If you have a high-deductible health plan (generally one with a deductible of $2400 or more for your family per year), you are eligible for a Health Savings Account (HSA). This allows your family to contribute $6250 ($6450 in 2013) per year pre-tax to the account. It grows tax-free and, if spent on health care, can be withdrawn tax-free now or in retirement. Since I recently transitioned to a high-deductible health plan, I am now eligible for an HSA. Many people don’t realize that, unlike a 401K, you don’t have to use the HSA provider your employer has chosen. You can use any provider you like.
There are plenty of choices out there for an HSA provider. Since I plan to use the account primarily as a Stealth IRA, I am most interested in low fees and good investing options. I’ll probably also use it occasionally to actually pay for health expenses, so ease of use and customer service is also an important consideration. These are the companies I considered using.
Alliant Credit Union
Alliant offers 1.25% on any balance of $100 or more. They provide free checks and a debit card and basically have no fees at all. They also have an investing option, but I’m not impressed with it. It’s hard to get good information on it, but it seems to be composed of what I consider lower tier mutual funds, such as Oppenheimer, Putnam, AIM etc. There is also a monthly $5.95 fee for the investing account. They do require you to keep at least $1000 in the savings account portion, but you can invest anything above and beyond that. As a credit union, you do have to jump through some hoops to join, but it’s no big deal and at most will cost you $10. If the investing options were better, this would be a great choice for me.
Stanford Federal Credit Union
Stanford offers 0.20% on their HSA accounts, BUT, if you commit to banking with them (a $500 direct deposit into a separate checking account each month, which I suppose you could use to fund the HSA), you can use their “premier health savings account” which offers a rate of 1.50%. Most fees are waived with the premier checking option. The downside? There doesn’t seem to be any investing option at all. At most it’ll cost you $15 a year to join the Friends of Palo Alto Library, which makes you eligible for the credit union.
HSA Bank
This is actually my partnership’s official provider. HSA Bank offers a graduated rate from 0.09% to 0.89% (0.49% for $5-10K) and has a pretty good investment option through TD Ameritrade. You have to keep $5K in the savings account or you pay a $3 monthly fee. On $5K, that works out to an expense ratio of 0.72%, which is pretty significant. The only other significant fee is the brokerage commission of $9.99 per ETF trade, but almost all of my preferred Vanguard ETFs are on the commission-free trade list. So even if I decide to completely invest my funds, I’m only looking at a cost of $36 per year.
HSA Administrators
I actually met the owner of HSA Administrators at a Bogleheads conference, and he seemed to be a great guy. They are very up-front about fees, and use Vanguard funds for their investment options (and in fact Vanguard links tl them on their site). They brag about the fact that you don’t have to keep any money in a low interest checking account, but they do charge a fee of $45 a year to maintain the account, which is $9 more than you’d pay at HSA Bank to do the same thing. Both charge a minimal fee for checks, but offer debit card transactions (if you choose credit instead of putting in your PIN) for free. Actually, I just realized while researching this that HSA Administrators actually uses HSA Bank for their “debit card account.” So you’re still subject to the $5000 minimum in the account or else you get the $3 a month fee. (Some places on the web state the minimum is $3000, but HSA Bank confirmed to me it was $5000.)
HSA Administrators also charges another fee, 0.32% of the first $20K in any mutual fund per year, which is a maximum of $64 per fund per year. The Vanguard funds offered are reasonable, and mostly offered as Admiral funds with expense ratios similar to the ETFs you can get through TD Ameritrade at HSA Bank. They offer the Prime Money Market Fund too, which used to be a great option for your cash, back when money market funds didn’t suck. I think HSA Bank has really taken the wind out of their sails with their TD Ameritrade option offering free Vanguard ETF trades, and so have a hard time recommending HSA Administrators over HSA Bank.
Fidelity HSA
Fidelity is also in the HSA game, offering their usual assortment of brokerage options and mutual funds. Non-Fidelity ETFs trade for $7.95 and there is a $48 per year HSA fee (waived if you have $250K invested at Fidelity.) Check fees are also minimal just like with HSA Bank and HSA Administrators. One downside is that your cash in the sweep account is only making 0.07%, so Fidelity isn’t a great option if you want to keep any significant chunk of the HSA in cash. But if you already have a lot of money with Fidelity, and plan to completely invest your HSA, this may be your best option.
Wells Fargo
Wells Fargo offers rates of 0.05% to 0.60% on their HSA. They require you to keep $2000 in the checking account, and then allow you to invest the rest, but only into their proprietary mutual funds, which pretty much suck due to their high expenses.
Adirondack Trust
Adirondack offers a rate of 2.96% [Update 1/13 – now 1%]with no minimum, but they do charge a fee of $25 to enroll and $4 a month. Unfortunately, there is no investment option.
Lake Michigan Credit Union
Lake Michigan is currently offering rates of 1.49% to 2.08% with no significant fees. They say there are additional investment options, but they don’t list them on the website. I called them up and the only option is to buy CDs. You can join the credit union by making a $5 donation to a group working on ALS (yes, Lou Gehrig’s Disease.)
Bank of the Sierra
Bank of the Sierra offers rates of 1.0% to 1.75% without residency restrictions. There is a $20 set-up fee and a $3 a month fee if you don’t maintain $3K in the account. There are no decent investing options anyone on the phone could tell me about.
Other institutions I already have accounts with, including Vanguard, Schwab, USAA, Ally Bank, and my local credit union, don’t offer HSAs. So in conclusion, I think my partnership made a great choice in picking HSA Bank and that’s where I’ll be opening up my HSA. Remember if you’re an employee you should have your employer send your pay directly to the HSA provider to save on payroll taxes on that money. A partner or independent contractor need not worry about that as he pays his payroll taxes independently.
Fidelity does not currently offer HSA to individuals but they probably will in 2013.
I wouldn’t have guessed that based on their website. http://planreview.fidelity.com/health_savings_account/home.htm
Went to Fidelity today, and as of 12/20/13 they do not offer HSA to individuals. As you wrote, the website seems to indicate they do offer to individuals, so I also called them. The response was that they don’t offer “at this time”, so hopefully they will in the future.
As of Jan 15, 2014, Fidelity still won’t provide HSA accounts to individuals. I contacted them yesterday.
Thanks for the update.
Still not offered as of 8/25/2014
Just got off the phone with Fidelity. As of 7/15/2015, still not available to individuals.
Still not as of 9/8/15
Still not offered as of 7/5/2016. Just called them.
Fidelity still does NOT offer individual HSAs as of 2/21/2017. Odds are they only want to focus on capturing the large volume business accounts. Pity.
As of February 21, 2017, Fidelity still does not offer individual HSA accounts.
I have one. And I opened it on August 2013, after transferring in an HSA from an ex-employer. I am understandably confused by these comments.
So, I go and look and, sure enough, there is no option to open a new HSA account, online or otherwise.
I must say, it’s great. But looks like I’m grandfathered in somehow. After talking to a rep, it was clear that somehow I got lucky, or saw that I worked with a company that had a relationship with Fido and opened my account.
Just looked at Fidelity, where we have our account. They only offer an HSA account to corporations with 500 or more employees….bummer, wanted to keep everything there
Health equity also has a nice program
http://www.healthequity.com/
They do investing and have 1.5% interest and they charge $2.50 per month
Balance Tier Average Daily Account Balance Interest Rate APY*
Tier 1 $0–$2,000.00 0.05% 0.05%
Tier 2 $2,000.01–$7,500.00 0.10% 0.10%
Tier 3 $7,500.01–$10,000.00 0.70% 0.70%
Tier 4 $10,000.01+ 1.50% 1.51%
I’m relatively new to Healthequity, but have been very impressed with their customer service and ease of use. Their service representatives are very knowledgeable and always check if they are unsure of anything. High recommended.
I also opened HSA early this year in HealthEquity. Good thing was that my health insurance company pays set up fees and monthly maintainence fees. Investment is free but need to keep $2000. They will pay my insurance electronically. Their mutual fund choices are not great. Only reasonable one I thought was Dryfus small cap index with ER of 0.5. But I can just use that one fund for small caps in my portfolio, though little expensive than vanguard.
Also, I thought they charge around $4.85 per month currently if your insurances depending on your insurance. That’s free for me.
I guess I’m not seeing why you guys like Health Equity. According to your information you have to keep $2K in there getting paid 0.05% for it, there aren’t any reasonably cheap investments, and there are fees of $30 a year. That seems worse than all, or at least most, of the options discussed above. Am I missing something?
Sam, I’m not sure why you are talking about paying your insurance premiums with an HSA. You can’t do that except under certain limited circumstances (retired, collecting unemployment, COBRA, or long-term care insurance.)
Update on HealthEquity, they now have a nice selection of Vanguard funds at low ER. I was sour on them for most of the year but my employer funnels free “healthy living” money there. They have revamped their website and it is linked with health records nicely. Also, the minimum in order to invest is only $1000. Trading fees for the high ER funds are waived but there is a 0.033% fee to use the Vanguard funds.
http://healthequity.com/doclib/HSA_invest.pdf
I think my language might be misleading. I think that’s just another option. Not really better but not worse either. That was the default option with my Optima insurance.
While HSA bank looks to be best option, you have to keep $5000 or pay $36. With HealthEquity you have to keep only $2000. There are no other fees (might differ with different insurances)
And I didn’t mean to pay my insurance premiums. I meant all insurance claims show up electronically in my account and could just pay it electronically from the website. So won’t need to spend money for check book ( although could be mute point as I plan to use it as IRA and not pay claims).
I had also thought of changing to HSA bank after reading about it in Bogleheads forum. But wasn’t sure if it’s worth the hassle. With amount of money that goes in , I could work with just one fund for now. Let me know if you think otherwise
Update to HealthEquity: The $2000 minimum that needs to stay in cash earns 0.2% interest per annum. They have a great lineup of Vanguard funds and 2 DFA funds… I dont know if this is new or had always been there. For these investments, if done by oneself, without advisor services, the fees are 0.033% per month (or 0.1% per quarter)- apart from the ERs of the funds, of course.
Seems like a nice option.
I ruled out HSA Bank because you cannot speak to anyone on the phone. I have been trying but I certainly don’t want to have that experience. Poor customer service Curious if anyone else had that experience.
Hmmmm…never actually tried calling them. What did you need to call them for?
I recently spoke to HSA Bank for tax prep reasons… i sent an email, this came at the bottom of it. I called and spoke to a human. Not sure what you experienced.
If there are any additional questions or concerns that you would like addressed, please feel free to send an email to [email protected]. Otherwise, for specific account information please contact our Customer Contact Center toll-free at 1-800-357-6246 or international 920-803-4100. Our representatives are available Monday through Friday from 7 AM to 9 PM CST and Saturday 9 AM to 1 PM CST.
I similarly just had a bad experience with HSA Bank as well and found this site because I was looking for another provider. Tried both their customer service and email. I can’t even access my online account because their site won’t let me esign their consent form. Their attitude has been ‘oh well.’ Looking at other comments here this seems to not be isolated. Will look into rolling over as well to one of the other options.
Sorry you’re having lousy service. I only interact with them once a year, all online, and haven’t had any issues. But if I kept having them, I would look elsewhere as well.
Very familiar with terrible customer service from HSA Bank! I’ve filed complaints with federal regulators (OCC) and Better Business Bureau. I was just involuntarily separated from my employer and haven’t replaced coverage since COBRA was too pricey. HSA Bank informed after coverage ended that they would start charging me $3/MO PLUS $2.50 X 2 investment accounts (both of which are and always have been unfunded) starting the new month. Despite emails and numerous hours on the phone with their customer service telling me they can’t give my $11,000+ balance account the fee waivers clearly depicted when above $5000 without any fine print on the website and if you ask them by phone or email before opening an account. In order to get me off the phone I was told by Diane that she couldn’t even tell me if they offered that account, I’d have to apply for a new account over the website and in about a week I’d be in their system and could call back to ask if they might reduce the fees…of course the site won’t let you apply if you don’t have the HDHP insurance in force… later told that it would take them 2 months to process transfer to another provider during which I’ll be getting all those fees. Criminal!
