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Choosing an HSA Provider — 94 Comments

  1. Health equity also has a nice program
    http://www.healthequity.com/
    They do investing and have 1.5% interest and they charge $2.50 per month

    Balance Tier Average Daily Account Balance Interest Rate APY*
    Tier 1 $0–$2,000.00 0.05% 0.05%
    Tier 2 $2,000.01–$7,500.00 0.10% 0.10%
    Tier 3 $7,500.01–$10,000.00 0.70% 0.70%
    Tier 4 $10,000.01+ 1.50% 1.51%

    • I’m relatively new to Healthequity, but have been very impressed with their customer service and ease of use. Their service representatives are very knowledgeable and always check if they are unsure of anything. High recommended.

  2. I also opened HSA early this year in HealthEquity. Good thing was that my health insurance company pays set up fees and monthly maintainence fees. Investment is free but need to keep $2000. They will pay my insurance electronically. Their mutual fund choices are not great. Only reasonable one I thought was Dryfus small cap index with ER of 0.5. But I can just use that one fund for small caps in my portfolio, though little expensive than vanguard.

    Also, I thought they charge around $4.85 per month currently if your insurances depending on your insurance. That’s free for me.

  3. I guess I’m not seeing why you guys like Health Equity. According to your information you have to keep $2K in there getting paid 0.05% for it, there aren’t any reasonably cheap investments, and there are fees of $30 a year. That seems worse than all, or at least most, of the options discussed above. Am I missing something?

    Sam, I’m not sure why you are talking about paying your insurance premiums with an HSA. You can’t do that except under certain limited circumstances (retired, collecting unemployment, COBRA, or long-term care insurance.)

  4. I think my language might be misleading. I think that’s just another option. Not really better but not worse either. That was the default option with my Optima insurance.

    While HSA bank looks to be best option, you have to keep $5000 or pay $36. With HealthEquity you have to keep only $2000. There are no other fees (might differ with different insurances)

    And I didn’t mean to pay my insurance premiums. I meant all insurance claims show up electronically in my account and could just pay it electronically from the website. So won’t need to spend money for check book ( although could be mute point as I plan to use it as IRA and not pay claims).

    I had also thought of changing to HSA bank after reading about it in Bogleheads forum. But wasn’t sure if it’s worth the hassle. With amount of money that goes in , I could work with just one fund for now. Let me know if you think otherwise

  5. That makes sense, Sam. Thanks for the clarification. That is a nice feature. I have no idea if HSA Bank has that feature as, like you, I plan to use it mostly as a stealth IRA. I agree that it would be relatively low yield to change at this point, especially since you do have one fund in there you like.

  6. Health Savings Administrators started using HSA Bank this summer. They sent me a letter going over the changes. It says there are no minimum balance fees. That part doesn’t affect me because I only have mutual funds, but it looks like I would still save money by using HSA Bank directly.

  7. I just use a local credit union. Our health care expenses end up using the money, but at least I don’t have to pay Fed taxes on the money. The credit union has a $2 monthly fee. They pay hardly any interest, but I have quick access to the funds.

  8. Hello White Coat Investor,

    Thank you for your helpful website. I wonder what you think about my current HSA plan. It is through Union Bank & Trust Company (http://www.ubt.com/personal/HSA-accountinfo.html). The fee is only $5 per quarter. Interest rate has been varried, most current annual % yield 0.21%. However, almost all of investment options seem to have high ER/management fees or is front load (i.e. Fidelity Advisor Freedom Lifecycle Funds, Goldman Sachs Satelite Strategies, AF EuroPacific Growth, Thromburg International Value, T.Rowe Price Int’l Growth and Income, MFS value, American Funds Growth Fund, ect… as listed on their website).

    I did choose PIMCO Total Return D because its relatively less expensive ER 0.75. If one is not happy with current offerred HSA plan, can he/she switch or does the whole practice have to switch as well?

    The rest of my investment are with Vanguard for other tax deferred/Roth IRA/and taxable account. I used bonds in my HSA as part of my whole portforlio assess allocation for goal of tax efficiency. Is that a reasonable approach?

    Again, thank you for your great website.

  9. While $5 a quarter isn’t too bad, the rest of it sounds downright crappy if you’re actually using the HSA as a stealth IRA and not spending it.

    Your HSA belongs to you. You should be able to use any one you like. If you’re employed it may be best to have your employer put your HSA contributions into the UB&T HSA and then periodically roll them into your HSA of choice. If you’re a partner I’d just make your contributions into your HSA of choice as there’s no payroll tax savings. Honestly I’d probably get the rest of the group to change too.

