
Launch HN: Lively (YC W17) – 401(k) for Healthcare - suralil
Hi HN! I’m Shobin, co-founder at Lively (<a href="https:&#x2F;&#x2F;livelyme.com" rel="nofollow">https:&#x2F;&#x2F;livelyme.com</a>). Lively is a Health Savings Account platform for employers and individuals. If you are unfamiliar with an HSA, think of it as the 401(k) for healthcare. We are in the current batch at YC and are excited to share our offering with you.<p>Lively was born over a year ago with personal experiences that both Alex (my co-founder) and I experienced firsthand. The short story is that we were experiencing a lot more out-of-pocket medical expenses than we were prepared for. That is what propelled us to begin looking around and came across the health savings account. The HSA is a triple tax-advantaged account (in the US, so we&#x27;re US-only) that allows you to contribute pre-tax dollars, invest your money and let it grow tax-free, and withdraw money tax-free so long as it is used for qualified medical expenses (at any point in the future). It has been an industry dominated by banks and other financial institutions and we saw an opportunity to enter it by focusing on user experience.<p>Alex and I are life-long friends and see this as an important problem to help solve. We are also happy to answer questions about our business, but also health savings accounts and high deductible health plans.
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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/](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/](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](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.

------
justinzollars
Health Savings Accounts depress me. Its a complete admission that we will
never have Healthcare in America as a public benefit.

That said, I know I would realize tax savings by saving in an HSA. I refuse to
do so because it acknowledges a position I do not agree with: that I should
pay for overly expensive Healthcare

~~~
zebrafish
Politics aside, I think HSAs are great. Under a single payer system I would
expect payroll taxes to be significantly higher (8-10%). You pay that every
month even if you don't use it. In return you get free healthcare when you do
use it.

With HSAs in America, you save an amount equal to your tax bracket on expenses
up to the lesser of your deductible (if plan pays 100% post-deductible) or the
maximum HSA contribution (3350 for singles). You only pay this when you need
care. You can also use your HSA dollars for things like glasses, pregnancy
tests, and teeth cleanings.

There's added incentive for employers to offer HSAs because it reduces their
payroll tax as well.

Granted this is all given that you are eligible, can afford, and have health
insurance. And that your provider will cover whatever treatment you're
seeking.

However, given my plan, I pay about $60/mo after my healthy life plan savings.
I can take the savings from that plan and look at my budget and afford to save
$100/mo in my HSA. That's $500 "lost to insurance" each year and $1200 growing
tax-free given I have no medical expenses (unlikely). Compare that to a
single-payer system with ~8% payroll tax. Given I make $5000 a month, that's
$400/mo or $4800/yr that's "lost to insurance" given that I have no medical
expenses .

I'm not a great example because I'm young, privileged, and healthy. I'm
interested in the economics of this whole thing though.

~~~
lcw
Define great. Obviously they only benefit, as you kind of noted, people with
disposable income. I mean you aren't dropping money into an HSA if you are
living paycheck to paycheck. Do you really think we should have health
programs that only profit our affluent citizens?

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vdnkh
Neat, but what's with the notifications permission? Notifications are pretty
intrusive and turned me off of your site - is there a good reason you need
them?

~~~
suralil
Thanks for your comment. We wanted to give our users the ability to opt-into
receiving information about HSA and other related topics as we move forward
without necessarily signing up on day 1 (in case they are not ready to do so).

~~~
mericsson
How about offering a mailing list signup? Instant push notifications doesn't
feel like the right medium for receiving info about HSA. Turned me off a bit
as well.

~~~
suralil
Good call. We are in the process of fixing this right now so it doesn't show
up. Will let you know as soon as this is fixed.

Edit: Ok removed the notifications. If you are still seeing it, please let us
know. Thanks to both of you for pointing this out!

~~~
vdnkh
You're welcome!

------
ucaetano
Any plans to include features easing long-term management of HSAs?

For example, one popular way to hack your HSA is not requesting any
reimbursements when the expenses happen, letting your cash grow tax-free for
decades and then request reimbursements from the old receipts. Today this
requires detailed record-keeping by the customer, it would be great if that
was a feature:

\- Request reimbursement

\- Set timing (now or save for future)

\- Add receipts/etc.