So you’re complaining that they didn’t charge you fees they clearly disclose for years?
I guess if losing $11 is “criminal” then you have good reason to be upset. Amazing to me what you will file a complaint over though.
Sorry about your job loss. Hope you find something even better quickly.
No, I don’t think you understood that at all. Did you read your own article terms on HSA Bank? As you mention above, they clearly disclose IN WRITING that they DO NOT charge account fees above $5k balance (which $11k+ clearly is), as the commenters here all seem to understand. However, despite my having more than double the required minimum to continue paying no fees, they are refusing to honor the published terms disclosed on their site. They also want to count two unfunded “Investment account” inquiry as additional accounts. Apparently, asking them for details on the programs, without actually funding them is reason enough for them to start charging you monthly fees. $84/year in fees that their own terms clearly state they will not take…THAT – is fraud. Maybe you enjoy being defrauded, but I don’t. I thought the multiple readers/commenters citing “poor customer service” with HSA Bank might recognize the issues, and follow suit.
Forgive me, that’s $96/year …($3+$2.50+$2.50)x12…fees they claim they do not collect. when your balance exceeds under half where mine stands.
You have $11K in the savings account component and they’re still charging the fees? Now I understand why you’re upset. Although if they’re not continuing to charge it on a monthly basis, I wouldn’t waste much time and effort trying to get my $11 back.
That makes sense, Sam. Thanks for the clarification. That is a nice feature. I have no idea if HSA Bank has that feature as, like you, I plan to use it mostly as a stealth IRA. I agree that it would be relatively low yield to change at this point, especially since you do have one fund in there you like.
Health Savings Administrators started using HSA Bank this summer. They sent me a letter going over the changes. It says there are no minimum balance fees. That part doesn’t affect me because I only have mutual funds, but it looks like I would still save money by using HSA Bank directly.
I just use a local credit union. Our health care expenses end up using the money, but at least I don’t have to pay Fed taxes on the money. The credit union has a $2 monthly fee. They pay hardly any interest, but I have quick access to the funds.
How does Sterling HSA stack up?
http://www.sterlinghsa.com/products/hsa/account_plans_fees/
http://www.sterlinghsa.com/products/hsa/investment_services/
Seems pretty high-fee to me.
Hello White Coat Investor,
Thank you for your helpful website. I wonder what you think about my current HSA plan. It is through Union Bank & Trust Company (http://www.ubt.com/personal/HSA-accountinfo.html). The fee is only $5 per quarter. Interest rate has been varried, most current annual % yield 0.21%. However, almost all of investment options seem to have high ER/management fees or is front load (i.e. Fidelity Advisor Freedom Lifecycle Funds, Goldman Sachs Satelite Strategies, AF EuroPacific Growth, Thromburg International Value, T.Rowe Price Int’l Growth and Income, MFS value, American Funds Growth Fund, ect… as listed on their website).
I did choose PIMCO Total Return D because its relatively less expensive ER 0.75. If one is not happy with current offerred HSA plan, can he/she switch or does the whole practice have to switch as well?
The rest of my investment are with Vanguard for other tax deferred/Roth IRA/and taxable account. I used bonds in my HSA as part of my whole portforlio assess allocation for goal of tax efficiency. Is that a reasonable approach?
Again, thank you for your great website.
While $5 a quarter isn’t too bad, the rest of it sounds downright crappy if you’re actually using the HSA as a stealth IRA and not spending it.
Your HSA belongs to you. You should be able to use any one you like. If you’re employed it may be best to have your employer put your HSA contributions into the UB&T HSA and then periodically roll them into your HSA of choice. If you’re a partner I’d just make your contributions into your HSA of choice as there’s no payroll tax savings. Honestly I’d probably get the rest of the group to change too.
I think you need to correct the HSA Administrators fee info which is 0.08% per QUARTER not per year. So actually 32 basis points per year.
http://www.hsaadministrators.info/hsa-fees
Good catch Mark. Indeed, it is 0.08% per quarter.
I’ve been pretty happy with Optum Health Bank. The interest rate is a nominal 0.92% but the monthly fees are only $3.00 and the investment options include the following mutual funds which are no-load or load waived:
Fund Name Ticker Symbol Asset Class
Amer. Cap World Grow & Inc (F) CWGFX World Stock-Large Value
Blackrock Equity Dividend MDDVX Equity
Federated Master Trust Mon Mkt FMTXX Money Market
Federated US Govt. 2-5 Year FIGTX Intermediate Government Bond
Goldman Sachs Balanced Strat GIPAX Allocation
Goldman Sachs Growth Strategy GGSAX Allocation
Goldman Sachs Growth&Inc Strat GOIAX Allocation
John Hancock Classic Value PZFVX Equity
John Hancock High Yield A JHHBX Fixed Income
John Hancock Large Equity Fund TAGRX Equity
John Hancock Money Market Fund JHMXX Money Market
JP Morgan Prime Money Market VPMXX Money Market
Keeley Small Cap Value KSCVX Equity
Mainstay S&P 500 Index MSXAX Equity
Munder Mid-cap Core Growth MGOAX Equity
Neuberger Berman Genesis Fund NBGNX Equity
Neuberger Berman Real Estate NREAX Equity
Oppenheimer Developing Markets ODMAX International
PIMCO All Asset PASAX Allocation
PIMCO GNMA Fund PAGNX Fixed Income
PIMCO Low Duration PTLAX Fixed Income
PIMCO Real Return PRTNX Fixed Income
PIMCO Small Cap Stocks Plus PCKAX Equity
Thornburg Value TVAFX Equity
Vanguard Global Equity VHGEX World Stock -Large Blend
Vanguard S&P 500 Index VFINX Indexed
Vanguard Wellington Fund VWELX Equity
Looks like a lot of high ER funds. How many of those funds other than the 3 Vanguard funds have an ER under 50 bp? I don’t think I would be happy with those fund options.
What is the point of having two SP500 index funds? BTW the Mainstay SP500 has an ER of 70 basis points for investor shares (according to Morningstar) vs 5 basis points for Vanguard Admiral 500 or 17 bp for Vanguard 500 Investor shares.
I was just happy to see the Vanguard 500 Index as I don’t have that much in the HSA and will be switching out of my HDHP this year. For someone who has enough saved in the HSA to consider more than an index fund I agree there are probably better options available elsewhere.
Need advice on my HSA. Our company uses HSA Bank.
I like the idea of investing (above a certain amount) for Stealth IRA purposes… I am using $5k as threshold minimum for cash and everything above this amount to invest)
As part of our company’s benefits, the company contributes about 80% (but doesn’t max the HSA).
I asked if they could deduct remaining from my pay monthly to max the annual contribution ($6,450/year total in our case).
They said they were advised by tax person NOT to do this, and for me to contribute post-tax dollars on my own funds to max amount.
I’m assuming theoretically I could deduct the amount contributed, so I wouldn’t pay taxes on it.
My question is…..will this complicate things down the road when taking out funds?
Some portions of the investment will be pre-tax and others would be post-tax/deductible.
I know with IRA’s this makes things more complicated, but wondered what people thought about in a HSA account.
thanks
I don’t know why the tax person advised against this. You cannot contribute post-tax dollars from your own funds. You should, however, be able to contribute pre-tax dollars from your own funds. As long as you have a HDHP you can contribute up to $6450 per year to an HSA. If the company is putting in say $5K, you can open up your own HSA and put in $1450. You can probably actually put it into the same HSA. You then deduct the contribution on the 1040, line 25. I believe that that if you’re an employee, contributing on your own will cost you a little more in payroll tax than if the company made the contribution for you.
Since all the money in the HSA is then pre-tax, there’s no complications down the road to worry about. As long as you spend it on health care, it’ll never be taxed. If you spend it on something else in retirement, it’s like a traditional IRA.
i’m confused…..mainly on the wording of pre-tax and post-tax
here is HSA’s webpage http://www.hsabank.com/hsabank/Education/Tax_Advantages.aspx
So, is this what you mean?
My company puts in $5k (not deducted from my pay, a benefit of working there), and I put in $1450 with my own funds (will file deduction on THIS amount for 2013 taxes)?
I’m just wondering if this will complicate things down the road if I decide to use funds for non-healthcare related expense after age 65. Parts of the funds and gains will be pre-tax but not deducted because it didn’t come out of my pay and parts would be deductible.
Maybe I just need to talk with a CPA. 🙂
IRS regs allow you to contribute pre-tax if your employer has a Section 125 plan that includes HSA contributions. In addition, you may contribute post-tax as well. The differences are these:
1) You report pre-tax and post-tax contributions on different lines of the IRS form 8889 when you file.
2) You cna avoid the 7.65% FICA tax by contribution pre-tax payroll deduction.
I hope this helps clarify.
I don’t want to discourage you from talking to a CPA, but I don’t think this is as complicated as you think it is.
The money your company puts in is pre-tax. You’re not taxed on it (it doesn’t show up as income on your W-2) and neither is the company (who deducts it as a business expense). The money you put in is also pre-tax, meaning it is deductible on your return for the year in which you contribute it.
So it is all pre-tax. Since it is HSA money, as long as you spend it on health care it is never taxed again. If you decide to buy a boat in retirement with it, well, then it’s taxable, no matter whether it came originally from your employer’s pocket or your pocket. It shouldn’t make anything complicated at all.
The only difference involves payroll taxes. Money your employer contributes directly isn’t subject to payroll taxes (you don’t pay payroll taxes on benefits.) Money you contribute directly has already been taxed for SS and Medicare, and there is no mechanism whereby you can get that money back. Not fair, but that’s the way it is.
To further expore this idea…. I have my own S-Corp (I am the owner and sole employee) which is contracted to my practice. I give myself a salary from my S-Corp (PLLC). Can I fund my HSA from my PLLC to avoid the payroll taxes?
I’ve been using Saturna Capital (www.saturna.com/) for my HSA. They don’t charge any monthly maintenance fees, and they have several no-fee mutual funds to choose from, although the expense ratios aren’t great. I believe you can also choose your own investment vehicles, but you have to pay $15 commission per trade.
They seem like one of the better HSA providers, no?
I guess $15 is better than a higher fee, but when it’s free at HSA Bank, it’s hard to say Saturna is better.
I believe HSA bank charges a standard fee of $2.50/mo for HSA balances below $3000. The investment option costs an additional $3/mo unless your HSA balance (not including investment funds) is at least $5000. So if you want the investment option, you have to pay $5.50/mo or earn only 0.15% APY on $5000/year. Health Equity Inc. has investment options with no monthly fees if you maintain a $2500 non-investment balance. Health Equity fees are lower but the investment options are fewer and not as good for the most part.
There are actually now several excellent, low-fee Vanguard options through Health Equity. In addition to Large cap index, they recently added extended market index, Total International Stock Market, Total Bond Market, Target 2060 and Target Retirement. By combining TBM and Target 2060 in appropriate ratios, you can pretty much replicate any Target or LifeStrategy fund you like although with some tracking error that will depend on rebalancing frequency. If you want even lower expense ratios then you can combine TBM, TISM, large cap index and extended market index to nearly replicate a Target fund as well. You can also tilt a bit towards international or mid-caps if you so desire.
That’s wonderful to hear. The more good options the better.
Just curious how you know this? I called Health Equity today to ask about the new Vanguard options but they said all they know at this time is that new options will be starting, but they’re not sure what those are at this time. Thanks
These funds are available in my account. Perhaps the options are only available if you are insured by Optima.
Anyone have any experience with the vanguard HSA?
never mind, just found out it is HSA Administrators
Just a correction on the minumum debit card balance. There is no minimum required balance, and no bank fee for the debit card for the Health Savings Administrator customers at HSABank. That $5,000 minimum is in place for their standard customers. Pat Jarrett, VP, Health Savings Adminstrators
Thanks for that information. Welcome to the blog Pat.
Another nice thing about Health Savings Administrators is that they allow you to pay the yearly fee out of pocket, so it doesn’t have to come out of your HSA investments.
