Investing

Schwab HSA: Is It Worth Doing?

Javier Simon

Published: March 29, 2024 12:39 pm

Last Updated: April 1, 2024 11:31 am

A Schwab Health Savings Account (HSA), also called a Schwab Health Savings Brokerage Account (HSBA), allows you to save for future medical expenses while enjoying certain tax advantages.

However, you must already have an HSA with a provider that allows a brokerage option to open a Schwab HSBA.

Schwab HSA Benefits

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Like any HSA, a Schwab HSBA comes with certain tax benefits.

• Money invested in an HSBA grows tax-free
• Your contributions to an HSBA are tax-deductible
• Withdrawals from an HSBA are tax-free as long as they’re used on qualified medical expenses

And while you may be limited to certain investment options with an HSA through your employer, a Schwab HSBA would let you invest in virtually the entire securities universe. This includes the following.

• Stocks
• Bonds
• Mutual funds
• Exchange-traded funds (ETFs)
• Schwab Stock Slices or fractional shares of stocks in the S&P 500

In addition, you’d have access to Schwab’s extensive educational and research tools including stock screeners, expert-selected lists of ETFs, watchlists and market data.

Plus, you can use an HSA plan to supplement your retirement income. After age 65, you can withdraw money from an HSA penalty free for any reason. But you’d still face regular income tax. If you want to know more about saving for retirement with tax benefits, see if the Schwab Roth IRA is right for you. 

For customer service, contact the Schwab HSBA Call Center at 800-472-0084.

Schwab HSBA fees

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When it comes to fees, A Schwab HSA works similarly to its taxable brokerage account option. This means zero commissions for trading U.S.-listed stocks, ETFs and options.

You can also invest in a variety of mutual funds that charge no transaction fees and may have expense ratio or management fees as low as 0.03%.

Moreover, Schwab doesn’t charge a maintenance fee on its HSAs, but your current HSA provider may.

How to open a Schwab HSBA

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You can open a Schwab HSBA by making sure your current HSA provider offers a brokerage option. You can then contact your HSA provider for enrollment materials.

Afterward, you can visit the Schwab website to open your account and follow these steps.

• Decide how much money you want to transfer from your HSA to your Schwab HSBA.
• Look up securities to invest your HSBA funds in.

Schwab HSBA: Is it worth it?

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With an HSA at Schwab, you can invest in a variety of securities like stocks and ETFs in order to save for future healthcare expenses. Your HSBA would function similarly to a traditional brokerage account. But it will have the tax benefits associated with HSAs.

However, the barrier to entry may be a bit high. You’d need to work with a current HSA provider that allows a brokerage option so you can open your HSBA with Schwab and transfer your assets.

And because this would be a self-directed account, Schwab recommends HSBAs to experienced investors who are comfortable selecting, monitoring and managing their own investments.

You can’t assign a Schwab advisor to help you manage this account. But your current HSA provider may let you work with a financial advisor.  And your current HSA provider may charge its own fees, even though Schwab charges no management fee on HSBAs.

If you’re curious about any other part of the Charles Schwab, check out this page: a regularly updated list of all our Charles Schwab, news coverage, and lists of benefits.