Author Topic: Fee for using HSA investments  (Read 2741 times)

mynewchoice

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Fee for using HSA investments
« on: July 08, 2016, 10:09:16 AM »
As I begin my mustachian journey, I have realized that my HSA is currently being underutilized as I do not contribute the maximum amount and we actually use the funds to pay for our medical expenses as they are incurred throughout the year.  With a better understanding now of how one can leverage the HSA account and invest in index funds, I have been investigating my options with the HSA that I have through my employer's plan.

While the credit union that holds my HSA does have nice index fund options, I noticed that they also charge a $5.95 monthly fee for utilizing the investment options.  I am curious to hear if this is a standard practice and reasonable fee based on other people's experiences.  For those that are using an HSA for investments, are you charged a monthly fee?  If so, is it similar to what my CU is charging?

iamlindoro

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Re: Fee for using HSA investments
« Reply #1 on: July 08, 2016, 10:26:38 AM »
My HSA is through HSA Bank.  I pay $2.50 per month for the HSA maintenance, and $3 per month to have access to investing through TD Ameritrade.  I pay no commision to buy VTI within that investment account because it's one of the commission-free ETFs that TD Ameritrade offers.

Paul der Krake

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Re: Fee for using HSA investments
« Reply #2 on: July 08, 2016, 10:28:38 AM »
Unfortunately, it is very common.

My HSA provider (UMB) charges a $3 monthly investment fee, and a $2.50 administrative fee currently paid by my employer. It is very much in line with the competition.

The typical pitfalls of HSA providers are one or more of the following:
- must keep high balance in cash to avoid fees
- must pay to invest
- poor selection of funds.

Spork

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Re: Fee for using HSA investments
« Reply #3 on: July 08, 2016, 10:33:31 AM »
My HSA is through HSA Bank.  I pay $2.50 per month for the HSA maintenance, and $3 per month to have access to investing through TD Ameritrade.  I pay no commision to buy VTI within that investment account because it's one of the commission-free ETFs that TD Ameritrade offers.

To add to this: ...and these fees are waived if you have a $5000 balance in the cash account.  It may still be worth the fees to move that $5000 into Ameritrade when you do the math of fees vs income from Ameritrade, but that option is there.

mynewchoice

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Re: Fee for using HSA investments
« Reply #4 on: July 08, 2016, 10:37:22 AM »
Thanks for the feedback.  @iamlindoro, I noticed your thread just after I had posted and your total fees are consistent with what my provider charges if I invest.  Fortunately, I am not charged any fees if I am just using the standard savings account option.  They do have a requirement that you have $1,000 balance and you can only invest funds in excess of the $1,000 but that won't be a problem if I stop using the account to pay for all of our medical expenses.

I am going to contact the CU to see if they waive that fee at any point.  I haven't found anything on their website and I suspect that they don't, but it is worth asking.  I also am looking into whether or not I can increase my contribution from my payroll deductions now, or if that can only be done during the annual enrollment period.

@Paul, I have a nice selection of Vanguard funds to choose from so I am excited to get rolling with this option and start putting my max contribution, as well as the contribution that my employer makes into my account, to work for me!

Update: Just called my CU and unfortunately the fee cannot be waived regardless of account balance, as it is a self investment plan through SaveDaily and that fee is imposed by them not the CU.  Also, I learned that I can make a post-tax contribution to get myself up to the limit and then need to track that amount to use when it comes time for taxes next year.
« Last Edit: July 08, 2016, 10:43:55 AM by mynewchoice »

markpst

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Re: Fee for using HSA investments
« Reply #5 on: July 09, 2016, 09:52:49 AM »
I have a "dead" HSA which I contributed to in 2009 and 2010. My employer dropped the plan in 2011 and my $5,000 was sitting in the pathetic money market account earning $3 per year. I finally got smart and moved $4,000 to investments (need to keep $1,000 in the regular account to avoid statement fees, etc.).

I am paying $3/month or so now on the investment account, but I had access to a couple of decent Vanguard Funds (settled on NAESX) and I turned the $4,000 into $4,600 so far. I missed some strong years in the market because this was confusing to me, I can't contribute anymore, and I didn't do the research to see what the true costs were. The more money you are able to invest in the HSA, the more insignificant that $5.95 monthly fee becomes.

DavidAnnArbor

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Re: Fee for using HSA investments
« Reply #6 on: July 09, 2016, 01:28:39 PM »
elements.org is a federal credit union whereby $2,500 has to sit in savings earning 0.5% interest, and any money thereafter can be invested in the linked tdameritrade account, where there are no monthly fees, and it's free to get VTI. However, they do charge $24 each time you wire money from elements to tdameritrade.

Helvegen

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Re: Fee for using HSA investments
« Reply #7 on: July 09, 2016, 07:56:53 PM »
I have a "dead" HSA which I contributed to in 2009 and 2010. My employer dropped the plan in 2011 and my $5,000 was sitting in the pathetic money market account earning $3 per year. I finally got smart and moved $4,000 to investments (need to keep $1,000 in the regular account to avoid statement fees, etc.).

I am paying $3/month or so now on the investment account, but I had access to a couple of decent Vanguard Funds (settled on NAESX) and I turned the $4,000 into $4,600 so far. I missed some strong years in the market because this was confusing to me, I can't contribute anymore, and I didn't do the research to see what the true costs were. The more money you are able to invest in the HSA, the more insignificant that $5.95 monthly fee becomes.

I'm jelly. My HSA admin only offers hot garbage funds to choose from. Not a Vanguard fund in sight, plus lots of nickle and diming if you choose to invest.

iamlindoro

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Re: Fee for using HSA investments
« Reply #8 on: July 09, 2016, 09:58:00 PM »
I have a "dead" HSA which I contributed to in 2009 and 2010. My employer dropped the plan in 2011 and my $5,000 was sitting in the pathetic money market account earning $3 per year. I finally got smart and moved $4,000 to investments (need to keep $1,000 in the regular account to avoid statement fees, etc.).

I am paying $3/month or so now on the investment account, but I had access to a couple of decent Vanguard Funds (settled on NAESX) and I turned the $4,000 into $4,600 so far. I missed some strong years in the market because this was confusing to me, I can't contribute anymore, and I didn't do the research to see what the true costs were. The more money you are able to invest in the HSA, the more insignificant that $5.95 monthly fee becomes.

I'm jelly. My HSA admin only offers hot garbage funds to choose from. Not a Vanguard fund in sight, plus lots of nickle and diming if you choose to invest.

Why be jelly? You're not stuck with an HSA admin, open another and transfer it out!

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

cacaoheart

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Re: Fee for using HSA investments
« Reply #9 on: July 12, 2016, 04:27:03 PM »
My employer high deductible plan utilizes Optum Bank. For the HSA account itself there is an administrative $3 per month fee that is waived due to their arrangement with my employer.

Investing is free but funds can only be added while I maintain $2000+ in the cash/noninvestment account. Optum provides access to Vanguard index funds.

The only fees are $2.50 per ATM transaction (if I ever actually use the card) and $20 if I wanted to transfer funds to a different HSA custodian.