I thought I’d share more on Alliant’s HSA. It seems like a good deal to me, although Vanguard funds are limited? What are your thoughts?
You have to keep $1000 minimum in Alliant’s HSA account, but any amount above that can be invested. A $5.95/month fee applies, and is deducted from the investment portion of the HSA. Unlimited mutual fund trades are offered in return for this.
https://www.savedaily.com/partners/acu/smi.asp
Here are the available funds:
ALLIANCE BERNSTEIN SMALL/MID CAP
ALLIANCEBERNSTEIN HIGH INCOME CLASS A
ALLIANZ NFJ INTL VALUE FD CLASS D
ALLIANZ RCM GLOBAL RESOURCES FD D
ALLIANZ RCM GLOBAL SMALL CAP CL D
ALLIANZ RCM WELLNESS FD CL D
AMERICAN BEACON LARGE CAP INVESTOR
AMERICAN CAPITAL WORLD GRTH & INC A
AMERICAN EUROPACIFICGROWTH CL R4
AMERICAN FUNDAMENTALINVESTORS CLASS A
AMERICAN SMALL CAP WORLD CLASS A
BARON SMALL CAP FD
BLACKROCK ENERGY & RESOURCES A
BLACKROCK EQUITY DIVIDEND FD CL A
BLACKROCK GLOBAL ALLOCATION CL A
BLACKROCK INFLATION PRO BOND PORT INV A
BLACKROCK PACIFIC FUND CL A
CALVERT SHORT DURATION INC CL A
CAMBIAR OPPORTUNITY INVESTOR CL
COHEN & STEERS REALTY SHARES
COLUMBIA GLOBAL BOND CL A
COLUMBIA HIGH YIELD BOND Z
COLUMBIA TECHNOLOGY FUND CL Z
DAVIS NEW YORK VENTURE CLASS A
DELAWARE DIVERSIFIED INCOME FD CL A
DELAWARE EMERGING MARKETS CLASS A
DELAWARE HEALTHCARE FUND CLASS A
DELAWARE INFLATION PROTECTED BOND CL A
DELAWARE VALUE
DREYFUS OPPORTUNISTIC MID CAP VALUE CL A
DREYFUS TECHNOLOGY GROWTH CLASS A
DWS CORE FIXED INCOME CLASS S
DWS ENHANCED COMMODITY STRATEGY A
DWS HEALTH CARE CL S
DWS TECHNOLOGY CL S
EAGLE MID CAP STOCK CLASS A
FBR GAS UTILITY INDEX
FIDELITY ADV HIGH INC ADVANTAGE CL T
FIDELITY ADVISOR EMERGING MARKETS INCOME A
FIDELITY ADVISOR NEW INSIGHTS CL A
FIDELITY ADVISOR SMALL CAP CL A
FIDELITY ADVISOR STRATEGIC INCOME A
FIDELITY CALIFORNIA MUNI MONEY MARKET
FIDELITY DAILY MONEY FUND
FIDELITY GROWTH STRATEGIES FUND
FIDELITY REAL ESTATE INCOME
FIRST EAGLE GOLD CLASS A
FIRST EAGLE OVERSEAS CLASS A
FRANKLIN ADJUSTABLE US GOVERNMENT A
FRANKLIN GOLD AND PRECIOUS METALS CL A
FRANKLIN INCOME CLASS A
FRANKLIN RISING DIVIDENDS CLASS A
GOLDMAN SACHS SHORT DURATION GOVT CL A
HARBOR BOND INST
INVESCO BALANCED – RISK ALLOCATION CL A
INVESCO GOLD & PRECIOUS METALS INV
INVESCO VAN KAMPEN AMERICAN VALUE CL A
INVESCO VAN KAMPEN COMSTOCK CLASS A
IVY ASSET STRATEGY CL A
JANUS OVERSEAS CLASS R
JOHN HANCOCK HIGH YIELD FD CL A
JPMORGAN CORE BOND FUND CL A
JPMORGAN CORE PLUS BOND CLASS A
JPMORGAN EMERGING ECONOMIES CL A
JPMORGAN EMERGING MRKTS DEBT FUND CL A
JPMORGAN EQUITY INDEX FUND CLASS A
JPMORGAN GOVERNMENT BOND FUND CLASS A
JPMORGAN US REAL ESTATE CLASS A
JPMORGAN VALUE ADVANTAGE CL A
KEELEY SMALL CAP VALUE CLASS A
MANNING & NAPIER WORLD OPPT SER CL A
MFS AGGRESSIVE GROWTH ALLOCATION CLASS A
MFS CONSERVATIVE ALLOCATION CLASS A
MFS DIVERSIFIED INCOME
MFS GLOBAL EQUITY CLASS A
MFS GOVERNMENT SECS CLASS A
MFS GROWTH ALLOCATION CLASS A
MFS MID CAP VALUE
MFS MODERATE ALLOCATION CLASS A
MFS UTILITIES CLASS A
MORGAN STAN INSTL REAL ESTATE PORT P
MUTUAL SERIES GLOBAL DISCOVERY CLASS A
OAKMARK FUND I
OPPENHEIMER GOLD & SPEC MINERALS CL A
OPPENHEIMER REAL ASSET
PIMCO COMMODITY REALRET STRAT ADMIN CL
PIMCO EMERGING MARKETS BOND ADMIN
PIMCO GLOBAL BOND
PIMCO HIGH YIELD CLASS D
PIMCO LONG TERM US GOVT ADMINISTRATIVE
PIMCO REAL RETURN
PIMCO SHORT TERM ADMINISTRATIVE SHS
PIMCO STOCKSPLUS TOTAL RETURN CL D
PIMCO TOTAL RETURN ADMINISTRATIVE SHS
PUTNAM AMERICAN GOVTINCOME CLASS A
RS TECHNOLOGY CLASS A
RUSSELL SHORT DURATION BOND CL S
SUN AMERICA FOCUS DIVIDEND CLASS A SHARE
T ROWE PRICE BLUE CHIP GROWTH INC
T ROWE PRICE CAP APPRECIATION
T ROWE PRICE REAL ESTATE FUND ADV CL
T ROWE PRICE RET 2050 ADV CL SHS
T ROWE PRICE RTMT FUND 2020 ADV SHRS
T ROWE PRICE RTMT FUND 2030 ADV SHRS
T ROWE PRICE RTMT FUND 2040 ADV SHRS
T. ROWE PRICE RETIREMENT 2015
T. ROWE PRICE RETIREMENT 2025
T. ROWE PRICE RETIREMENT 2035
T. ROWE PRICE RETIREMENT 2045
T. ROWE PRICE RETIREMENT 2055
TCW CORE FIXED INCOME N
TCW EMERGING MKTS INCOME CL I
TEMPLETON GLOBAL BOND CLASS A
THORNBURG INTL VALUE CL A
TURNER MIDCAP GROWTHINV CL
VANGUARD 500 INDEX FD INVESTOR SHS
VANGUARD BOND INDEX TOTAL MKT INVESTOR
VANGUARD ENERGY INVESTOR FUND
VANGUARD HEALTH CARE INVESTOR
VANGUARD LONG TERM INVMT GRADE INV
VANGUARD LONG-TERM BOND INDEX PORT INV
VANGUARD MID CAP INDEX SIGNAL
VANGUARD PRECIOUS METALS & MINING INV
VANGUARD REIT INDEX INV.
VANGUARD SHORT TERM BOND INDEX INVESTOR
VANGUARD SMALL CAP INDEX – SIGNAL SHRS
VANGUARD US GROWTH INVESTOR
I’ve heard good things about the Alliant HSA. I like HSA Bank better, but you could do much worse than Alliant. The lower minimum is nice and the free trades are nice. But to be honest, I do an HSA trade once a year….when I make my contribution. It’s just a little tiny IRA on the side for me. It’s all TSM. $5K in the bank account and the rest in TSM. Simple, low-fee. But depending on what you want to do with your HSA, you might like access to all those funds.
Great Site, thanks. I use Bank Of America (benefitsolutions.bankofamerica.com). Now, there is the monthly maintainence fee of $4.50 and you have to keep $1000 in your HSA account, but anything above that you can invest. So, with that, I only make .10% for interest since my balance is below the $2,500.01, but I’m ok with that since I invest the rest. They have some decent funds to invest into with low expense ratios. There is no fee/transaction cost to invest (except expense ratios, of course) into their fund choices and to sell them when you need to have the money back in your HSA account. So, that I liked.
I am considering going with HSA Bank (NYSE listed) over HSAadminstrators (fly by night operator??). Can anyone confirm if HSA operators are insured ?
While both vendors are quite good, I’m not sure what you mean by insured. Do you mean is the account backed by FDIC?
IRS regulations require that every HSA administrator has a custodian that meets cetain minumum finacial and experince criteria set by hte IRS. Most HSA providers are banks and meet these standards easily by virtue of their compliance with banking regs. Third party administrators, like us at HSA Administrators, contract with a bnak to be our custodian. We happen to use HSA Bank as our custodian. In addition to the fiducary oversight provided by the custodian, wea are audited and our staff are all bonded and insured as a way to protect your investments.
Pat & WCI – to clarify when I visited the HSAadminstrator website, there was very little in the “About Health Savings Administrators” section that provided me confidence that the company was strong (viz-a-viz “HSA Bank is a division of Webster Bank, N.A., Member FDIC” – the FDIC stamp gives me peace of mind).
Below is an excerpt from the article that caused me to get concerned. So I want to be sure that my HSA money will be safe (i.e. in the unlikely event of something like the one described below, what is my protection for my hard earned HSA money)
“Two co-founders of Canopy Financial Inc., a bankrupt Chicago-based health savings account administrator, are accused of defrauding investors of approximately $75 million and misappropriating nearly $19 million from accounts used to finance health care expenses.
Jeremy Blackburn, Canopy’s former president and COO, was charged in December in a civil enforcement action filed by the U.S. Securities and Exchange Commission.
New charges filed Monday, March 1, by the FBI in Chicago allege that Blackburn and Anthony Banas, Canopy’s former chief technology officer, misappropriated the money from HSAs and flexible spending accounts that Canopy held and administered.”
Link to article: http://www.workforce.com/articles/safe-harbor-urged-for-employers-with-automatic-401-k-plans
Thanks.
VJ – Yikes, that is scary. Stick with a national bank chain, then. Not that they can’t fold, but harder for them to defraud you. Like I posted earlier, Bank of America cost $54 annually. Another bonus is the debit card you get is free and so are the replacements if you need them and you can have up to 7 people on the account. Now, the APY is low, but for investing there is no fee to buy and sell (just watch expense ratios, of course) compared to Alliant Credit Union. In fact, when I called the rep on the phone couldn’t even tell me about any of the investments options. She kept telling my to log in. Though I do believe I saw LPL Financial lot in the fine print.
HSA Bank if changing their fees as of September 1st, if you have $4850 in your HSA account you avoid the monthly fee. To me, that is too much money to have sitting and not really earning much. Plus, there is an annuall $24 fee for investing. Unless I misunderstood the rep when I called.
Best of luck, I looked at many of the ones listed above and found that if I wanted to avoid the monthly fees I had to leave too much in my account. For some that may be fine/safe.
Good luck!
An update on healthequity which my employer is defaulting with:
http://www.healthequity.com/documents/USU_Fee_Schedule_Interest_Rates.pdf
No maintenance fees above $1500 (3.95/mo otherwise) and no investing fee. Investments are done via Optima Health. They have a fair list of lower-tier funds but only one vanguard fund. Not sure if there are more when you are logged in as some have posted above, mentioning several vanguard funds. Need $2000 min to invest.
http://www.healthequity.com/optima/optima_investment_options.pdf
Any thoughts?
WCI
Thanks for your Blog, I’m learning lots of great information.
Could you please clarify your choice of HSA providers. In the above post you mentioned HSA Bank as your choice, but in your “Stealth Roth” opinion you said
“My recommended provider for an HSA is Health Savings Administrators”
If you do like HSA bank for the stealth roth approach, do you leave the 5K in the savings acct to avoid the $3 fee or just invest all the funds and pay the $36
Thank You!
