Author Topic: HSA minimum balance fee  (Read 560 times)

ETBen

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HSA minimum balance fee
« on: September 17, 2018, 12:46:16 PM »
I have an HSA from a prior employer. Itís has 4500 in it. The minimum balance to avoid $3 per month fee is 5000.

I canít contribute to it bc my employer doesnít offer HSA qualified plans. 
I canít use it bc my current plan doesnít leave me with many out of pocket costs.
I canít transfer it bc the other HSA banks Iíve found have the same fee.
You can only invest part of it, so it wonít grow to $5k anytime soon.
If I close it out, itís taxed as income with the added penalty.

Is there any other solution Iím not considering? I hate the idea of the fee every month for nothing.

bacchi

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Re: HSA minimum balance fee
« Reply #1 on: September 17, 2018, 01:17:46 PM »
Put it in a Lively HSA and invest it for $2.50/month. Your $4500 should throw off enough yield to make up for the $30/year fee.

Jon Bon

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Re: HSA minimum balance fee
« Reply #2 on: September 17, 2018, 01:28:57 PM »
I have this same problem, frankly I think it is bull-crap as any other account with any other bank is fee free with direct deposit.

Its not very much money in the grand scheme of things, but it def feels like like a shady business practice.  Especially since the money is 'hostage' as you cant easily take it to a different bank. The banks are usually associated with the plans themselves.

If anyone has a workaround or a fee free bank I am all ears.






terran

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Re: HSA minimum balance fee
« Reply #3 on: September 17, 2018, 01:47:35 PM »
+1 on lively. No fees except the one mentioned by @bacchi if you want to invest the balance (and that's taken from a linked bank account, so it doesn't reduce the HSA balance). Investing is through TD Ameritrade which offers some excellent commission free ETFs.

FiveSigmas

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Re: HSA minimum balance fee
« Reply #4 on: September 17, 2018, 01:57:16 PM »
+1 on lively. No fees except the one mentioned by @bacchi if you want to invest the balance (and that's taken from a linked bank account, so it doesn't reduce the HSA balance). Investing is through TD Ameritrade which offers some excellent commission free ETFs.

Another +1 on Lively. I switched mine over this year from another HSA provider, and it was pretty painless.

terran

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Re: HSA minimum balance fee
« Reply #5 on: September 17, 2018, 02:02:45 PM »
Oh, another thing: There's a good chance your provider charges a fee to make a trustee to trustee transfer. If so, you can simply request a distribution to yourself for the full balance and then contribute directly to Lively. Same rules as indirect IRA rollovers: must be completed with 60 days and you can do at most 1 such HSA rollover in a 12 month period (important to note that this isn't a calendar year). You'll need to account for the rollover on form 8889.

FiveSigmas

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Re: HSA minimum balance fee
« Reply #6 on: September 17, 2018, 02:03:41 PM »
I have this same problem, frankly I think it is bull-crap as any other account with any other bank is fee free with direct deposit.

Its not very much money in the grand scheme of things, but it def feels like like a shady business practice.  Especially since the money is 'hostage' as you cant easily take it to a different bank. The banks are usually associated with the plans themselves.

If anyone has a workaround or a fee free bank I am all ears.

I empathise, but have come to accept it as "part of the game". Special interests have paid millions of dollars for special tax carve outs like HSAs, Donor Advised Funds, and the like -- they've got to make their profit somehow. Plus, the number of people investing in these accounts is (I suspect) still pretty small, so the market probably isn't yet big enough for cut-throat competition.

ETBen

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Re: HSA minimum balance fee
« Reply #7 on: September 17, 2018, 02:31:31 PM »
Thanks for the Lively recommendation!  Bc it does feel like Iím being held hostage!

Sibley

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Re: HSA minimum balance fee
« Reply #8 on: September 18, 2018, 07:55:36 AM »
I ran into the same problem. In my case, I had 3 HSAs - 2 prior employers and 1 current. So I moved all the money into the current employer's HSA, which has no fees while I'm employed at least. One acct I'm doing a direct transfer (and paying the fee), one account I did the send me a check workaround and thus avoided the fee.

On the bright side, it also consolidated so I only have one HSA card in my wallet.

Clean Shaven

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Re: HSA minimum balance fee
« Reply #9 on: September 18, 2018, 08:00:41 AM »
PTF. I need to move my HSA too.

Jon Bon

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Re: HSA minimum balance fee
« Reply #10 on: September 18, 2018, 11:27:25 AM »
My issue was I had an HSA, but it had dropped under the balance (5k) when the fee started.  Since then we had picked up my wife's insurance with her HSA. But you cannot combine the too. Luckily she is well over the required minimum and we are drawing down my old HSA as well, so the damage is limited. We are also investing a fair amount of the HSA funds so I am sure that is covering the fees. I guess my point is, the investment gains should not have to cover the fees.

It all just still feels dishonest. So many restrictions on how and when we can use these HSA funds. Turns out there are very few restrictions on how the can charge fees!

Most people are not going to have a >5k balance after a year, so this bank is ensuring itself a fee revenue stream for potentially years. Heck you can only contribute so much in a single year. Optum Bank can get bent.


bacchi

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Re: HSA minimum balance fee
« Reply #11 on: September 18, 2018, 12:12:53 PM »
To clarify, Lively only charges a fee if you invest your funds.

If you use it as a straight up bank account with a (free) debit card, there's no fee.

There are a few other banks that charge no fees but most do.