Author Topic: HSA Fees  (Read 9362 times)

Rollin

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HSA Fees
« on: July 15, 2015, 02:50:12 PM »
The bank that manages our Health Savings Account monies gets 3% to do that.  I think that is not so good and asked if I could take control of the funds.  They said no.

Do any of you have the ability to invest it where you want to?

forummm

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Re: HSA Fees
« Reply #1 on: July 15, 2015, 03:19:24 PM »
I think once you leave that health plan you can roll it over. There are some better online HSAs that have lowish fees. I looked into it once but don't remember the good ones.

MDM

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Re: HSA Fees
« Reply #2 on: July 15, 2015, 04:02:58 PM »
...and asked if I could take control of the funds.  They said no.

They may be correct from a literal interpretation of the question, but see http://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html.

milesdividendmd

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Re: HSA Fees
« Reply #3 on: July 15, 2015, 04:15:44 PM »
My impression is that most HSA's will allow you to roll over most of your balance to another provider.

Each year I roll over all but $25 from Health Equity to HSA Bank.

MoonShadow

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Re: HSA Fees
« Reply #4 on: July 15, 2015, 04:18:51 PM »
Yes, as a matter of law, you can choose which HSA you want to tie to your employers plan.  In practice, the employer is not obligated to do payroll deductions to any other HSA bank other than the one that they have an agreement with.  So if you roll over to another HSA trustee bank, you will have to do all of the deposits & tax deductions on your own, and you have to pay the 7.5% FICA that an HSA typically avoids.  By 3% fee, you mean what exactly?  3% per year of investment balance under management?  That would be awful.

Rollin

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Re: HSA Fees
« Reply #5 on: July 15, 2015, 07:01:25 PM »
Yes, as a matter of law, you can choose which HSA you want to tie to your employers plan.  In practice, the employer is not obligated to do payroll deductions to any other HSA bank other than the one that they have an agreement with.  So if you roll over to another HSA trustee bank, you will have to do all of the deposits & tax deductions on your own, and you have to pay the 7.5% FICA that an HSA typically avoids.  By 3% fee, you mean what exactly?  3% per year of investment balance under management?  That would be awful.

Yes 3% on the balance of $1200, but I just found out that the fee is $3/month regardless of the balance - soooo that could be a big %%

MoonShadow

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Re: HSA Fees
« Reply #6 on: July 15, 2015, 07:10:45 PM »
Yes, as a matter of law, you can choose which HSA you want to tie to your employers plan.  In practice, the employer is not obligated to do payroll deductions to any other HSA bank other than the one that they have an agreement with.  So if you roll over to another HSA trustee bank, you will have to do all of the deposits & tax deductions on your own, and you have to pay the 7.5% FICA that an HSA typically avoids.  By 3% fee, you mean what exactly?  3% per year of investment balance under management?  That would be awful.

Yes 3% on the balance of $1200, but I just found out that the fee is $3/month regardless of the balance - soooo that could be a big %%

Wait, I'm more confused.  So is it a $3 per month flat fee, or a 3% annual fee with a $36 minimum?  Or is it a $3 per month fee and 3% per year of funds?  $3 per month flat fee isn't bad at all, but it's probably just a basic bank savings fund, without access to the stock market or mutual funds.  While 3% per year of total funds invested is a huge fee, and seems rather unlikely.  3% of dividends and gains is more likely, but a strange way to do it.

Mirwen

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Re: HSA Fees
« Reply #7 on: July 15, 2015, 07:19:52 PM »
$3/month is very common among HSAs.  Mine is $1.75 per month with OptumBank.  It's not a management fee, it's a flat fee for having an account.

MoonShadow

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Re: HSA Fees
« Reply #8 on: July 16, 2015, 02:52:07 PM »
$3/month is very common among HSAs.  Mine is $1.75 per month with OptumBank.  It's not a management fee, it's a flat fee for having an account.

I have Optum Bank as well, and they do get something from the mutual fund companies they deal with, also.

Rollin

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Re: HSA Fees
« Reply #9 on: July 16, 2015, 05:24:34 PM »
Got to the bottom of it and if I switch to the option that does not give me any interest my employer will pay the fee.  Wow, now I have a tough decision - get the $3/month fee waived/paid or give up $0.05/month in interest on what started out to be $1200, but is now around $1,085 and pat the $3.  Hmmmm....

While I was at it I asked if they could go back and pay the fees from whence I began (about 3 months) and the lady on the phone said she's request it (as if they do, but just need to ask).