I think both HSA Bank and Health Savings Administrators are both great choices. As noted in this post, when I actually went to open one, I went with HSA Bank. The previous post was written at least a year earlier when Health Savings Administrators was a slightly better choice IMHO and I just never went and updated it. I leave $5K in the savings account, but it’s reasonable to pay $36 and invest it if you prefer.
I’ve been using Saturna , local, I live in Bellingham. The Amana funds, esp. Growth, at Saturna have done very well but are expensive, 1.11% for Growth, 1.20% for Income. There is no custodial fee or minimum balance required in a money market or such.
I also use HSA Administrators for their Vanguard funds.
They charge an annual custodial fee $45, paid outside of account, plus .08 per qtr (.32 annual) per acoount and then there is the Vanguard fee. The HSA fee maxes out at $16 qtr (= .08 x $20,000)PER ACCOUNT, ie fund. You can use up to four funds.
They tell me the Total International Stock Index, will be available as an Admiral later this year.
Stealth IRA indeed. Any money I find laying around goes first in HSA, then Roth, or IRA, or SEP.
By April 2014, I’ll have around $19,400 in my HSA. It’s currently earning .1% (.001) APY. I’m pretty much convinced that HSA Bank is the route I should take. This will be a stealth IRA for me, so as a piece of my asset allocation, I’m thinking I’ll invest in Vanguard Total Bond Market ETF (BND). Keep it fairly low risk since the money is far easier to access than “real” retirement accounts. Does BND sound good to you?
Also, to avoid the $66/year fees ($2.50/monthly account maintenance + $3.00/monthly investment fee), I plan on maintaining the $5,000 savings minimum (Effective January 1, 2014, the adjusted Balance Waiver Amount will be $4,925). I’m comfortable doing this, but do any of you just invest 100% and pay the fees?
I do the same as you’re planning, but I have run into people who prefer to pay the fees and keep the money invested. I consider the $5K kind of a health care emergency fund, since my deductible is ~$3K and co-insurance would probably eat up the rest for a significant expense. The rest goes into aggressive investments. Whether I’d actually tap that emergency fund or keep the HSA as a stealth IRA I won’t decide until the situation comes up.
Can I ask why you have it in aggressive investments? Is there an advantage to having aggressive investments allocated to the HSA in your overall asset allocation, or is it just a preference of yours?
I use aggressive investments because I don’t plan to spend it for decades.
I thought about this a little more, and out of any tax-advantaged account, the HSA seems to be the one you would want to try to grow the most aggressively… if you are okay risking your health savings. You put the money in pre-tax and pull it out tax-free assuming you have past and current medical expenses to cover it. Seems like a waste keeping it in low risk, low return investments with that in mind. I think I’ll be dropping mine into Vanguard Total Stock Market ETF (VTI) as part of my overall asset allocation.
That’s what mine is invested in, aside from the first $5K.
My employer offers the Wells Fargo HSA option, which you mentioned to be not too great given the dearth of fund options (https://www.wellsfargo.com/investing/hsa/funds-options/). In my situation, the monthly maintenance fee (around $4) is paid by my employer and it appears that the funds available have no commission or load fees either (https://www.wellsfargo.com/downloads/pdf/com/retirement-employee-benefits/hsa/UsingYourHSAtoPrepareforRetirement.pdf).
I do see a few aggressive funds (large cap) that I’d like to invest in as well. Do you have any concerns or comments on the Wells Fargo options?
I suppose that I could also open my own account at HSA Bank, pay the maintenance fees, and have broader options of investments (like VTI). I wonder if the gains would be worth the extra step annually to transfer funds from my employer HSA to my personal one. This brings up another question: (1) If I leave my current job prior to retirement, am I correct to assume that I’d be responsible for all of the maintenance fees?
Thanks for the thorough overview.
I’m sure you’d be responsible for maintenance fees. I’d probably go to the trouble to roll it over every year to get better investments. I find the Wells Fargo funds way too expensive. Their diversified international fund, for instance, is 1.25% a year.
New link for Lake Michigan Credit Union:
https://www.lmcu.org/banking/savings/savings_hsa.aspx
Seems like ELFCU is getting a lot of attention recently with their HSA, you can join by making a one-time $5 donation to a non-profit organization called Tru Direction.
Elfcu doesn’t charge any setup fee or maintenance fee. You can invest 100% of your money via TD Ameritrade once you have at least $2,500. If you choose to leave some money behind in the savings account at Elfcu, you earn 1%, which is about the best you can get these days for a savings account. TD Ameritrade also doesn’t charge any maintenance fees. You can invest in 101 commission-free ETFs, 32 of which are from Vanguard, in addition to other investments normally available through TD Ameritrade.
Elfcu offers a better HSA than HSA Bank. If you leave money in the savings account, the interest rate is higher (1% vs 0.3%). If you invest the whole thing, you don’t pay the $66 maintenance fees HSA Bank charges.
Thinking about taking my money out of HSA Administrators ($25 closing fee) and transferring to ELFCU.
Yeah, I’m wondering what compelling reason I have to continue keeping $5000ish in my HSA Bank savings account to avoid the fees when I could just invest it all through ELFCU + TDA.
Note: If you’ve started investing through HSA Bank for 2014 in TD Ameritrade and you are thinking of switching, there is a 30-day hold period for ETFs to avoid paying short-term trading fees.
correct, you do need to wait the 30-days before transferring assets to another HSA.
I have been trying to figure out if there is a way to avoid the $25 closing fee that HSA Administrators charges to close an account. Thankfully ELFCU does not charge any opening fees.
I have considered the idea of “rolling over” the entire amount in the HSA Administrators HSA to my personal checking account and then promptly writing a personal check to ELFCU. (Note – this is only allowed once/year). However, when I called HSA Administrators they will only allow your account to go down to $50. I have no interest in leaving $50 with HSA Administrators. Therefore, it seems to unfortunately make the most sense to pay the $25 closing fee at HSA Administrators and fill out the transfer paperwork at ELFCU…
Dang, I forgot about the $25 closing cost for HSA Bank. Maybe I’ll get all invested for 2014 and wait to see if ELFCU really blows up. Then I’ll bite the $25 bullet.
Thanks for the tip on ELFCU. I hadn’t heard of them until today. That’s definitely compelling. Keep in mind I don’t think this was an option when the post was written. I think ELFCU has only been around a couple of years, and no one was talking about their HSA until the last month or two. Looks like HSA Bank has got some real competition. Hopefully they step it up so I don’t have to move my money! That $5K earning 0.3% is getting to be a smaller and smaller portion of my HSA every year though. I mean, if I make 8% on that $5K instead of 0.3%, we’re only talking about a couple of hundred dollars a year. It’s not exactly a life changing amount of money. Still, if I were opening an HSA today…I’d probably do it at Eli Lilly FCU. Maybe I’ll think about an HSA rollover in a month or so and do a post on it.
I just got notice that elfcu is charging $3 monthly maintenance fee starting 7/1/14 if your balance drops below $2500. I just completed all of the paperwork to transfer my HSA over…arg!!!! I am not back in the market for a fee free investment HSA account.
Yes, I saw that. Annoying isn’t it?
Please allow me to clarify several points in the conversation.
Health Savings Administrators is separate from HSA Bank. We do use HSA bank as our custodian and to supply debit cards for those who want them. We do not require a balance to be held in the checking account to avoid fees. HSA bank has this requirement for some of the investment options they provide. Our annual fee of $45.00 is structured to allow first dollar investing.
The $50.00 balance requirement that Matt referenced does not come into play if you choose to close the account. That is designed to accomodate any market movement and avoid a negative balance when withdrawals are made.
Pat Jarrett — I’m always a little confused as to why people don’t choose always choose Health Savings Administrators if they plan to use it as a retirement account. Your Vanguard investment offerings, fee structure, and and no minimum cash balance requirement allows individuals with large-balance HSAs to save money (pay less, earn more). My spreadsheet comparisons easily concluded you were the best custodians for my retirement account. So thanks! We’ve enjoyed doing business with you.
Just logged onto ELFCU HSA to do my quarterly transfer of funds (employer contributions) to the TDAmeritrade account, only to see a newly implemented wire transfer fee of $24, for each transaction. Gross.
Probably will stick with ELFCU as HSA provider, but certainly less excited given this new fee, magnified if you’re single, which in the best case is equivalent to a sales load of ~0.75%, higher if you do multiple transfers in a given year.
You might be interested in this: http://thefinancebuff.com/elfcu-best-hsa-adds-fee.html
Thanks for the link!
While I’m not familiar with the various transfer options available to banks, hopefully ELFCU will choose to implement one or more of the various cheaper alternatives discussed.
Like the author, I’m likely to stick with ELFCU, but now only transfer 1x/year instead of quarterly. However, if customers were to ever lose access to commission-free ETFs offered at TDA, I may consider looking elsewhere.
I hate bait and switch tactics, which this feels like. I’m still at HSA Bank and kind of glad about it.
Same here. I am with HSA Bank and was considering a switch later this year. I’ll probably wait to see if ELFCU switches to ACH before I make a move.
Jim, do you hold $5k in HSA Bank savings to avoid all fees? I still do.
I do. Truthfully, that $5K is the HSA. The rest is a retirement account to me.
First off, thank you for the wonderful website.
2 questions:
1. What do you guys think about HSA investing in the Vanguard Wellington fund? Do you think the Wellington has less risk because of the bond component? I’d like to use the HSA as a stealth IRA but keep it as a backup in case of medical catastrophe. Murphy’s law demands that this medical catastrophe would occur during an extreme bear market. Would Wellington provide some protection in this scenario?
2. Does HSA’s have similar asset protections as 401K? Is it state-by-state?
Thank you so much!
2.
1. I think a better solution is keeping a chunk of the HSA in cash. I keep $5K in cash. That’s precisely the amount HSA Bank requires to avoid fees. How convenient. But Wellington is a low-cost, stodgy actively managed fund that is hard to criticize given it’s nearly a century of solid returns.
2. It is state by state and not yet worked out by case law as HSAs are fairly new.
BMO Harris Bank offers a no-free HSA. Details are here:
https://www.bmoharris.com/us/personal-finance/checking-accounts/health-savings-account#page=page-2
No investments are offered, but if you’re just looking for a place to park a few thousand, this is the best I could find. The little bit of interest it pays (0.10% or so) obviously won’t keep up with healthcare inflation, but at least you’re not losing money to fees on top of that. It’ll do the trick for a year or two while you spend it on small expenses or get back into an employer-matched HSA.
“BMO Harris Bank offers a no-free HSA.”
Drats… that’s no-fee*
26 yo PGY1 ortho resident married with no kids. Goal of HSA to me in a perfect world would be to not spend it keep adding to it and have it converted to an IRA down the road. I get 500 a year that my hospital puts into an HSA account. How much additional a year would you recommend placing into an HSA, if any, if your goal of it at this point is purely an investment strategy.
I’d try to max it out if possible, but your goal shouldn’t be to spend it on anything but health care, ideally as late in life as possible. That’s the way to maximize the triple tax benefit.
There is a consensus that if you have a finite amount of money to put aside, you should first get the match on any retirement contributions, fully find the HSA next, then use any other available funds to further fund the retirement. The logic is that the HSA is a dual-purpose fund that can be used for medical tax free (at any age), or after age 65 can be used (taxable) as an IRA. The reality is that one of your largest post retirement expenses is likely to be medical expenses, which you would be able to pay with tax free dollars. My suggestion – fund as much as you can, up to the IRS limits, if possible.
I agree and max out my HSA on January 2nd each year.
I am a physician working for a hospital and my health insurance is a high deductible plan. I missed the enrolment period for the FSA offered though hospital plan. Can I use HSA for the year I missed enrolment for FSA?
Thank you for the great and instructive posts.
The FSA has nothing to do with an HSA. If you have a HDHP, you can fund an HSA. I don’t know that you can go back and make a contribution for a previous year you missed though.
