Welcome back to our Blooom Brain Pickers series! We’re picking the brains of the best in the biz to inform, entertain, and most of all, educate you when it comes to making personal finance decisions. Today we are honored to feature Shobin Uralil of Lively.
Shobin Uralil is the COO and Co-Founder of Lively. Lively is a modern Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare. Lively HSAs works alongside high deductible health plans to make healthcare easier for everyone. Lively is not a bank but has all of the benefits of one. Prior to Lively, Shobin was the Vice President of Operations at Retroficiency, an energy analytics software company and co-founder and CEO of kWhOURS, Inc., an energy auditing software. Shobin earned a BS in Business Administration from Georgetown University and an MBA from MIT’s Sloan School of Management, where he was the recipient of the inaugural Howard and Carol Anderson fellowship for entrepreneurship.
I started the business with a long-time friend of mine, Alex Cyriac. He and I went through our own personal experiences dealing with out-of-pocket medical expenses when we were least prepared to do so. That got us thinking – how do people afford their ongoing healthcare expenses? After lots of research, we determined that the Health Savings Account (HSA) was the best way for people to save – tax deductible contributions, tax free growth through interest accumulation or potential investment gains, and tax-free distributions if used for medical expenses. The problem was that the industry was dominated by lots of banks, financial institutions, and TPAs who focused on providing solutions to employers as opposed to individuals. These providers had a variety of issues including providing a lackluster product experience, ‘nickeling and diming’ users with hidden fees, not having robust investment options, and making it hard for users to access their funds when they needed it most. So we decided to quit our jobs and make an HSA focused on the end-consumer all while being 100% free for users.
Can you explain some of the biggest benefits of using an HSA?
Health Savings Accounts have a number of benefits:
1. They are the most powerful savings accounts in America today. They are triple tax-advantaged: – tax deductible contributions, tax free growth through interest accumulation or potential investment gains, and tax-free distributions if used for medical expenses.
2. Any unused funds roll over from year-to-year. So those funds don’t “expire” and are not “use it or lose it”.
3. It’s owned by the individual (not employer) so if you switch employers, you take your HSA funds with you.
4. After 65 years old, if you want to use your funds for non-eligible expenses, you can. You just have to pay ordinary income taxes – just like a 401(k).
HSAs are used alongside a qualified High Deductible Health Plan. So, if you find yourself on one of these health plans, you can open an HSA and begin saving for future healthcare expenses – all tax-free.
Healthcare is always a hot topic in this country, but it’s especially in the spotlight this year, with the COVID-19 pandemic. What are your thoughts on the future of HSAs and the role they could play in improving the US healthcare system?
Over the last 10-15 years, the cost of healthcare in the US has skyrocketed. As such, High Deductible Health Plans have increased in popularity both with individuals and employer groups. With that increase, so has the popularity of the HSA. Today, there are over 28 million Americans with HSAs and it’s estimated that there are 40-50M American who are eligible. When we think about COVID-19, it just adds even more pressure into an already brittle healthcare system which will lead to increased costs. As this happens, we would expect HSAs to grow drastically as it really does represent the only long-term way for people to save for their healthcare expenses to combat the rising costs of health insurance. As mentioned before, because unused HSA funds roll over from year-to-year, it enables people to build a nest egg for those future healthcare expenses, something that only HSAs can do.
At blooom, we often encourage our clients to think of an HSA like another retirement account, since they have similar (if not better) tax advantages, many have an investment option, and younger people especially are less likely to actually need to dip into the account for medical costs, giving them time to let their money stay invested and grow. That said, how do you feel Lively is helping its users navigate the complexity of deciding which investments to select for that piece of their HSA?
While HSA investments are not for everyone, when it is right for you, it is an amazing retirement strategy to invest your HSA dollars. Lively has really focused on making investments available to everyone, not just those who have the means to be able to do so. As such, we have a few features that really remove that barrier for consumers to begin investing:
1. First dollar-investing – this means that you don’t have to wait to accumulate a minimum amount of money that you have to keep in cash prior to accessing investments – something that most of our competitors do and
2. No fees to access investments. Many HSA providers will charge you a monthly access fee simply to begin investing. At Lively, we provide two investment options that help all kinds of investors – experienced and novice. As a Lively user, you have the option to invest in a self-directed TD Ameritrade brokerage account where you have full access to a wide variety of investment options, including individual stocks, bonds, CDs, over 550 commission-free ETFs, and more than 13,000 mutual funds. You also have the option to invest your funds using an HSA Guided Portfolio approach which offers a personalized portfolio mix suggestion based on your risk preferences and time horizon.
As the HSA market continues to expand, what can you share about your longer-term vision for Lively, either within the HSA world, or beyond?
The underlying issue we are tackling is the shift that happens when healthcare costs are being passed down to consumers. The cost burden is going from payers and employers to individuals. Healthcare and finances are bigger than just HSAs. We just started there, but we aspire to be the default place that every one of our account holders will think to go to whenever they are faced with a decision touching on their healthcare and finances. Ultimately, we see a world where Lively helps bridge the gap between a consumer’s clinical outcomes and their financial realities.
What personal and/or professional experiences have helped develop your passion to build a health savings product for individuals?
I wrote about the details around the personal side of it for me here.
Professionally, I spent an entire career working in a highly regulated space – the energy industry. I took much of my learning about how to navigate the operational & structural complexity of operating within the Health Savings Account industry.
What is the best/worst financial advice you have ever received personally?
A dollar today is worth more than a dollar tomorrow! While it is finance 101, it has really shaped how I have approached most financial decisions in my life.
The information is provided for discussion purposes only and should not be considered as advice. While the data from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of the data provided. Blooom does not provide tax advice. Consult a tax expert for tax-specific questions.