Okay then, $360 saved over ten years!  Oh, but I lost $6 in interest.  Again, hmmmmm.....what should I do : ))

milesdividendmd

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Re: HSA Fees
« Reply #10 on: July 16, 2015, 05:41:59 PM »
Transfer it to a decent HSA, pay the fee (5-$6/month) and plug it all into a low cost index fund.

MoonShadow

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Re: HSA Fees
« Reply #11 on: July 16, 2015, 05:48:12 PM »
Transfer it to a decent HSA, pay the fee (5-$6/month) and plug it all into a low cost index fund.

This, but do it next year.  Choose the interest free method, and roll your funds over each year into a decent HSA trustee, one that will let you invest them.  The original HSA will make you keep a 'minimum' of about $2k in the original account, and they can get away with it.

milesdividendmd

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Re: HSA Fees
« Reply #12 on: July 16, 2015, 05:58:07 PM »

Transfer it to a decent HSA, pay the fee (5-$6/month) and plug it all into a low cost index fund.

This, but do it next year.  Choose the interest free method, and roll your funds over each year into a decent HSA trustee, one that will let you invest them.  The original HSA will make you keep a 'minimum' of about $2k in the original account, and they can get away with it.

I only keep $25 in my "official" HSA each year to avoid the $25 account closure fee!

Rollin

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Re: HSA Fees
« Reply #13 on: July 16, 2015, 06:01:01 PM »
Transfer it to a decent HSA, pay the fee (5-$6/month) and plug it all into a low cost index fund.

I didn't realize I could roll it over.
Transfer it to a decent HSA, pay the fee (5-$6/month) and plug it all into a low cost index fund.

This, but do it next year.  Choose the interest free method, and roll your funds over each year into a decent HSA trustee, one that will let you invest them.  The original HSA will make you keep a 'minimum' of about $2k in the original account, and they can get away with it.

Is there a reason to do it next year?

MDM

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Re: HSA Fees
« Reply #14 on: July 16, 2015, 06:06:24 PM »
I didn't realize I could roll it over.

It would be interesting to understand how the linked article in reply #2 was deficient in explaining this.  Could you elaborate?

Rollin

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Re: HSA Fees
« Reply #15 on: July 16, 2015, 06:09:52 PM »
I didn't realize I could roll it over.

It would be interesting to understand how the linked article in reply #2 was deficient in explaining this.  Could you elaborate?
Fudge - that was yesterday.  How am I supposed to remember what happened back then?  So, I'll go back and read it.

Thanks for pointing that out...I guess I was a little preoccupied with other stuff :0

Edited for profanity :)
« Last Edit: July 17, 2015, 07:44:16 AM by Rollin »

Interest Compound

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Re: HSA Fees
« Reply #16 on: July 16, 2015, 09:41:57 PM »
Saturna is my favorite option:

http://www.saturna.com/individual/hsa/

They charge $15 each transaction for mutual funds, or ETFs. So if you just make a single transaction a year, it's a $15 yearly fee ($10 extra for Vanguard mutual funds, as Vanguard doesn't reimburse them for some random cost I forgot the name of). If you buy an ETF and want to reinvest dividends, that's an additional dollar each time, so it's best to pool the dividends together and combine them with your yearly contribution. No other strings like the other HSA providers which require thousands of dollars in a savings account to avoid additional fees.

pdxvandal

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Re: HSA Fees
« Reply #17 on: July 16, 2015, 11:52:23 PM »
Put 5k in a Wells Fargo HSA and you pay no monthly fee. Zilch.

milesdividendmd

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Re: HSA Fees
« Reply #18 on: July 17, 2015, 12:00:10 AM »

Put 5k in a Wells Fargo HSA and you pay no monthly fee. Zilch.

I assume you mean $5K in their savings account, not invested in the market? 

If so that's a pretty common feature of many HSAs.  If not, and they have low cost index fund options, that's a great deal.

Interest Compound

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Re: HSA Fees
« Reply #19 on: July 17, 2015, 12:36:28 AM »
Saturna is my favorite option:

http://www.saturna.com/individual/hsa/

They charge $15 each transaction for mutual funds, or ETFs. So if you just make a single transaction a year, it's a $15 yearly fee ($10 extra for Vanguard mutual funds, as Vanguard doesn't reimburse them for some random cost I forgot the name of). If you buy an ETF and want to reinvest dividends, that's an additional dollar each time, so it's best to pool the dividends together and combine them with your yearly contribution. No other strings like the other HSA providers which require thousands of dollars in a savings account to avoid additional fees.