Yes, you can spend HSA funds anytime on eligible medical expenses. You don’t need to be enrolled in an HDHP to spend or take a distribution. You only need to be in an HDHP to make contributions.
Of course, I wouldn’t take my word on it (doesn’t count for much if the IRS has a question). Here is the regulation on HSA distributions:
http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204081
“If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses.”
“Eligible individual” means one who is eligible to contribute into an HSA.
Now, if you are eligible to contribute to your HSA, it usually makes sense to do that versus contributing to an FSA where the funds must be spent by the end of the year.
I currently have an HSA through Aetna with VERY ERs on their limited number of funds. I would like to switch to a new HSA. I live in California which is one of the few states which does not exempt earnings from state taxes. I would like to invest in a high quality TIPS fund for my HSA in order to make the earnings tax free in California. Any thoughts on which HSA administrator would be the best for my circumstance?
Thanks!
You can easily do that through HSA Bank just by buying a TIPS ETF. I can’t recall if HSA Administrators offers the Vanguard TIPS fund as well, but I’d check into that if you don’t like HSA Bank for some reason.
HSA Bank experience: Recently set up and funded my account in a one-time deposit in order to get it invested and working for me as soon as possible. Then I sat by for two weeks as it just sat there because HSA Bank had “set up a new online system.” Called a handful of times to see when their system might be back online in order to initiate my Ameritrade account. Twice told it would be the next day, then the next time I called, I was told I had been told the previous time it would not be for another 1.5 weeks (which was untrue). I feel like some of my frustration could have been prevented if someone would have been honest and up front with me from the start. Customer service representatives certainly not helpful, or not well informed; unsure of which. Will certainly not recommend to colleagues or other solo practice physicians. There are lots of HSA services out there, I would recommend another which is better run and more reliable.
Thanks for sharing. Sorry to hear about your experience. I haven’t had any of those issues with HSA Bank. You might try Health Savings Administrators.
Hi, I’ve been researching HSA and stumbled upon your blog. So informative, thank you! I’m brand new to HSA. I’m looking for an HSA bank without the need for investment at this time. I was wondering if anyone has heard of Inland Bank or American Midwest Bank. These banks were mentioned from one of the comments on an online article I was reading. These banks offer free HSA. What about SelectAccount? Thanks in advance for any input!
I haven’t heard of those but wouldn’t be surprised if they offered a reasonable savings rate and low fees. A quick Google search ought to find the terms for those HSAs.
“Another nice thing about Health Savings Administrators is that they allow you to pay the yearly fee out of pocket, so it doesn’t have to come out of your HSA investments.”
Is that a tax deductible expense, like often admin fees are in a retirement plan?
Should be. It would be best as a business expense (Schedule C), but you could lump it onto Schedule A subject to the 2% floor.
Great information and suprisingly difficult to find online. This will be my fist year in a HDHP plan and I am excited at the opportunity of opening an HSA account. After reading the entire blog there seems to be several HSA administrators standing out: HSA Bank, Health Equity and Eli Lilly.
White Coat, I realize this is a bit of a moving target, but as we stand today, what company would you recommend for the lowest fee’s and best investment options? Thank you in advance–
I’m curious of this as well. I’m one of those that moved from a local bank with essentially no interest rate to HSA Bank. I keep the $5,000 in the bank and invest the rest in a TDA no-commission ETF, specifically VTI. I pay no fees, no commissions, no nothing aside from expense ratio on the ETF. I guess you could say my fee is having to leave $5,000 earning below inflation.
I decided against jumping ship for Eli Lilly when they showed up as the new game in town and clear winner. I’m glad I did, because they started changing their terms.
Another great source of information and an update on Eli Lilly, I would suggest you also check The Finance Buff’s posts on the topic. Here is the latest: http://thefinancebuff.com/elfcu-adds-monthly-fee.html
It would be worth adding Saturna to your list of possible choices.
I actually just starting investing the $5K this year. I figure I’m likely to do better than $3 a month on that over the long term.
I’m very happy with the HSA Bank/TD Ameritrade combination.
First, love the site and book. Finished reading it a couple months ago and now recommend it to all my co-residents. I’ve read this current post in its entirety. Few questions.
1) For 2014, I was on three separate health plans. One while I was a fourth year med student, another short term bridge insurance with high deductible, and finally a third under my wife’s plan now that I’m an intern in a new state. Not all of the plans were considered high deductible (the 5 months on short term bridge was). Am I able to fully contribute for 2014 to an HSA account or will I only be able to contribute a portion of the maximum given that I wasn’t high deductible for the entire year.
2) Regardless your answer to above, I will be contributing for 2015 as a first time HSA participant. Reading all your posts above it seems like there’s been a lot of discussion as to that best way to go. If I’m reading it correctly and you were in my position, you would:
-Max out HSA at HSA Bank (as opposed to other companies cited in above posts)
-Put all the money into investments and not keep the minimum 5K in savings, essentially sucking up the $36 administrative fee (I think that’s a change compared to what you said originally).
-Invest everything in TD Ameritrade’s “Vanguard Total Stock Market Index Fund ETF Shares” (VTI)
Did I miss anything or would you do something different? I’m looking to take care of this in the next week or so and just looking for the final recs from a seasoned pro 🙂
Thanks again and congrats on the proceeds from all your hard work at WCI.
1) It’ll be a little complicated. If you end the year in a HDHP that you were in by DEcember 1st, you can make a full HSA contribution. However, if you don’t, your contribution gets prorated by the number of months you were in the HDHP.
2) Do you have a HDHP for 2015? If not, you can’t do an HSA for 2015. But yes, that’s what I’m doing with my HSA. If you plan to spend your HSA money any time soon, you shouldn’t invest it into stocks. And yes, that is a change from leaving $5K at HSA Bank to minimize fees. Nothing special about TSM. A more diversified approach may be completely appropriate, but obviously be a little more complicated. But given no commissions on Vanguard ETFs you could do some TISM and TBM too if you wanted.
Unfortunately, I was not in a HDHP on December 1st (just started reading about HSA accounts this month). I was only in the high deductible category for 5 months during my short term interim insurance period. I suppose the best bet is to call HSA Bank directly and tell them the situation and they should be able to tell me how much I can contribute. Unless you have another recommendation of whom to contact.
As for 2015, I just switched my enrollment a few days ago to a higher deductible plan that hopefully should qualify (deductible is now 4000). However, the “out of pocket network” is 13200, which appears to be above the 12900 I read about online. Any idea how strict they are in regards to this out of pocket network clause? If they’re strict with it, my health care offerings wouldn’t let me qualify (despite switching to their highest deductible plan).
And yes, I’m only 27 so hopefully this money will not be used anytime soon.
Thanks.
You can calculate it. It sounds like $6550*5/12 to me, but you were a little vague about how many months you qualified for an HDHP. I’d also have to look up the deadline for contributing to an HSA. It might have been year end, so you might just be out of luck for 2014.
The plan must be qualified as a high deductible plan. Most that are are labeled as such (HSA plan, or high deductible plan etc). Just ask the company- is this a qualified high deductible plan?
As a former stockbrocker, investment specialiest and financial planner in both the commission based and fee based worlds who has been out of that business for a long time, I will say this to many of you:
Stop quibbling about the setup and maintenance fees and go ahead and set one up. I found out about these yesterday, found this blog sight last night, searched the no-load fund companies with no luck, went to both Bank of America and Wells Fargo. I selected Wells Fargo because that guy knew how to set it up so I could make 2014 deductible contributions as well as 2015. (This is Jan 21, 2015). That’s $6,000 (one for me, one for my wife) I just deducted from my 2014 income. I just saved another $2,000 in taxes.
This is going to be like IRA’s in the early ’80s. Nobody cared besides the banks until the mutual fund companies figured out that there was a lot of accumulated money to be rolled over after they had been around awhile.
With Obamacare (excuse me, the ACA) almost every self-employed person qualifies, plus all those small business employing less than 50 people. After the average account balance starts hitting $15 – 25,000, the Vanguards, Fidelitys, and T Rowe Prices will be all over this and you can transfer your money then via rollover.
But get it started now.
Just my .02.
Agree that any HSA is better than no HSA. You know you don’t get an HSA for you and one for your wife, right? It’s just one.
I agree with you on the similarities between IRAs and the evolution of HSAs. We are seeing a lot of transfers from the banks to investment HSAs. I was disappointed that you didn’t stumble upon the link to HealthSavings when you visited the Vanguard site. We offer a selection of Vanguard funds and don’t require that you keep a balance in a checking account prior to investing.
You learned about them yesterday? And now you are telling us all to run and gobble them up? Welcome to the party, former “stockbrocker” “specialiest”. You may want to check the limits on individual vs family. Fees do matter to most of us too.
Thanks for your input. Last year was my first year with a HDHP and my first year contributing to an HSA.
I can’t tell you how displeased I’ve been thus far with the process (on account of my HR department and HSA Bank)
– took forever to get HR to contribute $3300 in one lump sum as opposed to distributing it over a year’s worth of paychecks
– HR forgot to stop contributing $3300 so now I’ve overcontributed for 2014 and will face the excise tax
– HR can’t figure out how to increase my contribution to $3350 for 2015
– HR has some weird setup where they continue to withhold $3300 in pretax money with each paycheck and then offsets it by giving me $3300 in aftertax money, looks like I’ll be owing more in taxes than anticipated by the end of the year
– And now HSA bank has decided to make random transfers over to my TD Ameritrade account so once again I am under the $5000 limit and am subject to $5.50/month in fees ($2.50 to service the account, $3 to be able to invest)
All small things in the grand scheme but what an unbelievable amount of ineptitude displayed by both parties in running this account. Almost made me wonder if I should just close everything and switch back to a regular health insurance plan but since everyone here seems to be so enthusiastic about the usage of the HSA as a Stealth IRA, I guess I’ll suck up the service fees for another year and see how it goes.
Sorry to hear about all that. It does get more complicated when you have an employer involved. I luckily don’t have to deal with that. The downside, of course, is that I have to pay payroll taxes on my HSA contributions, and you probably don’t.
Darren,
It sounds like your HR could use some training. Sorry.
My employer pays more than 25% of the HSA max as a wellness incentive.
It obviously varies a lot.
Thanks, at what point would you guys say move on?
I can’t get HSA Bank to respond to me via email or via phone (I just get put on hold for 30+ minutes at a time) about these erroneous transfers. Seriously, what kind of bank just randomly transfers money out of people’s accounts?!
Transfer to another HSA provider? Just shut it down? I don’t anticipate needing the money for medical purposes, should I just cash out and allocate more into my taxable investing account? Thanks!
Whether you change or not, you’re going to have to work with HSA Bank to get this mess straightened out. My second favorite is Health Savings Administrators. You might try there.
Agree that an HSA is better than no HSA too. But I don’t think it’s trivial in trying to find the ideal HSA administrator, especially as new ones come and others change their terms. You’ll find after spending more than a day on this blog and others like it that many people posting about HSA administrators are comparing what they already have with what might be out there today. And this discussion leads to newcomers being able to quickly reference this discussion to make their own choices. I’m surprised you went with Wells Fargo, but to each their own.
Regarding your ability to contribute for 2014, you had to have a HDHP in place at some point in 2014, right?
Sorry, meant to reply to Jim Adams.
I’m planning to enroll in a HSA with my future employer. They use HSAbank. I’ve been given a list of 20+ Vanguard No Load Mutual Funds ranging from low to high risk. Can divide investment across 4 funds. Do most take high risk selections?
I don’t know what most do. I’m 100% stock in my HSA because I don’t plan to use it for a long time and that was the simplest solution and it’s only a tiny chunk of my entire portfolio.
Regarding you comments about employees making sure to have your employer send the money directly to avoid payroll taxes, does this still apply if you would max out SS tax anyway?
You never max out Medicare of course. But yes, if you’re going to max out the SS tax, no savings there.
