not to hijack, but I'm always struggling on the HSA recommendations - especially if you have some young kids and spend $3-6k a year on medical costs out of pocket.
When I look up the HSA data on the internet, this always strikes a chord....do they have their data wrong?
One of the features that incorrectly attracts many employees to HDHPs is the ability to set up a Health Savings Account, or HSA. Unfortunately, HSAs that receive an employer contribution are usually required by the insurance provider to be kept at an institution that offers poor choices of investment products and have high fees, which leads to subpar long-term investment performance. HSAs that do not receive an employer contribution can be held anywhere, but as we explained earlier, an HDHP without an employer contribution to an HSA doesn’t make much sense.
Mandated HSA plans usually have a smaller basket of mutual funds from which to choose than 401(k)s and they are often higher-expense and therefore poorer-performing. I saw this firsthand at a previous employer. Repeated academic research has shown that actively managed mutual funds on average underperform index funds by 2.1% per year.3 Many HSA plans only put your money in money market funds or savings like accounts, which generally underperform inflation. That is even worse than underperforming relative to an index fund.
HSAs are often loaded with fees. Many charge a fee for using your HSA debit card at the doctor’s office or pharmacy. Many also charge fees for individual trades, as well as monthly and annual custodian fees just for keeping your money in the account. You may also be asked to pay a “closing fee” too, if you want to move the account to another custodian. In total, the fees on an HSA can easily add up to at least $150 per year.