  10. I’ve been pretty happy with Optum Health Bank. The interest rate is a nominal 0.92% but the monthly fees are only $3.00 and the investment options include the following mutual funds which are no-load or load waived:

    Fund Name Ticker Symbol Asset Class
    Amer. Cap World Grow & Inc (F) CWGFX World Stock-Large Value
    Blackrock Equity Dividend MDDVX Equity
    Federated Master Trust Mon Mkt FMTXX Money Market
    Federated US Govt. 2-5 Year FIGTX Intermediate Government Bond
    Goldman Sachs Balanced Strat GIPAX Allocation
    Goldman Sachs Growth Strategy GGSAX Allocation
    Goldman Sachs Growth&Inc Strat GOIAX Allocation
    John Hancock Classic Value PZFVX Equity
    John Hancock High Yield A JHHBX Fixed Income
    John Hancock Large Equity Fund TAGRX Equity
    John Hancock Money Market Fund JHMXX Money Market
    JP Morgan Prime Money Market VPMXX Money Market
    Keeley Small Cap Value KSCVX Equity
    Mainstay S&P 500 Index MSXAX Equity
    Munder Mid-cap Core Growth MGOAX Equity
    Neuberger Berman Genesis Fund NBGNX Equity
    Neuberger Berman Real Estate NREAX Equity
    Oppenheimer Developing Markets ODMAX International
    PIMCO All Asset PASAX Allocation
    PIMCO GNMA Fund PAGNX Fixed Income
    PIMCO Low Duration PTLAX Fixed Income
    PIMCO Real Return PRTNX Fixed Income
    PIMCO Small Cap Stocks Plus PCKAX Equity
    Thornburg Value TVAFX Equity
    Vanguard Global Equity VHGEX World Stock -Large Blend
    Vanguard S&P 500 Index VFINX Indexed
    Vanguard Wellington Fund VWELX Equity

  11. Looks like a lot of high ER funds. How many of those funds other than the 3 Vanguard funds have an ER under 50 bp? I don’t think I would be happy with those fund options.

    What is the point of having two SP500 index funds? BTW the Mainstay SP500 has an ER of 70 basis points for investor shares (according to Morningstar) vs 5 basis points for Vanguard Admiral 500 or 17 bp for Vanguard 500 Investor shares.

  12. I was just happy to see the Vanguard 500 Index as I don’t have that much in the HSA and will be switching out of my HDHP this year. For someone who has enough saved in the HSA to consider more than an index fund I agree there are probably better options available elsewhere.

  13. Need advice on my HSA. Our company uses HSA Bank.

    I like the idea of investing (above a certain amount) for Stealth IRA purposes… I am using $5k as threshold minimum for cash and everything above this amount to invest)
    As part of our company’s benefits, the company contributes about 80% (but doesn’t max the HSA).

    I asked if they could deduct remaining from my pay monthly to max the annual contribution ($6,450/year total in our case).
    They said they were advised by tax person NOT to do this, and for me to contribute post-tax dollars on my own funds to max amount.

    I’m assuming theoretically I could deduct the amount contributed, so I wouldn’t pay taxes on it.

    My question is…..will this complicate things down the road when taking out funds?
    Some portions of the investment will be pre-tax and others would be post-tax/deductible.

    I know with IRA’s this makes things more complicated, but wondered what people thought about in a HSA account.
    thanks

  14. I don’t know why the tax person advised against this. You cannot contribute post-tax dollars from your own funds. You should, however, be able to contribute pre-tax dollars from your own funds. As long as you have a HDHP you can contribute up to $6450 per year to an HSA. If the company is putting in say $5K, you can open up your own HSA and put in $1450. You can probably actually put it into the same HSA. You then deduct the contribution on the 1040, line 25. I believe that that if you’re an employee, contributing on your own will cost you a little more in payroll tax than if the company made the contribution for you.

    Since all the money in the HSA is then pre-tax, there’s no complications down the road to worry about. As long as you spend it on health care, it’ll never be taxed. If you spend it on something else in retirement, it’s like a traditional IRA.

  15. i’m confused…..mainly on the wording of pre-tax and post-tax

    here is HSA’s webpage http://www.hsabank.com/hsabank/Education/Tax_Advantages.aspx

    So, is this what you mean?
    My company puts in $5k (not deducted from my pay, a benefit of working there), and I put in $1450 with my own funds (will file deduction on THIS amount for 2013 taxes)?