Great post and great website, White Coat Investor! Thank you for all of your help. I am setting up an HSA now. Do you still feel HSA Bank is the best choice? And I’ve gone to the HSA Bank website which links to the TD Ameritrade website, but they don’t list the investment options available …. is there a link to see which Vanguard ETF’s are offered from HSA Bank/TD Ameritrade? Thank you for your help and your time! Jim
You can buy any Vanguard ETF at TD Ameritrade. It’s a regular brokerage. Plus you get over 100 ETFs without a commission:
http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
That list includes 6 Vanguard ETFs. They’ve got a bunch of commission-free funds too. I don’t recall if I’m paying a commission to buy Vanguard TSM there or not, but I only do it once a year, so even if I do pay, it’s not a big deal.
And do you still feel HSA Bank is the best choice? Thank you!
I’m still using them and haven’t heard of anything better. HSA Administrators also very good. If all you want is a savings account, there are some better choices too.
Has anyone had any experience with USBank? I actually had an HSA account with them that was funded by my hospital during residency. Now, I’m looking for my own personal HDHP and wondering if I should stick with USBank or switch to one of the other ones that I’m hearing more about (e.g. HSA Bank). Thanks.
Great advice here. I’m new to being offered the HSA. The options are very dismal considering I will start with about $70 from my first paycheck deduction. We don’t get bulk options. I’m going to lose 5% to fees every month while I try to ramp up to the $5k threshold where the fees go away over the next 3 years. Quite discouraging starting out.
Question on the contribution limit– is it per plan year of the hsa or per tax year?
While my HDHP starts 7/1, I’m currently in an FSA that needs to fully expire before i can contribute to an HSA, and that isn’t until 10/15.
So, can I fund all 3350 for 2015 in the last 2 months of the year? or should I just set up my semi-monthly paycheck (24 a yr) to pull 3350/24/2= 69 and change in to it from the start?
whhoops, ignore that last /2.
Why are you losing 5% to fees? You know you don’t have to use your employer’s recommended HSA, right?
I didn’t realize that HSA plan years were different than tax years, so I don’t know the answer to that one.
Yes, you can fund the whole thing in the last 2 months. I fund my entire HSA on Jan 2nd. Be aware, however, if this is being done with automatic paycheck withdrawals, there is an additional benefit- no payroll taxes on the contribution.
Thanks for the reply.
My employer told us to find our own and offered no guidance at all! That’s how I ended up here, trying to research where to set it up. I’m choosing HSAbank after much research and a lot of it from this thread.
The 5% figure I came up with is from the $2.50 fee per month. If i only fund it $69 a paycheck, and lose 2.50 of it, that hurts. But that math was wrong, I will be funding it $139.50 a paycheck to give me 139.50*24 = 3348 a year put away, just about the max. so its most like 1.5%. I am not given the option to lump insert (through payroll), just a standard contribution per check.
The first year will be pretty bad fee wise, but once the balance ramps up, it should provide a good savings benefit and i’m in it for the long haul.
You can lump sum contribute, just not through payroll, if you have $5K to put in.
Man, my math is awful. It should be 139
Do you have an opinion on SelectAccount? Seems like they have better interest rates while still offering good investment options and low fees
Never heard of them, but it sounds like you’re doing the evaluation right.
I don’t see where they list the mutual fund options (and their expense ratios) that are required for accounts with less than 10k. I also don’t understand how much of the account can be invested in the brokerage account if you do have $10,001. Just a dollar or most of the 10k?
For Select Account, with a > $10K balance, all but $1000 can be moved to the self directed brokerage account.
Question: If I wish to rollover my HSA from one provider (HSA1) to another (HSA2), and I have part or all of my funds in one or more investments offered through HSA1, how do I do the rollover of the non-cash investment portion of HSA1 to HSA2?
Must I first liquidate all my HSA1 shares to its cash account? What if HSA2 offers some or all of the same investment funds in which my HSA1 investments were in? Can I keep those shares intact/unsold during the rollover?
Thank you!
I think you have to liquidate it. Not a big deal since there are no tax consequences, but possibly some commissions and of course bid/ask spreads.
Thanks for the reply. Follow-up question:
If I understand correctly, the differences between a Transfer versus Rollover, is that a Transfer is done directly between HSA1 and HSA2 (often with an associated “transfer fee” assessed by HSA1 and/or HSA2), whereas with a Rollover, I withdraw the money myself from HSA1 (in my case to my checking account setup for my electronic contributions and withdrawals), then write a check to HSA2 to fund the HSA there, making sure to check the box on HSA2’s application designating it as a rollover and NOT as a contribution for the current tax year.
I have read the fine print @ HSA1 (Fifth Third Bank HSA, in my case). In its fee schedule, it has a $25 “Account Closure Fee”, and a $25 “Outgoing Rollover Fee”. It states that “Fee is charged and deducted at the time the account is closed/rolled over to another institution. Any account with no transactional activity within 180 days of account opening will automatically be closed. Any account maintaining a $0.00 balance for 16 consecutive months will automatically be closed.
The fee will be the lesser of $25.00 or the remaining balance in your account at time of closure/rollover request.
If I fund HSA2 via Rollover, could I possibly avoid the Closure Fee fees by not officially closing the account but leaving $0 balance in it?
And, regarding their $25 “Outgoing Rollover Fee”, how would they know that I am doing a rollover if I would be withdrawing all the funds into my checking account? Perhaps what they are referring to is actually an outgoing TRANSFER fee?
Thank you again!
Yes, they probably mean a transfer fee. I’d call and ask when they assess the $25 fee, but I’d plan on paying it.
I’ve been following this thread for about the past year because I knew I would get to this point where I am today of needing to select an HSA provider.
In my situation I think I feel most comfortable just leaving it in cash for the first year and maybe even the first two years because I really need to determine the amount I am going to use an medical expenses which of course is not the plan (the plan is to use it as an investment vehicle) but in my situation that is just something that is going to have to be determined.
So I am looking for a fee free provider, and looking at this thread it seems to be that there are two good options:
https://www.bmoharris.com/main/personal/checking-accounts/hsa#page=page-2
and
https://www.selectaccount.com/products/hsa/
and I believe that SelectAccount is better because there is no “closure fee” (unlike BMO Harris) which is what I might encounter in 1-2 years when it comes time for me to ” invest” rather than keep it in cash, and that is assuming I don’t like their investment options at that time (which may unnecessary if they have something like Vanguard total stock market index fund).
Just wanted to share this with anyone in a similar situation, and of course to confirm you guys don’t mention something to the contrary before I pull the trigger. Thanks as always
If you’re going to leave it in cash, I’d find whoever is paying the highest rate on cash. My quick Google search shows Lake Michigan Credit Union is at the top of the heap with 2%. Why not go there?
Per this:
https://www.selectaccount.com/wp-content/uploads/F9650-Individual-HSA-Pricing-Sheet.pdf
the no-fee option at Select Account pays 0%.
That makes sense, glad I asked, I was considering only the closure fee.
I had a terrible time with HSAdministrators HSA plan, so I went with Well’s fargo. Their website was down for 1 month when I was trying to start an account and service over the phone was very poor.
I didnt want to trust them with my money based on that experience.
So I cautiously went with Well’s fargo HSA- they require a minimum of $1000 available in cash, and everything over that can be invested. For balance less than $5000, there is a $3/mth fee.
I looked at their mutual funds, and invested 100% of my money in WFAF INDEX FUND ADM
Expense ratio is 0.25%, but that is ok – I do my banking through WF and I do not plan to use this money till I retire.
Did you look at HSA Bank? Better investing options than that fund, similar fees.
I haven’t yet. I look at it today and see if i want to roll over the HSA
Been scanning through this article and thread looking for some insight into what to do with my HSA. I started one quite a few years back (2005 or so) when I had a HDHP. After a few years I qualified for insurance through my union, and have been covered ever since. With only $3600 in my HSA, I haven’t made any contributions since it was started, as my union insurance is low deductible. As I understand it, I don’t qualify to make contributions to to my HSA with my current insurance.
A few years ago Chase started charging a monthly fee, and then recently stopped handing HSA accounts all together. HSA Bank took them over, continuing to charge a fee. I feel like I’ve got this cash sitting in limbo, slowly dwindling away with fees and inflation.
My questions are:
1) What do you recommend I do with such a small sum and no ability to add to it?
2) Should I move it to a no fee provider with essentially no interest? (i.e. my Credit Union, or online bank)
3) Should I maybe consider an investing option? Or is the sum too low to make it worth the fees? If it IS worth it, who offers the most cost effective investment solution?
Appreciate any insight!
1) Either spend it on health care or move it somewhere (HSA Bank let’s you go to TD Ameritrade) and invest it.
2) If you’re not going to invest it, and it’ll take you a while to spend it, then sure. But I think the HSA Bank interest will pay the fees, no?
3) Sure. TD AMEritrade. They have an agreement with HSA Bank.
Thank you for this article. Based on this, we set up with HSA bank in October. Though in the long run it’ll work out, I had a terrible experience getting set up. Just anyone wanting to set up that does your own HR (we’re small medical group, I do most this stuff for all of us), it took 2 mo to get someone to get back to me with enrollment forms. I got forms sent to me with minimal to no discussion/explanation. It was like I was waiting in line to buy groceries, not like they were trying to encourage me to use their service.
I got a login to the employer website with no orientation or guide on how to use it.
And to run my first set of contributions I had to go back and forth with the “[email protected]” email address (different people each time) to figure out how to do everything.
Then I made a mistake and last month deductions were run twice and it’s 3 weeks to get my money back. I realize it’s my mistake, but it’s frustrating that I’ve kind of been left on my own to get his done and figure it all out.
I am generally very efficient at this stuff, in this last year have set up group health, disability, term life, 401k, and now this for my group. I’ve really not had this issue with any of the other companies.
Sorry to hear about the lousy experience. To be sure, I haven’t done this for a business, just for myself, and found that pretty straightforward. There are certainly other companies out there doing this for businesses, and I wouldn’t be surprised if their customer service were better. But I’m not sure the price would be so low and the ability to invest would be so good. Maybe you get what you pay for in that regard.
No apologies needed, thank you for the review article. I think in the long run (cost wise) HSAbank is still the best option. I was just surprised by how little up front help there was and was so busy with other things I didn’t notice until all this money was being withdrawn unexpectedly (my own mistake with how I set up contributions and I’ll be getting a check back now that it’s sorted out). I left the comment for anyone setting this up for their businesses to make sure they get help (if you can!) with setting it up at the beginning.
I’ve had an HSA with HSA Bank, established the first year they became available. I’ve found their customer service and website below par, but I deal with them once a year: I make my full contribution Jan. 2, then transfer it immediately to TDA. In the past, I was able to schedule my contribution in advance. It looks as if their most recent website redesign will not allow me to schedule a contribution for 2016 until we are in the new year. One more minor inconvenience, I guess, which pales in comparison to some of the mistakes described above. I am in the process of transferring most of my retirement accounts over to Fidelity, and now that they have their HSA program set up and running, I won’t hesitate to include my HSA account in the transfer.
I only interact with them once a year too. Haven’t had an issue so far.
Do you have more info on Fidelity’s HSA? Last i looked it was corporate only. ie, an HR rep for a company could establish one for payroll, but there was no individual option.
I believe you are correct. I initially just did a cursory search inside Fidelity and found several hits, but I didn’t read the fine print. I have a call in to my rep to confirm that no individual HSA is currently available, and will post back if that is incorrect. Good catch!
I am also using my HSA account as a stealth IRA. I have no need for cash in the HSA account, want to maximize the amount I can invest, and have a 20+ year horizon before retirement.
I’ve debated between Select Account and HSA Bank. I see an advantage of Select Account over HSA Bank but wanted to see if others would share the same analysis…
1. With Select Account, I only need to keep $1,000 in cash and total yearly fees would be $30 ($12 maintenance fee for ThriftSaver option and $18 investment fee). However, with HSA Bank, if I only kept $1,000 in cash, yearly fees would be $66. With a balance over $5,000, HSA Bank will waive all fees but would prevent an additional $4,000 from being invested on the brokerage side. So, the $30/year (or actually $34/year if I factor in the $4 of lost interest with HSA Bank on the extra $4,000 in cash) total yearly fee with Select Account allows me to invest an additional $4,000 on the investment side of things. My annualized ROI on the extra $4,000 invested with Select Account/Schwab would have to only exceed 0.85% to break even with the Select Account fee and lost interest on the $4K. I see any annualized ROI above 0.85% as a clear advantage of Select Account over HSA Bank. I would think that exceeding 0.85% on an annualized basis over 20+ years would be a given if invested using disciplined and generally accepted investment strategies.