\- Reimbursement is approved by HSA

\- "Saved reimbursements" are stored/tracked for future use

\- When it's time to withdraw, user selects amount ("I need $10k") and HSA
creates a portfolio for withdrawal ("You'll get reimbursed for claims 23, 46
and 73 adding to $11,456")

~~~
suralil
Yes absolutely. This is something that is on our roadmap. generally speaking,
certain powerful features of the HSA (as you pointed out) are not well
understood by people. We want to build product to pull out the best features
and highlight them. This is a great thought. Keep them coming!

------
utnick
Great idea, I think most people don't realize how great HSAs are. They are
better than 401ks in almost every way besides the lower contribution limit.

Even if you are very healthy, the category of medical expenses you can use it
for is very broad.

~~~
mgkimsal
used to be even broader - there was a time (pre aca) when I could pay for most
OTC medications with HSA funds... not anymore. :(

------
mericsson
Great stuff!

"Were you surprised when you started getting charged a monthly fee for your
HSA when you left your employer? Yeah, so were we!" \-- this surprised a
friend of mine. I sent this his way.

Any plans to offer investment options as part of the HSA?

~~~
suralil
I can't even tell you how "annoyed" we were when we got wind of this. It
really is important to us to not charge individuals for the basic HSA. We will
be coming out with investment capabilities at the end of Q2. Stay tuned for
that. And for full transparency, since that is a premium feature, we will
charge individuals for that ability, however our fees for that will be in-line
with how the current industry prices it. If you don't want investment
capabilities, your HSA is 100% free with us.

~~~
mgkimsal
And someone will, at some point, point out how 'annoyed' they are at your
'premium feature' fees, when vanguard has much much much lower fees, and most
or all of the functionality you'll have developed. or... maybe your plan is to
just acquired by vanguard? (I say this not as a vanguard user, but someone who
is aware of just how low their fees are relative to most other places, though
fidelity is catching up in a lot of areas).

------
bgentry
1\. Do you support individual/non-employer accounts?

2\. What are the investment options for the accounts? Can I put it into low-
fee Vanguard index funds?

3\. Can I roll over from an existing HSA provider, and if so, how painless do
you make that?

~~~
suralil
1\. Yes we absolutely do. You can sign-up as an individual. When you get to
the sign-up screen, just click on the Individual Account.

2\. We are going to be launching investment capabilities at the end of Q2.
When we do this, you will have access to invest in low cost mutual funds,
ETFs, but also straight stocks/bonds, etc. It will be a self-directed option.

3\. Yes you can rollover! But be sure to ask your provider if there is a fee.
We have found that often times HSA providers charge a nominal
rollover/transfer fee. They vary so be sure to ask. Today, just send us an
email to support@livelyme.com and we can walk you through that process. We
just need some information from you, will fill out a form, send it to you for
electronic signature, and we take care of the rest. We have plans to
completely automate this process, but we haven't yet released that
functionality. Stay tuned!

~~~
clamprecht
If you can offer Vanguard funds with no crazy fees, you will be extremely
popular on bogleheads.org. There isn't a clear leader for HSAs for people who
just want to invest their HSA money in Vanguard funds. There are some options,
but they all have fees that seem unreasonable to me. Hopefully Vanguard will
eventually just offer HSA accounts directly.

~~~
mgkimsal
> Hopefully Vanguard will eventually just offer HSA accounts directly

I thought they did already?

[https://personal.vanguard.com/us/whatweoffer/overview/health...](https://personal.vanguard.com/us/whatweoffer/overview/healthsavings)

~~~
clamprecht
Unfortunately they don't... at the bottom of that page it says, "The links to
the HealthSavings Administrators and HealthEquity websites take you to sites
outside vanguard.com. Vanguard is not responsible for the content of third-
party websites."

------
pbnjay
I looked into getting a HSAs through my consulting LLC last year due to the
tax benefits, but my current (day job) employer plan includes a mandatory HRA.
From what I could find at the time, I wouldn't qualify for this, right? Do you
have a list of qualifications somewhere easy to access? Also, what are the
investments accessible to the plan? I'm not finding much details on your site.

~~~
chimeracoder
> I looked into getting a HSAs through my consulting LLC last year due to the
> tax benefits, but my current (day job) employer plan includes a mandatory
> HRA.

IANAL, but I'm pretty sure those are entirely orthogonal. You can have both an
HRA and an HSA.

An HRA is exclusively employer-funded. An HSA is something you can enroll in
if you have a high-deductible health plan. You can have an HSA through your
employer or independently, and either you or your employer can contribute to
your HSA, subject to the annual cap.

There is also the FSA, which is similar to an HSA, except the money expires at
the end of each year. Confusingly, if you have an HSA, you _can_ have an FSA,
except then the FSA can only be used for a very small set of expenses, rather
than the full range that FSAs otherwise allow.