    I’m just wondering if this will complicate things down the road if I decide to use funds for non-healthcare related expense after age 65. Parts of the funds and gains will be pre-tax but not deducted because it didn’t come out of my pay and parts would be deductible.

    Maybe I just need to talk with a CPA. :)

    • IRS regs allow you to contribute pre-tax if your employer has a Section 125 plan that includes HSA contributions. In addition, you may contribute post-tax as well. The differences are these:
      1) You report pre-tax and post-tax contributions on different lines of the IRS form 8889 when you file.
      2) You cna avoid the 7.65% FICA tax by contribution pre-tax payroll deduction.

      I hope this helps clarify.

  16. I don’t want to discourage you from talking to a CPA, but I don’t think this is as complicated as you think it is.

    The money your company puts in is pre-tax. You’re not taxed on it (it doesn’t show up as income on your W-2) and neither is the company (who deducts it as a business expense). The money you put in is also pre-tax, meaning it is deductible on your return for the year in which you contribute it.

    So it is all pre-tax. Since it is HSA money, as long as you spend it on health care it is never taxed again. If you decide to buy a boat in retirement with it, well, then it’s taxable, no matter whether it came originally from your employer’s pocket or your pocket. It shouldn’t make anything complicated at all.

    The only difference involves payroll taxes. Money your employer contributes directly isn’t subject to payroll taxes (you don’t pay payroll taxes on benefits.) Money you contribute directly has already been taxed for SS and Medicare, and there is no mechanism whereby you can get that money back. Not fair, but that’s the way it is.

    • To further expore this idea…. I have my own S-Corp (I am the owner and sole employee) which is contracted to my practice. I give myself a salary from my S-Corp (PLLC). Can I fund my HSA from my PLLC to avoid the payroll taxes?

  17. I’ve been using Saturna Capital (www.saturna.com/) for my HSA. They don’t charge any monthly maintenance fees, and they have several no-fee mutual funds to choose from, although the expense ratios aren’t great. I believe you can also choose your own investment vehicles, but you have to pay $15 commission per trade.

    They seem like one of the better HSA providers, no?

  18. I guess $15 is better than a higher fee, but when it’s free at HSA Bank, it’s hard to say Saturna is better.

  19. I believe HSA bank charges a standard fee of $2.50/mo for HSA balances below $3000. The investment option costs an additional $3/mo unless your HSA balance (not including investment funds) is at least $5000. So if you want the investment option, you have to pay $5.50/mo or earn only 0.15% APY on $5000/year. Health Equity Inc. has investment options with no monthly fees if you maintain a $2500 non-investment balance. Health Equity fees are lower but the investment options are fewer and not as good for the most part.

    • There are actually now several excellent, low-fee Vanguard options through Health Equity. In addition to Large cap index, they recently added extended market index, Total International Stock Market, Total Bond Market, Target 2060 and Target Retirement. By combining TBM and Target 2060 in appropriate ratios, you can pretty much replicate any Target or LifeStrategy fund you like although with some tracking error that will depend on rebalancing frequency. If you want even lower expense ratios then you can combine TBM, TISM, large cap index and extended market index to nearly replicate a Target fund as well. You can also tilt a bit towards international or mid-caps if you so desire.

  20. Just a correction on the minumum debit card balance. There is no minimum required balance, and no bank fee for the debit card for the Health Savings Administrator customers at HSABank. That $5,000 minimum is in place for their standard customers. Pat Jarrett, VP, Health Savings Adminstrators

  21. I thought I’d share more on Alliant’s HSA. It seems like a good deal to me, although Vanguard funds are limited? What are your thoughts?

    You have to keep $1000 minimum in Alliant’s HSA account, but any amount above that can be invested. A $5.95/month fee applies, and is deducted from the investment portion of the HSA. Unlimited mutual fund trades are offered in return for this.

    https://www.savedaily.com/partners/acu/smi.asp

    Here are the available funds:

    ALLIANCE BERNSTEIN SMALL/MID CAP
    ALLIANCEBERNSTEIN HIGH INCOME CLASS A
    ALLIANZ NFJ INTL VALUE FD CLASS D
    ALLIANZ RCM GLOBAL RESOURCES FD D
    ALLIANZ RCM GLOBAL SMALL CAP CL D
    ALLIANZ RCM WELLNESS FD CL D
    AMERICAN BEACON LARGE CAP INVESTOR
    AMERICAN CAPITAL WORLD GRTH & INC A
    AMERICAN EUROPACIFICGROWTH CL R4
    AMERICAN FUNDAMENTALINVESTORS CLASS A
    AMERICAN SMALL CAP WORLD CLASS A
    BARON SMALL CAP FD
    BLACKROCK ENERGY & RESOURCES A
    BLACKROCK EQUITY DIVIDEND FD CL A
    BLACKROCK GLOBAL ALLOCATION CL A
    BLACKROCK INFLATION PRO BOND PORT INV A
    BLACKROCK PACIFIC FUND CL A
    CALVERT SHORT DURATION INC CL A
    CAMBIAR OPPORTUNITY INVESTOR CL
    COHEN & STEERS REALTY SHARES
    COLUMBIA GLOBAL BOND CL A
    COLUMBIA HIGH YIELD BOND Z
    COLUMBIA TECHNOLOGY FUND CL Z
    DAVIS NEW YORK VENTURE CLASS A
    DELAWARE DIVERSIFIED INCOME FD CL A
    DELAWARE EMERGING MARKETS CLASS A
    DELAWARE HEALTHCARE FUND CLASS A
    DELAWARE INFLATION PROTECTED BOND CL A
    DELAWARE VALUE
    DREYFUS OPPORTUNISTIC MID CAP VALUE CL A
    DREYFUS TECHNOLOGY GROWTH CLASS A
    DWS CORE FIXED INCOME CLASS S
    DWS ENHANCED COMMODITY STRATEGY A
    DWS HEALTH CARE CL S
    DWS TECHNOLOGY CL S
    EAGLE MID CAP STOCK CLASS A
    FBR GAS UTILITY INDEX
    FIDELITY ADV HIGH INC ADVANTAGE CL T
    FIDELITY ADVISOR EMERGING MARKETS INCOME A
    FIDELITY ADVISOR NEW INSIGHTS CL A
    FIDELITY ADVISOR SMALL CAP CL A
    FIDELITY ADVISOR STRATEGIC INCOME A
    FIDELITY CALIFORNIA MUNI MONEY MARKET
    FIDELITY DAILY MONEY FUND
    FIDELITY GROWTH STRATEGIES FUND
    FIDELITY REAL ESTATE INCOME
    FIRST EAGLE GOLD CLASS A
    FIRST EAGLE OVERSEAS CLASS A
    FRANKLIN ADJUSTABLE US GOVERNMENT A
    FRANKLIN GOLD AND PRECIOUS METALS CL A
    FRANKLIN INCOME CLASS A
    FRANKLIN RISING DIVIDENDS CLASS A
    GOLDMAN SACHS SHORT DURATION GOVT CL A
    HARBOR BOND INST
    INVESCO BALANCED – RISK ALLOCATION CL A
    INVESCO GOLD & PRECIOUS METALS INV
    INVESCO VAN KAMPEN AMERICAN VALUE CL A
    INVESCO VAN KAMPEN COMSTOCK CLASS A
    IVY ASSET STRATEGY CL A
    JANUS OVERSEAS CLASS R
    JOHN HANCOCK HIGH YIELD FD CL A
    JPMORGAN CORE BOND FUND CL A
    JPMORGAN CORE PLUS BOND CLASS A
    JPMORGAN EMERGING ECONOMIES CL A
    JPMORGAN EMERGING MRKTS DEBT FUND CL A
    JPMORGAN EQUITY INDEX FUND CLASS A
    JPMORGAN GOVERNMENT BOND FUND CLASS A
    JPMORGAN US REAL ESTATE CLASS A
    JPMORGAN VALUE ADVANTAGE CL A
    KEELEY SMALL CAP VALUE CLASS A
    MANNING & NAPIER WORLD OPPT SER CL A
    MFS AGGRESSIVE GROWTH ALLOCATION CLASS A
    MFS CONSERVATIVE ALLOCATION CLASS A
    MFS DIVERSIFIED INCOME
    MFS GLOBAL EQUITY CLASS A
    MFS GOVERNMENT SECS CLASS A
    MFS GROWTH ALLOCATION CLASS A
    MFS MID CAP VALUE
    MFS MODERATE ALLOCATION CLASS A
    MFS UTILITIES CLASS A
    MORGAN STAN INSTL REAL ESTATE PORT P
    MUTUAL SERIES GLOBAL DISCOVERY CLASS A
    OAKMARK FUND I
    OPPENHEIMER GOLD & SPEC MINERALS CL A
    OPPENHEIMER REAL ASSET
    PIMCO COMMODITY REALRET STRAT ADMIN CL
    PIMCO EMERGING MARKETS BOND ADMIN
    PIMCO GLOBAL BOND
    PIMCO HIGH YIELD CLASS D
    PIMCO LONG TERM US GOVT ADMINISTRATIVE
    PIMCO REAL RETURN
    PIMCO SHORT TERM ADMINISTRATIVE SHS
    PIMCO STOCKSPLUS TOTAL RETURN CL D
    PIMCO TOTAL RETURN ADMINISTRATIVE SHS
    PUTNAM AMERICAN GOVTINCOME CLASS A
    RS TECHNOLOGY CLASS A
    RUSSELL SHORT DURATION BOND CL S
    SUN AMERICA FOCUS DIVIDEND CLASS A SHARE
    T ROWE PRICE BLUE CHIP GROWTH INC
    T ROWE PRICE CAP APPRECIATION
    T ROWE PRICE REAL ESTATE FUND ADV CL
    T ROWE PRICE RET 2050 ADV CL SHS
    T ROWE PRICE RTMT FUND 2020 ADV SHRS
    T ROWE PRICE RTMT FUND 2030 ADV SHRS
    T ROWE PRICE RTMT FUND 2040 ADV SHRS
    T. ROWE PRICE RETIREMENT 2015
    T. ROWE PRICE RETIREMENT 2025
    T. ROWE PRICE RETIREMENT 2035
    T. ROWE PRICE RETIREMENT 2045
    T. ROWE PRICE RETIREMENT 2055
    TCW CORE FIXED INCOME N
    TCW EMERGING MKTS INCOME CL I
    TEMPLETON GLOBAL BOND CLASS A
    THORNBURG INTL VALUE CL A
    TURNER MIDCAP GROWTHINV CL
    VANGUARD 500 INDEX FD INVESTOR SHS
    VANGUARD BOND INDEX TOTAL MKT INVESTOR
    VANGUARD ENERGY INVESTOR FUND
    VANGUARD HEALTH CARE INVESTOR
    VANGUARD LONG TERM INVMT GRADE INV
    VANGUARD LONG-TERM BOND INDEX PORT INV
    VANGUARD MID CAP INDEX SIGNAL
    VANGUARD PRECIOUS METALS & MINING INV
    VANGUARD REIT INDEX INV.
    VANGUARD SHORT TERM BOND INDEX INVESTOR
    VANGUARD SMALL CAP INDEX – SIGNAL SHRS
    VANGUARD US GROWTH INVESTOR