2. Select Account allows you to trade using a Charles Schwab account and HSA Bank allows you to use a TD Ameritrade account. Both are self-directed. So, for investment options and expense ratios, this is a wash. Caveat: Schwab account can be opened once the investment funds are over $10K which is easily achievable after 2 years of contributions.
So, assuming I have at least $10K on the investment side, I have no need for a cash balance in my HSA, and I have a long term horizon, I believe Select Account is the better choice over HSA Bank. I would appreciate any feedback on this analysis. Many Thanks!
I read your facts and arrive at the opposite conclusion. I see the following advantages of HSA Bank:
1) Can invest from the time you make your first contribution. No waiting for $10K.
2) Vanguard ETFs are free at TD Ameritrade, but not Schwab. (Trust me, I know as I use both- TD in my HSA and Schwab in my 401(k)) Add at least $8 a year to your fees, more if you use any kind of complex asset allocation.
3) Select requires $30 in fees. You can totally avoid those at HSA Bank if you really want to.
4) $66 on $5K is just over a 1% return. Not much of a trade off to just invest the whole thing. Meanwhile, at Select, you have to pay $30 even if you leave them $1000.
5) Neither of them pays any kind of decent interest rates. If you really want your HSA in cash, might as well go elsewhere. These options are both for people who want to invest their HSA, and for the person who wants to do that, I think HSA Bank is the better deal.
Thank you for your quick reply and thoughts.
Although I do favor Vanguard ETFs, I found that Schwab offers commission free trades on many of its in-house ETFs that track very closely with their Vanguard counterparts and have similar (and slightly lower) expense ratios. For my purposes, I would consider this a wash (although I know this is debatable due to the increase bid-ask spreads and lower volumes with Schwab ETFs compared to Vanguard ETFs).
For my analysis, I have assumed that I am starting with over a $10K balance so there would be no waiting in the scenario I presented.
I did error in my analysis in that I didn’t take into account that I could have a cash balance with HSA Bank at near $0 (by leaving just enough cash to pay the monthly fees). This would allow for close to an additional $1,000 to be invested than compared to the Select Account.
I now do see HSA Bank as the better option because the compounded ROI from the additional close to $1,000 invested will likely outpace the slightly higher HSA Bank fees in the long run.
Thanks again for your time!
The Schwab ETFs aren’t bad, but I do prefer the Vanguard ones.
I transferred from a local bank’s HSA to HSA Bank mainly because of its superior investment options. I would echo some of the previous negative comments regarding their customer service, as I had some delays in setting up the account and receiving initial documents.
Sometimes I feel like their customer service reps could use some additional training.
WCI, I have a question: Since you are leaving $0 in the cash account and investing 100% via TD Ameritrade, how are the monthly Account Maintenance Fee of $2.50 and Investment Fee of $3.00 paid? Does HSA Bank liquidate $5.50/month out of your TD Ameritrade account?
They will liquidate it out of the TD Ameritrade account, first the cash then by selling shares, but I’ve left $30-50 at HSA Bank each year to avoid the issue.
Has anyone heard of optum bank? This is the first time Ive been able to use an HSA. Im not really sure about how I want to use the account, although I think I will eventually be headed in the direction of using it as a stealth IRA (FYI I know almost nothing with regards to investing). Any advice would be helpful.
I prefer HSA Bank/TD Ameritrade due to the slightly better investing options. Here are Optum’s:
https://www.optumbank.com/individuals-families/how-to-invest-with-hsas/mutual-funds.html
It’s not terrible. There are three admiral share Vanguard index funds there. You could do far worse. The $3 a month fee is similar to HSA Bank although they require you to keep $2000 in there, not sure if that means in cash or just in the total account.
My family will be moving to a HDHP on March 1. I may or may not remain with that plan for the entire year depending on whether or not my wife starts working (she works in education and they typically have superior insurance). I would like to contribute to an HSA while we are on the HDHP, but wanted to know if there is any penalty to contributing to an HSA if you don’t keep your HDHP for the year?
Yes. It’s not so much a penalty as an overcontribution. Details here:
https://www.irs.gov/publications/p969/ar02.html#en_US_2015_publink1000204045
It’s all about the “last month rule”.
Yes.
HSA bank has terrible customer service. They changed to a debit card with a chip, that our medical supplier for insulin pump supplies is unable to process so every time I need to pay a bill it’s a huge problem. I call customer service and it takes forever to sit through their stock repertoire of soothing platitudes before anyone actually addresses the problem, and then about four out of five times the answer is “we can’t do anything about that.” It’s always someone else’s problem. They put holds on my money and keep it tied up so it’s even harder to access in order to purchase insulin. I have NEVER had a good experience with them and will be contacting my employer’s Benefits office first thing Monday morning to close this account and make other arrangements. I just now wasted another hour arguing unsuccessfully with them about making my money available so I can purchase vital medical supplies.
If the debit card doesn’t work, why not just put it on your credit card and then reimburse yourself from the HSA?
The main benefit of HSA Bank as near as I can tell isn’t on the spending side, it’s on the investing side. I’ve never actually spent any money from mine.
My company uses optumbank for their HSA. You previously thought it wasn’t such a bad place to hold money, but thought HSA Bank was superior. I inquired about using HSA bank instead and was told I could do that, but would not be able to make pre-tax payroll contributions to HSA Bank. I would have to fund it post-tax. When you make a post-tax contribution to an HSA, are you able to get back all the taxes paid on that money (SS, medicare, local)? Am I better off sticking with payroll deductions to optumbank, vs post-tax contributions to HSA Bank?
The payroll deductions will save you payroll taxes. You would save the income taxes either way. You can just use Optum and do a rollover to HSA bank once a year, no big deal.
You can claim the post tax contributions on your 1040, but that only covers fed. Fico adds up to 7.65% and you will not get that back if you go in on your own after the fact. So, it’s worth it to use your work’s provider.
You can move like WCI suggets once a year.
Looks like you have VFIAX as an option in optum. I’d probably just dump it all there. It’s not VTI but it’s an agressive fund with the lowest ER .05 around. In my opinion, it’s not worth the hassel of managing 2 accounts and moving money around to save literally a few bucks.
If you have a 5 basis point broadly diversified index fund in it, I agree I’d probably just use that. You can roll it to HSA Bank or similar if you ever leave that employer.
I would like to steer everyone away from Health Savings Administrators. Not only are their fees ridiculous but they make you fill out a from and mail it in to close your account. Talk about a bunch of scammers.
DON’T USE HEALTH SAVINGS ADMINISTRATORS!
What fees do you view as ridiculous? What is the scam? Having to close the account in writing?
Im finally starting an HSA account, and have previously asked about where to fund it in another thread (but this thread seems more recent/relevant). My work offers an HSA through Benefit Wallet, which after 1000 dollars allows you to invest in their select funds. While they do charge maintenance fees, they are all paid for by my employer so their effect is negligible unless I leave my employer. Although most of their funds charge a high ER, one of their funds is Vanguard Total Stock Market (VTSMX), with an expense ratio of 0.17 (the index fund, not an EFT). I was initially going to set up an account at HSA Bank and direct my employer to deposit money there, but then they will not cover any fees (which I believe will be around 60 dollars a year until I hit their minimums).
Since I will just be starting off , I think Benefit Wallet might be the better option for now, until I amass enough assets to make switching worth it. Here’s my thinking:
As a single person, I will only be able to invest 3350, which my group’s payroll does over each paycheck, and not as a lump sum. Once I hit the 1000 dollar threshold to invest via BenefitWallet, I will direct all of the future investments to go into the VTSMX. This has an ER of 0.12 more than a Vanguard EFT would (0.17 vs 0.05) if I invested in HSA Bank, but without any of the maintainence fees (bc my employer pays them). I also dont plan on needing to pay any other fees because I am using this solely as a “stealth IRA”. But considering HSA bank would cost me ~60 per year vs. nothing for BenefitWallet, I would need about $50,000 in my account before the difference in the ER covers the fees for each year ($60/0.0012) . For the first year of investing $2350, the cost of an ER of 0.12% more is only $2.82. Therefore I think it’ll be best to invest in VTSMX via benefit wallet, and once I get a balance high enough to be worth it then switch to HSA Bank, or if I leave my employer (and then get subjected to paying for the management fees of Benefit Wallet) switch over then. I mean $2.82 in “lost fees” due to a higher ER is better than $60
-Any thoughts?
-Is my math accurate?
Thanks to everyone who posted above for your insight.
Sure, if they’re going to pay the fees, it will be worth paying a slightly higher ER for a while
The new fees for optum are .03% per month on invested money with a max fee of $10 per month. They offer more vanguard funds now. Also the minimum to avoid 2.75/month fee is $3000 in savings.
For HSA bank
Just to be clear if I keep 5000 in savings with HSA bank the the only fee I pay per year is the 25 dollar transfer fee if I do it all at one time to td?
Is HSA bank still better than optum?
I think HSA is better. I think I pay something like $60-80 a year without leaving anything at HSA Bank (all invested at TD Ameritrade). That sounds like less than $10 a month.
I leave exactly $5000 in cash with HSA, and my fees for the year total zero. I consider this part of my cash allocation across my total portfolio. I don’t pay anything for transferring funds into TDA, which I do once a year shortly after I make my contribution in January. The one potential downside of using HSA Bank is their customer service, which many have complained about. Since I haven’t had the need to contact them about any issues yet, I can’t comment one way or the other on that subject. Hopefully, by the time I need to access these funds, they will have their act together.
Hi, I am starting an HSA this month and will be able to contribute up to $373.00 per month through payroll. I’d like to invest rather than spend the cash. I don’t have $5000. to invest right off the bat, or even the $3350.00 max yearly contribution. Should I go with HSA Bank, and immediately invest in a low fee mutual fund? If so, which mutual fund do you prefer? Thanks, Jodi
HSA Bank is a good choice for someone who wants to invest. You might also look into Saturna which recently lowered fees. Any broadly diversified mutual fund is probably fine. I use the Vanguard Total Stock Market fund. But if you might actually need this money for health care expenses in the next few years, a balanced fund may be a better choice.
It looks like Saturna is fee free if I choose one of their proprietary mutual funds. Would you by chance know which of their products would be close to the Vanguard Total Stock Market Fund? Thanks, Jodi
I don’t know much about them. You might want to ask The Finance Buff. He just did a post on them. But his suggestion was buy Vanguard funds there and pay a fee to do so. If you only do it once a year the fee is less than HSA Bank’s monthly fees if you don’t want to leave $5K in cash.
Jodi, I started much like you with no initial bank roll to put in and payroll limitations on contributions being spread throughout the year with no real easy way to get a lump sum in mid year for catch-up. Being single, the $~138/pay period was going to lose a few percent off the top every month just for having it placed somewhere. I’m not a doctor like most folks here but do make an above average salary in my IT world and have found this place to be offer some sound financial advice.
I ended up going with HSABank because I plan to back-door it for triple tax advantaged savings rather than medical expenses (I effectively have none right now). Plus, it’s a division of Webster, which has about 30 branches in a 10 mile radius of me, so if i ever needed to go in face to face, I felt more secure with that than some “GiveUsYourHSAMoney.biz” that I never heard of before.
After a few months of paying in to the cash account only, (~$500) i ‘bought’ the rights to use TD for trading. I enrolled in the 0 fee trade plan. I moved $400 over and bought 4 shares of VTI (at the time, it was $98.xx)
I then set up monthly automatic transfers of $200 from HSA to TD. Since this is only about 75% of my monthly contrib, this will allow my cash/checking side of the house to grow over time and eventually get to the 5k threshold– OR, act as short term cash should I need it for something major (snowboarding crash maybe? I’m mid-30s and pretty healthy) that I don’t want to pay for out of pocket. My HSA has a $1500 ded and 3k max year OOP so it’s a pretty good plan and keeping 5k off the bat for medical was not a major concern to me.