Here's some more info. The best option in my opinion is to buy Fidelity Spartan funds through Saturna:

Vanguard Mutual Funds
=========================
Cost per trade: $24.95
Admiral Shares: Yes (*without* meeting the minimum 10k requirement).
Dividend re-invest: no charge
Inactivity fee (no trade within calendar year): $12.50


Fidelity Mutual Funds
=========================
Cost per trade: $14.95
Admiral Shares: Yes* (but *will* need to meet 10k requirement). The new website will give you an error right away if the order doesn't meet the fund's minimum.
Dividend re-invest: no charge
Inactivity fee (no trade within calendar year): $12.50


ETF (Vanguard & Fidelity)
=========================
Cost per trade: $14.95
Dividend re-invest: $1
Inactivity fee (no trade within calendar year): $25

Source: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=135513&start=50#p2526869

Fully fund the HSA each year with a single contribution, and your yearly fee will be $14.95. Personally, I just throw it all at Fidelity's Total Market Index Fund FSTVX.

milesdividendmd

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HSA Fees
« Reply #20 on: July 17, 2015, 12:51:40 AM »
Why do you favor using Fidelity mutual funds over Vanguard ETFs? All things being equal I would favor the latter.

I use Spartan funds for my 403B through Fidelity, and have generally been unimpressed by both their cost and tracking error relative to Vanguard. (Disclaimer: completely unscientific claim, just gestalt.)

Interest Compound

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Re: HSA Fees
« Reply #21 on: July 17, 2015, 07:22:06 AM »
Why do you favor using Fidelity mutual funds over Vanguard ETFs? All things being equal I would favor the latter.

I use Spartan funds for my 403B through Fidelity, and have generally been unimpressed by both their cost and tracking error relative to Vanguard. (Disclaimer: completely unscientific claim, just gestalt.)

Agreed, I prefer Vanguard as well. However, it's based solely on principle, and trust. When I look at the data since inception, they look pretty even to me, with Vanguard edging ahead by having slightly lower fees:



I've been going back and forth on this myself. Since Saturna charges an additional $10 transaction cost on Vanguard funds, it comes out to an additional $10 a year. So the options are:

1. Vanguard funds (preferred) - $25 yearly cost, auto dividend reinvesting.
2. Vanguard ETFs - $15 yearly cost, but dividends must be held in cash until Jan when I make my new contribution.
3. Vanguard ETFs - $19 yearly cost if I let them reinvest dividends automatically.
4. Fidelity Spartan fund - $15 yearly cost, auto dividend reinvesting.

With #2, I'm not sure what the opportunity cost is of keeping dividends in cash for that long, but I'm guessing it will grow to over $10 a year as the account grows. With #3, I'm not sure what the hidden cost is of reinvesting dividends with a market order at market open (which is how they'd do it). With #4, I'm not sure how this will affect me. Currently both Vanguard and Fidelity's total US stock index fund have the same .05 ER, so I'd expect the difference to be very minimal. I can't tell for sure if it will be in my favor or not.

Every option has it's ambiguity, but the one thing that's certain is Saturna's additional $10 cost for Vanguard Funds. So I'm leaning towards option #4.

milesdividendmd

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Re: HSA Fees
« Reply #22 on: July 17, 2015, 08:14:14 AM »
Ahhh. So it's the lack of fees for reinvesting dividends with Fidelity. That was the factor I was missing. Makes perfect sense. 100% agree with your choice.

pdxvandal

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Re: HSA Fees
« Reply #23 on: July 18, 2015, 11:41:57 PM »
Well, 2k in the cash account (required to invest) and the other 3k invested. No monthly fees.


Put 5k in a Wells Fargo HSA and you pay no monthly fee. Zilch.

I assume you mean $5K in their savings account, not invested in the market? 

If so that's a pretty common feature of many HSAs.  If not, and they have low cost index fund options, that's a great deal.

Interest Compound

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Re: HSA Fees
« Reply #24 on: July 19, 2015, 10:20:57 AM »
Well, 2k in the cash account (required to invest) and the other 3k invested. No monthly fees.


Put 5k in a Wells Fargo HSA and you pay no monthly fee. Zilch.

I assume you mean $5K in their savings account, not invested in the market? 

If so that's a pretty common feature of many HSAs.  If not, and they have low cost index fund options, that's a great deal.

Exactly. $2,000 in a cash account IS a fee. Sure you could count it towards the fixed income in your asset allocation, but there's a big opportunity cost to keeping that money in cash. Here's their interest page:



Had that $2,000 been in bonds or CDs (or even an online savings account) instead, you'd be getting a much better rate. Based on that, it's the equivalent of about a $42 yearly fee. If you want your HSA to be 100% stocks (like mine), to expand that part of your portfolio as much as possible, the opportunity cost is much higher. Now it's more like a $200 yearly fee.