    • I’ve heard good things about the Alliant HSA. I like HSA Bank better, but you could do much worse than Alliant. The lower minimum is nice and the free trades are nice. But to be honest, I do an HSA trade once a year….when I make my contribution. It’s just a little tiny IRA on the side for me. It’s all TSM. $5K in the bank account and the rest in TSM. Simple, low-fee. But depending on what you want to do with your HSA, you might like access to all those funds.

  22. Great Site, thanks. I use Bank Of America (benefitsolutions.bankofamerica.com). Now, there is the monthly maintainence fee of $4.50 and you have to keep $1000 in your HSA account, but anything above that you can invest. So, with that, I only make .10% for interest since my balance is below the $2,500.01, but I’m ok with that since I invest the rest. They have some decent funds to invest into with low expense ratios. There is no fee/transaction cost to invest (except expense ratios, of course) into their fund choices and to sell them when you need to have the money back in your HSA account. So, that I liked.

  23. I am considering going with HSA Bank (NYSE listed) over HSAadminstrators (fly by night operator??). Can anyone confirm if HSA operators are insured ?

    • IRS regulations require that every HSA administrator has a custodian that meets cetain minumum finacial and experince criteria set by hte IRS. Most HSA providers are banks and meet these standards easily by virtue of their compliance with banking regs. Third party administrators, like us at HSA Administrators, contract with a bnak to be our custodian. We happen to use HSA Bank as our custodian. In addition to the fiducary oversight provided by the custodian, wea are audited and our staff are all bonded and insured as a way to protect your investments.

  24. Pat & WCI – to clarify when I visited the HSAadminstrator website, there was very little in the “About Health Savings Administrators” section that provided me confidence that the company was strong (viz-a-viz “HSA Bank is a division of Webster Bank, N.A., Member FDIC” – the FDIC stamp gives me peace of mind).

    Below is an excerpt from the article that caused me to get concerned. So I want to be sure that my HSA money will be safe (i.e. in the unlikely event of something like the one described below, what is my protection for my hard earned HSA money)

    “Two co-founders of Canopy Financial Inc., a bankrupt Chicago-based health savings account administrator, are accused of defrauding investors of approximately $75 million and misappropriating nearly $19 million from accounts used to finance health care expenses.