In the meantime, my brokerage account will continue to grow and the goal is for the gains to offset the costs on the <5k cash side of the house.
Once it's at 5k, i plan to roll all funds into the brokerage side monthly.
I check my holdings basically every day, so i don't automate my trades, but if you are less interested in monitoring, I think you can set up scheduled buys in TD as well.
That's what I'm doing, and it's worked out well for me. Good luck!
I’m guessing the fees at Optum bank are different depending on how your employer has set it up with them.
For example, in our plan, we have $0 fee for account maintenance, and $0 for the investment account. You just have to keep $2k in the cash account to use the investment account.
I had to pour over the fine print and triple check it to be sure, but it is indeed $0 fees for our plan through our employer.
I guess the only cost would be the opportunity cost of the $2k sitting in the 0.2% interest bearing account, but if one is already maxing out your other tax deferment vehicles, this is a no brainer.
Just to add my 2 cents… I think there are really NO great options for HSA’s right now. It is a matter of choosing the least of the possible evils. My wife’s employer uses Optum so I just went through the setup with them.
As posted above it is $2k minimum in cash account to be eligible for investment account. Also there is $3/month charge for having an investment account unless you hit $3k minimum in the cash account, at which point that $3 fee is waived. Also they charge 0.03% monthly maintenance fee on the investment account portion (caps at $10/month).
However on a qualitative note, Optum’s website is terrible. I have literally spent the last 4 hours just to do basic setup tasks because it crashes on most of the links. They have speedy customer service if you call them but still, makes me wary when a bank that is managing my money has such a barely functioning website. Their fund offering is OK and I am not aware of any fees for re-allocating funds. All in all I would not recommend them although the other options out there are not much better.
I hope this thread keeps active as better banks join the HSA landscape.
I think you’re way too negative. I see LOTS of great options. You’re just choosing between good and great and better and best. I mean, your “bad” option is a $36 a year charge? Were you expecting them to do it for free? And you’re complaining about 3 basis points? I mean, take a look at your 401(k). My very good 401(k) either charges 0.2-0.3% or $200 a year. The Utah 529, perhaps the best in the country, adds on a charge of something like 15-20 basis points to the ERs of the funds.
I can’t speak to Optum’s website, but HSA Bank’s has been pretty much flawless for me. I had to call and ask them where a link was once, but I’ve had to do that with Vanguard before too.
I think your expectations are way too high if you think these are terrible HSA options. There are terrible HSAs out there, but I don’t think the ones being discussed are terrible, much less “evil.”
I mean, my latest complaint with HSA Bank was that they didn’t pull money from my MMF at TD Ameritrade to pay their fees. They sent me a letter instead and I had to transfer the money myself. Big friggin’ deal. Meanwhile, I have my entire HSA invested in TSM at 5 basis points all for a fee that totals something like $60 a year. A deal at twice the price.
Fair enough WCI. My comment was too negative. I was fresh off the frustration of Optum’s website and that seeped through a bit too much. Your objective framing of the costs from these vendors is accurate and clearly shows that their fees are reasonable and in line with other larger banks. Still I have found dealing with IRA’s and 401ks much easier (Fidelity, Vanguard, Schwab) especially with regards to their websites. I will give HSA Bank a try based on this post. Thanks!
Here is my situation that I am hoping some of you will comment on.
This coming year I will be able to invest my HSA funds in something a little more aggressive than where it is now, Ally Bank money market earning 1%.
Ally Bank doesn’t have any decent investing products, so I am comfortable switching my HSA to Saturna.
My goal is to use the HSA as an investment vehicle rather than for medical expenses but aside from my 4 months of emergency fund before my 3-month-wait disability insurance policy kicks in, I do not have funds elsewhere to meet the worst-case scenario catastrophic year-end medical expense, meaning that feasibly I could indeed be forced to tap the HSA. Also meaning that the HSA funds should be kept in a conservative environment.
I have decided that a bond fund suits me to invest my HSA money, specifically an ETF (VTIP) Short-Term Inflation-Protected Securities ER 0.08%, no minimum investment
Do you have an opinion on how different VTIP would be from what I currently have, money market earning 1% at Ally Bank? In other words can I expect VTIP to outperform 1%? Of course none of us know the future but I’m wondering if it is even worth the hassle to move my HSA from Ally Bank to Saturna just because Saturna offers better investment options just so I can buy VTIP at Saturna?
But here’s the other part of my issue: I am comfortable considering my HSA as part of the “bonds portion” of my total portfolio. This means that buying VTIP in my HSA will allow me to take the same amount VTIP OUT OF my SEP IRA and put it INTO a (hopefully) higher earning stock fund in my SEP IRA; this amount I am talking about is only in the range of about 3% of the total portfolio, so not that significant but not to be ignored either.
Any comments on HSA funds earning
1% in the money market
versus
VTIP + allowing the same dollar amount to be invested in a stock fund in my SEP IRA.
Thanks
In the long run, I would expect a bond fund to outperform a savings account. By how much? Not a lot. For instance, this year it’s up 1.5% and a savings account is up 1%. Future expected returns from that fund? I would expect – 0.33% real, so in a 2% inflation scenario, something like 1.7% a year.
I consider my HSA a different account from my retirement funds (different goals.) But if you prefer to lump them all together, then sure, it’s fine to put bonds in one and stocks in another. But that works both ways. For instance, you could put the HSA in stocks and if you have to tap it, buy stocks elsewhere and sell the HSA stocks.
The other nice thing about an HSA (assuming you have some other funds) is you can invest it aggressively and if you need to tap it while the market is down, you can just delay the withdrawal by a year or three until it has recovered.
How do you delay the withdrawal, exactly?
You can reimburse eligible health care costs at any time in the future if you save your medical receipts. In other words, if I had a co-pay for a exam last year for $50, I could pay myself back this year, next year, or any time in the future.
I did not know that. Wow, that makes this account even more awesome.
So I can save receipts now as a 30-something and, assuming inflation doesn’t make the reimbursement worthless, pay myself back solely with earnings by leaving it invested for a few years. Incredible.
this may be a dumb question but does it matter tax wise if you contribute to the hsa all at once vs each paycheck? I plan on doing it all at once so I can contribute the full amount to investing immediately -vanguard total stock market- instead of month by month.
Thanks
If your employer pulls it out of your paycheck you don’t pay payroll taxes on it. If you pay it yourself, you do. But whether you make 12 payments or 1 doesn’t matter.
I ran into this PDF today listing the ‘best 2017 HSA providers’.
http://www.investors.com/wp-content/uploads/2017/03/BestHSA032017-1.pdf
nice to see the asset and account numbers.
I’m still with HSA bank.
The usual players on the list. A couple I hadn’t seen there before. Surprised Alliant wasn’t on it. As “savings account” type HSAs go, that’s a pretty popular one. I guess it’s only paying 0.65%. For some reason I thought it used to pay 2%. Maybe they cut the rate.
I wonder what the investing options for Avidia and BOA are.
I was trying to post a chart of BOA’s investments, though I can’t seem to do it and I don’t want to retype it all out. There are over 50 funds – though that has changed as some were closed to new investors and the Vanguard being replaced with Blackrock. I will work on this so I can post it.
My employer is now offering a HDHP for my family so I will be eligible for an HSA. Their carrier is HSA bank, which seems like a great option.
It seems like they use a 3rd party investment company in Memphis that is an “in between” between my employer and HSA bank. I have asked my employer to provide me with their contact so that I can determine if they also skim some from my contributions/charge their own fee. In your experience, would this be common? If they charge something, I would assume I would need to get my own directly through HSA bank?
Thanks.
Yes, check with the employer to see if you can get them to send the money directly to HSA Bank because that will save you payroll taxes. Otherwise, you’ll have to decide if your saved payroll taxes exceed the additional fees from this third party. They probably do, but that still sucks to pay unnecessary fees.
Brian – Thanks so much for posting that. Very nice to have a “at-a-glance”. Some of those those investment thresholds seem really high. They may be offering a better % and a lower monthly maintenance fee than what I’m getting at BOA, but I would rather have more of my money invested. BOA did this month release the only 3 Vanguard funds they had and replaced them with 2 Blackrock funds (same class). Not happy. In addition, BOA lowered many expense ratios on their investments which was a nice surprise, moving them to admiral shares. I’m sure someone in a back room got some kickbacks when Vanguard wasn’t in their new portfolio.
Thanks for all this information. Seems like HSA bank is the clear way to go, but there are not many comments about the Bank of America HSA. Can anyone comment on a comparison of the Bank of America HSA to HSA Bank?
Here’s a nice thread on it: https://www.bogleheads.org/forum/viewtopic.php?t=117644
I think I’d still take HSA Bank, but it does look like BOA is getting better.
http://corporate1.morningstar.com/ResearchLibrary/article/813893/2017-health-savings-account-landscape/
http://www.investors.com/news/special-reports/best-hsa-providers-by-fees-features-and-investment-options/
The second link isn’t as clean as I would want it. I have it all on one page. I like Bank Of America, even for some of its faults. The did finally update their web-site this March / April and looks much better. They have cleaned up or (shorten) their investment options.
We’re just opening up an HSA. Funds will be contributed from the paycheck biweekly. We plan on using it as a stealth IRA. Based on everything above, HSA Bank still seems to be the way to go. However, it looks like they no longer offer Vanguard funds commission-free.
http://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
My preference would be to invest in VTI or VOO. Would you still recommend HSA Bank in that case or go with someone like HSA Administrators, who have commission-free Vanguard funds?
Thanks in advance!
I’m still buying VTI there once a year and plan to pay the $5 commission. But there are other good ETFs if you don’t want to do that.
I transitioned all my VTI to SPTM. Seems others have done the same.
https://www.bogleheads.org/forum/viewtopic.php?t=230074
over the 5 year, they track nearly identically
https://finance.yahoo.com/chart/VTI#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
Not sure it’s worth it to save $4.95 a year. If I were doing more transactions than that, it would be worth considering.
My grandfather used to say “Watch your pennies, and the dollars will take care of themselves…” He retired a multi-millionaire, when $1,000,000 was a lot of money.
Consider the following funds instead: SPTM, SPYD, SPYV, Total Stock Market, S&P Dividend, and Large Cap Value, respectively. All trade commission-free and have extremely low costs.
WCI,
I am just out of residency and have established an HSA with HSA Bank that I fully funded the family maximum of $6,750 for the calendar year of 2017. I have moved the money over to the TD Ameritrade account through HSA Bank in order to invest it. I noticed in this post that you are using the VTI ETF, as it was commission-free when you started your account. It appears it now has a $6.75 commission. I want to invest in something broadly diversified like the Total Stock Market as you have done. My question for you is the following: Should I invest in an ETF like VTI and pay the $6.75 commission or should I invest in a mutual fund like the VTSAX (it appears it doesn’t have a minimum account limit on TD Ameritrade although it does on my Vanguard account)? The mutual fund fee appears to be $25. I would greatly appreciate any advice! Thanks for everything you do!
Anytime I want to add to my Vanguard ETFs, I just call my investment rep. and request free trades. Never a problem…ymmv
I’m still using VTI and paying the $6.95 commission. If you wish to avoid that you could try something like SPLG. https://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
I just started using an HSA after reading your book with my family with a high deductible plan outside of my employer (bc/bs of alabama). my employer doesn’t offer one. how do I have them directly deposit into the HSA? they are telling me that I will have to pay out of pocket then take the tax deduction later. does that sound correct?
Yes. That’s what I do. It’s better if your employer will do it directly (saves you some payroll taxes) but you take what you can get. Be sure you’re not turning down a significant employer subsidy of health insurance just to get a HDHP/HSA.
Check this out before going with HSA Bank.
https://www.youtube.com/watch?v=HGczzlwr9AY