And of course, this is before compounding. If you compound this out (all estimated of course):

10 years: Your HSA will have $3,500 less
20 years: Your HSA will have $13,000 less
30 years: Your HSA will have $36,000 lless

...etc.

pdxvandal

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Re: HSA Fees
« Reply #25 on: July 19, 2015, 12:06:53 PM »
Good point but I did save on taxes putting it into the HSA and I don't concern myself that much with 2k ... it's part of my cash asset allocation.

But it could be worth looking into rolling it all over to an HSA invested in more like an 80/20 mix (if that's allowable). Is that what you are suggesting?

Interest Compound

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Re: HSA Fees
« Reply #26 on: July 19, 2015, 04:21:02 PM »
Good point but I did save on taxes putting it into the HSA and I don't concern myself that much with 2k ... it's part of my cash asset allocation.

But it could be worth looking into rolling it all over to an HSA invested in more like an 80/20 mix (if that's allowable). Is that what you are suggesting?

Yes, that's exactly what I'm suggesting. And with a Saturna HSA, you can invest in any Vanguard or Fidelity ETF, which have much lower fees than the Wells Fargo funds they're offering in your HSA.

But yea, my biggest point is to understand you're paying an implicit "fee" when they force you to hold cash. Even if your asset allocation includes cash, you can put that cash in a CD or savings account with higher interest rates. If you think of it that way, forcing you to put the $2,000 cash (even if you were going to hold the cash anyway) in a 0.05% interest account, equates to a $20-40 yearly fee.

Jack

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Re: HSA Fees
« Reply #27 on: July 21, 2015, 12:55:41 PM »
Good point but I did save on taxes putting it into the HSA and I don't concern myself that much with 2k ... it's part of my cash asset allocation.

But it could be worth looking into rolling it all over to an HSA invested in more like an 80/20 mix (if that's allowable). Is that what you are suggesting?

Yes, that's exactly what I'm suggesting. And with a Saturna HSA, you can invest in any Vanguard or Fidelity ETF, which have much lower fees than the Wells Fargo funds they're offering in your HSA.

But yea, my biggest point is to understand you're paying an implicit "fee" when they force you to hold cash. Even if your asset allocation includes cash, you can put that cash in a CD or savings account with higher interest rates. If you think of it that way, forcing you to put the $2,000 cash (even if you were going to hold the cash anyway) in a 0.05% interest account, equates to a $20-40 yearly fee.

You're talking as if we have a choice, but my HSA account was chosen by my employer (just like a 401(K), I assume). Short of changing jobs, what can I do about it?

MoonShadow

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Re: HSA Fees
« Reply #28 on: July 21, 2015, 01:16:58 PM »
Good point but I did save on taxes putting it into the HSA and I don't concern myself that much with 2k ... it's part of my cash asset allocation.

But it could be worth looking into rolling it all over to an HSA invested in more like an 80/20 mix (if that's allowable). Is that what you are suggesting?

Yes, that's exactly what I'm suggesting. And with a Saturna HSA, you can invest in any Vanguard or Fidelity ETF, which have much lower fees than the Wells Fargo funds they're offering in your HSA.

But yea, my biggest point is to understand you're paying an implicit "fee" when they force you to hold cash. Even if your asset allocation includes cash, you can put that cash in a CD or savings account with higher interest rates. If you think of it that way, forcing you to put the $2,000 cash (even if you were going to hold the cash anyway) in a 0.05% interest account, equates to a $20-40 yearly fee.

You're talking as if we have a choice, but my HSA account was chosen by my employer (just like a 401(K), I assume). Short of changing jobs, what can I do about it?

You can rollover your HSA funds, but they won't make it easy.

charis

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Re: HSA Fees
« Reply #29 on: July 21, 2015, 01:49:27 PM »
Yes, as a matter of law, you can choose which HSA you want to tie to your employers plan.  In practice, the employer is not obligated to do payroll deductions to any other HSA bank other than the one that they have an agreement with.  So if you roll over to another HSA trustee bank, you will have to do all of the deposits & tax deductions on your own, and you have to pay the 7.5% FICA that an HSA typically avoids.

What now?  My payroll deductions go to my employer-chosen HSA, avoiding FICA.  At some point (once a year), I rolled over the cash to a new HSA with better investment options.  It was very easy.  Rolling over meanings transferring the cash to another HSA, not making direct contributions to an HSA of your choice, which I agree that an employer does not have to do.

MDM

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Re: HSA Fees
« Reply #30 on: July 21, 2015, 01:53:50 PM »
You're talking as if we have a choice, but my HSA account was chosen by my employer (just like a 401(K), I assume). Short of changing jobs, what can I do about it?
You can rollover your HSA funds, but they won't make it easy.

See http://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html for rollover ideas.