    Jeremy Blackburn, Canopy’s former president and COO, was charged in December in a civil enforcement action filed by the U.S. Securities and Exchange Commission.

    New charges filed Monday, March 1, by the FBI in Chicago allege that Blackburn and Anthony Banas, Canopy’s former chief technology officer, misappropriated the money from HSAs and flexible spending accounts that Canopy held and administered.”

    Link to article: http://www.workforce.com/articles/safe-harbor-urged-for-employers-with-automatic-401-k-plans

    Thanks.

    • VJ – Yikes, that is scary. Stick with a national bank chain, then. Not that they can’t fold, but harder for them to defraud you. Like I posted earlier, Bank of America cost $54 annually. Another bonus is the debit card you get is free and so are the replacements if you need them and you can have up to 7 people on the account. Now, the APY is low, but for investing there is no fee to buy and sell (just watch expense ratios, of course) compared to Alliant Credit Union. In fact, when I called the rep on the phone couldn’t even tell me about any of the investments options. She kept telling my to log in. Though I do believe I saw LPL Financial lot in the fine print.
      HSA Bank if changing their fees as of September 1st, if you have $4850 in your HSA account you avoid the monthly fee. To me, that is too much money to have sitting and not really earning much. Plus, there is an annuall $24 fee for investing. Unless I misunderstood the rep when I called.
      Best of luck, I looked at many of the ones listed above and found that if I wanted to avoid the monthly fees I had to leave too much in my account. For some that may be fine/safe.
      Good luck!

  25. An update on healthequity which my employer is defaulting with:

    http://www.healthequity.com/documents/USU_Fee_Schedule_Interest_Rates.pdf

    No maintenance fees above $1500 (3.95/mo otherwise) and no investing fee. Investments are done via Optima Health. They have a fair list of lower-tier funds but only one vanguard fund. Not sure if there are more when you are logged in as some have posted above, mentioning several vanguard funds. Need $2000 min to invest.

    http://www.healthequity.com/optima/optima_investment_options.pdf

    Any thoughts?

  26. WCI
    Thanks for your Blog, I’m learning lots of great information.
    Could you please clarify your choice of HSA providers. In the above post you mentioned HSA Bank as your choice, but in your “Stealth Roth” opinion you said
    “My recommended provider for an HSA is Health Savings Administrators”

    If you do like HSA bank for the stealth roth approach, do you leave the 5K in the savings acct to avoid the $3 fee or just invest all the funds and pay the $36
    Thank You!

    • I think both HSA Bank and Health Savings Administrators are both great choices. As noted in this post, when I actually went to open one, I went with HSA Bank. The previous post was written at least a year earlier when Health Savings Administrators was a slightly better choice IMHO and I just never went and updated it. I leave $5K in the savings account, but it’s reasonable to pay $36 and invest it if you prefer.

  27. I’ve been using Saturna , local, I live in Bellingham. The Amana funds, esp. Growth, at Saturna have done very well but are expensive, 1.11% for Growth, 1.20% for Income. There is no custodial fee or minimum balance required in a money market or such.
    I also use HSA Administrators for their Vanguard funds.
    They charge an annual custodial fee $45, paid outside of account, plus .08 per qtr (.32 annual) per acoount and then there is the Vanguard fee. The HSA fee maxes out at $16 qtr (= .08 x $20,000)PER ACCOUNT, ie fund. You can use up to four funds.
    They tell me the Total International Stock Index, will be available as an Admiral later this year.
    Stealth IRA indeed. Any money I find laying around goes first in HSA, then Roth, or IRA, or SEP.

  28. By April 2014, I’ll have around $19,400 in my HSA. It’s currently earning .1% (.001) APY. I’m pretty much convinced that HSA Bank is the route I should take. This will be a stealth IRA for me, so as a piece of my asset allocation, I’m thinking I’ll invest in Vanguard Total Bond Market ETF (BND). Keep it fairly low risk since the money is far easier to access than “real” retirement accounts. Does BND sound good to you?

    Also, to avoid the $66/year fees ($2.50/monthly account maintenance + $3.00/monthly investment fee), I plan on maintaining the $5,000 savings minimum (Effective January 1, 2014, the adjusted Balance Waiver Amount will be $4,925). I’m comfortable doing this, but do any of you just invest 100% and pay the fees?