~~~
suralil
We have tried to answer these questions and many more on our Learning Center.
Feel free to check it out here: [https://livelyme.com/hsa-
faqs/](https://livelyme.com/hsa-faqs/)

WRT investments, we will be launching those capabilities by the end of Q2.
Stay tuned and feel free to drop us a note anytime about what you would be
most interested in when it comes to investment capabilities.

~~~
pbnjay
> 3\. Can’t have or be eligible to use a general purpose Flexible Spending
> Account (FSA).

Maybe this was it. My employer plan offers an FSA, so since I don't like
throwing money away I guess I'm out of luck.

------
chrisa
Can a single member LLC sign up as an employer? Or are there minimum employee
restrictions?

~~~
suralil
So long as you have a high deductible health plan, you can sign-up for an HSA,
but there are some tax deductible rules that would apply. We have an FAQ in
our Learning Center. The question is "Are employer contributions tax-
deductible?".

------
imosquera
Question about the standard HSA, you say I can invest and withdraw with no
penalties unlike a 401k. Is that true?

What are you guys doing to make it easier, specifically for small business to
leverage your product?

~~~
clamprecht
The big limitation is you can only contribute $3350 per year (per person).

~~~
suralil
For 2017, the individual limit is $3,400 and for families it is $6,750. You
are right that HSA accountholders are limited to these amounts as of today.

------
DrSayre
This seems awesome to me! Ive had a HSA qualifying health care plan for awhile
now, but never really found a bank that had an account without having to pay a
monthly fee. Good luck guys!

~~~
suralil
Thanks for well wishes!

------
Faaak
I get: "Your access to this site has been limited". "Reason: Access from your
area has been temporarily limited for security reasons.".

~~~
suralil
Sorry! We are fixing this right now. Stay tuned. I will let you know as soon
as it is fixed.

Edit: Should be fixed now. Please let us know if you continue to experience
any issues!

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ll931110
How does the fee and investment portfolio differ from the traditional HSA
banks (e.g. Select Account)?

~~~
suralil
We haven't launched our investment capabilities yet. That will come at the end
of Q2. For individuals, there is no fee for just having a Lively HSA account.

------
akouri
Happy to be a first customer, I hate the current non-transparent options out
there!

~~~
suralil
We'd love to have you on board. When you do sign-up, let us know how we can
improve our experience and offering!

~~~
DrSayre
The only odd thing for me was it got stuck at a loading screen when I was
redirected to my account page. Other than that, I didnt have any problems.

Also it would be nice if Ally was a bank you could link directly with... but I
understand if there is some technical issues that prevent certain banks from
being able to link automatically.

~~~
suralil
Thanks for pointing it out. We have identified the issue and are fixing it
now.

------
iends
Please add low cost index funds when you add investments. Preferably Vanguard.

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ellisv
Looks interesting. I'll consider when investments are available.

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ebbv
I am torn because you are probably hard working nice guys but I really hope we
can move to universal health care and then your business would be obsolete.
Best of luck.

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st3v3r
So how do you solve the problem of someone getting sick or injured before
their HSA has enough money in it? Cause that's the big downside of an HSA.

~~~
suralil
So long as you have established your HSA prior to incurring the expense, you
would be able to reimburse yourself later for that expense. So for example, if
you were to establish your HSA tomorrow and funded it with $1 and then the
very next day you got sick or injured, you could pay for those services out-
of-pocket and then reimburse yourself with your HSA dollars whenever you had
enough money in it at some point in the future.

------
melipone
Hope that does not replace Medicare!

~~~
Sanddancer
No kidding. HSAs are great if you're healthy. Soon as you have a chronic
condition or two where you need to see the doctor on a more than biannual
basis, you see where they, and the rest of the insurance system really starts
falling apart. A friend I have has several chronic illnesses and is on a
pretty typical high deductible health insurance plan you get when you're
making $15/hour. Because of this, she can't afford to get treatment for those
chronic illnesses due to that several hundred dollar annual deductible just to
get into the door. Seeing a doctor would help her greatly, but she's screwed
because of the penny wise, pound foolish situation these kinds of plans offer.

In contrast, I'm on disability and on Medicare. Medicare means I pay $6/month
for prescriptions which have a "retail" price of $2k, and my copays for
regular, non-preventative, doctor visits are $10-$20. Even the doctor fee is
because I'm using one not fully within the medicare system. This actually
makes it possible to get treatment, even while seeing doctors who specialize
in my various medical conditions. Thus I'm getting better, and don't have to
balance treatment and finances.

~~~
UncleMeat
They are also worthless for the poor, who don't benefit from the reduced tax
liability.

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numchucklee
Move to france, they have really good health care as opposed to health
insurance.

