experience more seamless than what is currently provided but are a couple months away from releasing that.