    • I do the same as you’re planning, but I have run into people who prefer to pay the fees and keep the money invested. I consider the $5K kind of a health care emergency fund, since my deductible is ~$3K and co-insurance would probably eat up the rest for a significant expense. The rest goes into aggressive investments. Whether I’d actually tap that emergency fund or keep the HSA as a stealth IRA I won’t decide until the situation comes up.

      • Can I ask why you have it in aggressive investments? Is there an advantage to having aggressive investments allocated to the HSA in your overall asset allocation, or is it just a preference of yours?

          • I thought about this a little more, and out of any tax-advantaged account, the HSA seems to be the one you would want to try to grow the most aggressively… if you are okay risking your health savings. You put the money in pre-tax and pull it out tax-free assuming you have past and current medical expenses to cover it. Seems like a waste keeping it in low risk, low return investments with that in mind. I think I’ll be dropping mine into Vanguard Total Stock Market ETF (VTI) as part of my overall asset allocation.

  29. My employer offers the Wells Fargo HSA option, which you mentioned to be not too great given the dearth of fund options (https://www.wellsfargo.com/investing/hsa/funds-options/). In my situation, the monthly maintenance fee (around $4) is paid by my employer and it appears that the funds available have no commission or load fees either (https://www.wellsfargo.com/downloads/pdf/com/retirement-employee-benefits/hsa/UsingYourHSAtoPrepareforRetirement.pdf).

    I do see a few aggressive funds (large cap) that I’d like to invest in as well. Do you have any concerns or comments on the Wells Fargo options?

    I suppose that I could also open my own account at HSA Bank, pay the maintenance fees, and have broader options of investments (like VTI). I wonder if the gains would be worth the extra step annually to transfer funds from my employer HSA to my personal one. This brings up another question: (1) If I leave my current job prior to retirement, am I correct to assume that I’d be responsible for all of the maintenance fees?

    Thanks for the thorough overview.

    • I’m sure you’d be responsible for maintenance fees. I’d probably go to the trouble to roll it over every year to get better investments. I find the Wells Fargo funds way too expensive. Their diversified international fund, for instance, is 1.25% a year.

  30. Seems like ELFCU is getting a lot of attention recently with their HSA, you can join by making a one-time $5 donation to a non-profit organization called Tru Direction.

    Elfcu doesn’t charge any setup fee or maintenance fee. You can invest 100% of your money via TD Ameritrade once you have at least $2,500. If you choose to leave some money behind in the savings account at Elfcu, you earn 1%, which is about the best you can get these days for a savings account. TD Ameritrade also doesn’t charge any maintenance fees. You can invest in 101 commission-free ETFs, 32 of which are from Vanguard, in addition to other investments normally available through TD Ameritrade.

    Elfcu offers a better HSA than HSA Bank. If you leave money in the savings account, the interest rate is higher (1% vs 0.3%). If you invest the whole thing, you don’t pay the $66 maintenance fees HSA Bank charges.

    Thinking about taking my money out of HSA Administrators ($25 closing fee) and transferring to ELFCU.

    • Yeah, I’m wondering what compelling reason I have to continue keeping $5000ish in my HSA Bank savings account to avoid the fees when I could just invest it all through ELFCU + TDA.

      Note: If you’ve started investing through HSA Bank for 2014 in TD Ameritrade and you are thinking of switching, there is a 30-day hold period for ETFs to avoid paying short-term trading fees.

      • correct, you do need to wait the 30-days before transferring assets to another HSA.

        I have been trying to figure out if there is a way to avoid the $25 closing fee that HSA Administrators charges to close an account. Thankfully ELFCU does not charge any opening fees.

        I have considered the idea of “rolling over” the entire amount in the HSA Administrators HSA to my personal checking account and then promptly writing a personal check to ELFCU. (Note – this is only allowed once/year). However, when I called HSA Administrators they will only allow your account to go down to $50. I have no interest in leaving $50 with HSA Administrators. Therefore, it seems to unfortunately make the most sense to pay the $25 closing fee at HSA Administrators and fill out the transfer paperwork at ELFCU…

        • Dang, I forgot about the $25 closing cost for HSA Bank. Maybe I’ll get all invested for 2014 and wait to see if ELFCU really blows up. Then I’ll bite the $25 bullet.

