Optum Bank HSA Review: Pros, Cons, And Alternatives

Optum Bank’s HSA provides about everything anyone may want in an HSA at affordable prices. With its full-service HSA product, you get access to saving, investing, a variety of spending methods, and live customer service. In fact, HSA customer service is available 24/7 by phone or email.

Whether you’re an employee or individual, Optum Bank can meet your HSA needs. In this article, we’ll review its features and costs. 

For anyone with a High-Deductible Health Plan (HDHP), contributing to an HSA is a great way to save on taxes.

See how Optum Bank compares on our list of the Best HSA Providers.

Who Is Optum Bank?

Optum Bank is an HSA administrator. And it's one of the largest in the industry with more than $12 billion in HSA assets and servicing nearly 5.6 million HSAs.

Optum Bank is part of Optum Financial, a technology-focused health and wellness company owned by United Health Group (UHG). It was founded in 2003 and is based in Salt Lake City, Utah. Optum Bank is not a traditional bank, but is rather a Utah state-chartered industrial loan corporation.

Most people first experience Optum Bank through their employer as it manages many employer-sponsored HSA plans. However, anyone who's enrolled in an HDHP plan can apply to open an individual HSA account with them.

Optum also recently acquired HSA provider Starship, and is migrating their customers into the main Optum HSA system.

What Do They Offer?

Optum Bank offers various tax-advantaged health savings plans, including health savings accounts (HSAs), flexible spending accounts (FSAs), HRAs, and MSAs. In this article, we’ll focus on its HSA offering. HSA accounts are triple-tax advantaged. This means:

• Withdrawals for qualified health expenses are income tax-free
• All contributions to an HSA are income tax-free
• Any interest earnings and investment growth from deposits are income tax-free

Employees of Optum and UHG automatically receive Optum Bank as their HSA administrator. These employees don’t pay a fee for investing in their HSA accounts. Other employers may charge a monthly fee, which can be dependent on the HSA account’s balance. However, it's more common that the monthly fee is waived for employees.

Individual account holders, on the other hand, will incur a $2.50 monthly fee until their account reaches $3,000. After that, the fee is waived.

Qualified Medical Expenses (QMEs)

QME spending is at the heart of an HSA. As long as you follow IRS publication 502 or IRS publication 969, you’ll meet the spending requirements. Some examples of QMEs include medical, dental, vision, and prescription expenses.

Money going into the HSA is tax-free dollars. For employees, this is easy since contributions come directly from their paycheck.

For individuals, they are contributing taxed dollars. To claim those dollars as tax-free, the individual must include their HSA contributions on their tax return. Using HSA funds for eligible medical expenses works the same for both employees and individuals.

Spending Your HSA Funds

As long as your HSA funds are spent on QMEs, they’ll remain tax-free. Any interest earned in the account will also be tax-free.

There are several ways to spend your HSA funds:

• Debit card included with your account
• Request paper checks
• Bill pay
• Spend out-of-pocket and request a reimbursement from your account

Optum Bank also recently launched an online store that only sells HSA-eligible products. And account holders can get up to 5% off their Optum Store purchases and free shipping by using the code OPTHSA5.

Earning Interest And Investing

For non-invested funds at Optum Bank, you’ll earn interest at tiered rates. Unfortunately, these rates are not publicly disclosed. To see your specific APY, you'll need to login to your account. You can also choose to invest your funds.

Self-directed brokerage services are provided by Charles Schwab. Before you can start investing, your account balance must be at least $1,000. Once you've hit that savings mark, you can invest in a solid variety of mutual funds and target date funds.

You can also choose digitally-managed portfolios through Betterment with automatic rebalancing. It’s easy and fast to move money between your HSA and investment account in $100 increments.

How Does Optum Bank's HSA Compare?

The Optum Bank HSA offers an impressive variety of spending and investing options. However, it does charge a monthly fee until your balance reaches $3,000. If you'd like to consider your alternatives, check out this quick comparison chart:

Are There Any Fees?

At Optum Bank, you are not charged on any of the following:

• Check order fee
• Wire transfer fee
• Nonsufficient funds (NSF) fee
• Official check fee
• Excess contribution fee
• Returned deposit item fee
• Stop-payment fee
• Research fee
• Document copy fee
• Check processing fee (or ACH fee)

There is a monthly fee of $2.75, which can be avoided with a higher balance. The actual amount will depend on your employer. For individuals, the amount is $3,000, but if you're lucky, your employer may also cover the cost. Additionally, the following fees apply if you choose to use these options:

• $2.50 per ATM transaction plus any fees charged by the ATM’s bank.
• $20 to (outbound) transfer your HSA to another bank or custodian.
• $1.50 printed statement fee. You can choose online statement delivery to avoid this fee.

Finally, if you choose to invest some of your HSA funds, you'll be charged a monthly brokerage fee of 0.03% of your invested assets, up to a maximum of $10 per month. Thus, this brokerage fee only applies to the first $33,000 in your investment account.

Note: Many people have an Optum HSA with their employer, then when they leave, they are suddenly charged fees. 

How Do I Open An Account?

You can visit the Optum Bank website to open an account. The application process takes about 10 minutes to complete and there are no account opening fees.

Is My Money Safe?

Yes , Optum Bank’s website uses encryption and deposit account funds are FDIC-insured. However, any funds that you invest through Betterment are not FDIC-insured. 

Contact

Optum Bank offers 24/7 customer service. To contact them by phone, you'll call 866-234-8913. You can also email them at customercare@optum.com.

There also separate support channels for members who have employer-sponsored HSAs with MyCDH or UHC. Those phone numbers and email addresses can be found here.

Why Should You Trust Us

We have been covering HSAs and reviewing HSA products for almost 10 years. We were one of the earliest media outlets to highlight using an HSA as an IRA. The HSA has also been a tool I've used personally across multiple providers.

Our team has tested, tried, and used almost every HSA service available to consumers, so we're very confident in our recommendations to you.

Who Is This For And Is It Worth It?

Optum Bank has been servicing HSAs for nearly two decades, are reliable, and provide everything you’ll need in an HSA account. Plus, once you reach $3,000 in your account, the monthly fee is waived.

Even if you do have to pay the monthly fee (which is on the high side) Optum Bank could still be worth it for all of the services that you receive in return, especially it's investing options through Schwab and Betterment.

However, most individual HSA users are going to find more at Fidelity or Lively for no monthly fee.

See how Optum Bank compares on our list of the Best HSA Providers >>>

Common Qustions

Let's answer a few common questions about the Optum Bank HSA.

Who owns Optum Bank?

Optum Bank is owned by UnitedHealth Group Inc. which a multinational healthcare company that's headquartered in Minnetonka, Minnesota.

Did Optum Bank change its name to Optum Financial?

No, while Optum Bank is now a part of Optum Financial, banking customers will continue to see the "Optum Bank" name on their account materials.

Is Optum Bank part of Wells Fargo?

No, but Optum Bank did acquire all of Wells Fargo's HSA accounts back in 2016.

Can I withdraw money from my Optum Bank HSA account?

Yes, debit Mastercards are provided to all HSA accounts holders that can be used to pay providers directly or to withdraw cash from ATMs to reimburse qualifying expenses that were paid out-of-pocket. 

Features