Author Topic: How good is my HSA?  (Read 1751 times)

xenon5

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How good is my HSA?
« on: March 22, 2015, 05:10:52 AM »
This is my first year with an HSA that comes with my health insurance through work.  I'm trying to understand some of the nuances that come with investing using this account.  It seems like there's lots of variety in HSAs available, but each one has its own obscure rules with account fees, minimum balances, and the like. 

Also, the portal that I access my HSA through is a third party to the bank holding the HSA which is a third party to Schwab for the brokerage account.  When I tried calling for information, the person who answered the phone had no idea it was even possible to connect the HSA to a brokerage account.  Needless to say, there's lots of gaps and missing info.

So far, this is what I've figured out:
1) $24 annual fee to use the brokerage
2)$1000 minimum cash balance in the HSA to contribute to the brokerage account (ergo an opportunity cost fee)
3)I get a couple pennies each month in interest?  Can't find any information anywhere about what the interest rate is, but it's probably not more than 0.10%
4)can't find any fee schedule for general account fees

In terms of mutual funds, the options aren't too bad but not exactly what I'd want either.  I will probably just use "Schwab S&P 500 Index" with a 0.09 expense ratio since it's the lowest available in the account.


How does this sound on the surface?  In particular I'm not happy about the $1k minimum cash balance to invest.  At the same time, I don't fully understand how HSA portability works.  I know that by contributing via payroll deductions to the HSA provider selected by my employer, I'm avoiding FICA taxes, but if I contribute directly I have to pay FICA.  Is it possible to keep this account open for the FICA tax benefit, then transfer to some other HSA to invest?  Is it worth the hassle?
« Last Edit: March 22, 2015, 05:15:05 AM by xenon5 »

bearkat

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Re: How good is my HSA?
« Reply #1 on: March 22, 2015, 08:44:55 AM »
So your HSA fee and investment structure sounds very similar to mine at mybenefitwallet.

Main account <$1,000: $3.50 / month ($42 annually)
Investment account use (any balance): $2.90 / month ($34.80 annually)

Also, you do not have the option to invest without a main account balance of >$1,000.

This is my first year having an HSA, and my employer doesn't give me the option to front-load my HSA, so I'm stuck contributing $554.17 / month. That means I just barely crossed over the fee threshold in the main account, and have ~$100 available to invest. Personally, I'm going to wait to invest until I have a bigger balance, but I haven't decided what my threshold will be.

a1smith

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Re: How good is my HSA?
« Reply #2 on: March 22, 2015, 08:53:38 AM »
Sounds very similar to mine.  My HSA is with Bank of America and it has the same $1000 cash balance requirement.  Any amount over $1000 gets auto-invested in my selections each paycheck.  If I use it for health care expenses (try not to) and the cash balance goes below $1000 then the auto-invest stops until you are back above $1000.

My employer pays the annual fee; I don't know how much BoA charges for that.  I have 37 funds to choose from.  Five are Vanguard funds but there are lots of others with ER in the 0.4% range so they aren't too bad; I also look at performance when choosing funds.

I can fund the HSA account myself if I want and not do it through payroll deduction so I can frontload.  My employer contributes $1500 if my spouse & I both get annual physicals.  ($750 each)

I just checked the interest rate on the cash balance:

Interest Rate
Balance                            APY
$10,000.01 and over         0.30%
$2,500.01 to $10,000.00   0.20%
$0.00 to $2,500.00           0.10%

Since I have at most $1000 cash balance I'm getting 0.1%.