          • Thanks for the tip on ELFCU. I hadn’t heard of them until today. That’s definitely compelling. Keep in mind I don’t think this was an option when the post was written. I think ELFCU has only been around a couple of years, and no one was talking about their HSA until the last month or two. Looks like HSA Bank has got some real competition. Hopefully they step it up so I don’t have to move my money! That $5K earning 0.3% is getting to be a smaller and smaller portion of my HSA every year though. I mean, if I make 8% on that $5K instead of 0.3%, we’re only talking about a couple of hundred dollars a year. It’s not exactly a life changing amount of money. Still, if I were opening an HSA today…I’d probably do it at Eli Lilly FCU. Maybe I’ll think about an HSA rollover in a month or so and do a post on it.

  31. Please allow me to clarify several points in the conversation.
    Health Savings Administrators is separate from HSA Bank. We do use HSA bank as our custodian and to supply debit cards for those who want them. We do not require a balance to be held in the checking account to avoid fees. HSA bank has this requirement for some of the investment options they provide. Our annual fee of $45.00 is structured to allow first dollar investing.

    The $50.00 balance requirement that Matt referenced does not come into play if you choose to close the account. That is designed to accomodate any market movement and avoid a negative balance when withdrawals are made.

    • Pat Jarrett — I’m always a little confused as to why people don’t choose always choose Health Savings Administrators if they plan to use it as a retirement account. Your Vanguard investment offerings, fee structure, and and no minimum cash balance requirement allows individuals with large-balance HSAs to save money (pay less, earn more). My spreadsheet comparisons easily concluded you were the best custodians for my retirement account. So thanks! We’ve enjoyed doing business with you.

  32. Just logged onto ELFCU HSA to do my quarterly transfer of funds (employer contributions) to the TDAmeritrade account, only to see a newly implemented wire transfer fee of $24, for each transaction. Gross.

    Probably will stick with ELFCU as HSA provider, but certainly less excited given this new fee, magnified if you’re single, which in the best case is equivalent to a sales load of ~0.75%, higher if you do multiple transfers in a given year.

  33. First off, thank you for the wonderful website.

    2 questions:

    1. What do you guys think about HSA investing in the Vanguard Wellington fund? Do you think the Wellington has less risk because of the bond component? I’d like to use the HSA as a stealth IRA but keep it as a backup in case of medical catastrophe. Murphy’s law demands that this medical catastrophe would occur during an extreme bear market. Would Wellington provide some protection in this scenario?

    2. Does HSA’s have similar asset protections as 401K? Is it state-by-state?

    Thank you so much!

    2.

    • 1. I think a better solution is keeping a chunk of the HSA in cash. I keep $5K in cash. That’s precisely the amount HSA Bank requires to avoid fees. How convenient. But Wellington is a low-cost, stodgy actively managed fund that is hard to criticize given it’s nearly a century of solid returns.

      2. It is state by state and not yet worked out by case law as HSAs are fairly new.

  34. BMO Harris Bank offers a no-free HSA. Details are here:
    https://www.bmoharris.com/us/personal-finance/checking-accounts/health-savings-account#page=page-2

    No investments are offered, but if you’re just looking for a place to park a few thousand, this is the best I could find. The little bit of interest it pays (0.10% or so) obviously won’t keep up with healthcare inflation, but at least you’re not losing money to fees on top of that. It’ll do the trick for a year or two while you spend it on small expenses or get back into an employer-matched HSA.

  35. 26 yo PGY1 ortho resident married with no kids. Goal of HSA to me in a perfect world would be to not spend it keep adding to it and have it converted to an IRA down the road. I get 500 a year that my hospital puts into an HSA account. How much additional a year would you recommend placing into an HSA, if any, if your goal of it at this point is purely an investment strategy.

    • I’d try to max it out if possible, but your goal shouldn’t be to spend it on anything but health care, ideally as late in life as possible. That’s the way to maximize the triple tax benefit.

  36. There is a consensus that if you have a finite amount of money to put aside, you should first get the match on any retirement contributions, fully find the HSA next, then use any other available funds to further fund the retirement. The logic is that the HSA is a dual-purpose fund that can be used for medical tax free (at any age), or after age 65 can be used (taxable) as an IRA. The reality is that one of your largest post retirement expenses is likely to be medical expenses, which you would be able to pay with tax free dollars. My suggestion – fund as much as you can, up to the IRS limits, if possible.

  37. I am a physician working for a hospital and my health insurance is a high deductible plan. I missed the enrolment period for the FSA offered though hospital plan. Can I use HSA for the year I missed enrolment for FSA?

    Thank you for the great and instructive posts.

  38. Yes, you can spend HSA funds anytime on eligible medical expenses. You don’t need to be enrolled in an HDHP to spend or take a distribution. You only need to be in an HDHP to make contributions.

    Of course, I wouldn’t take my word on it (doesn’t count for much if the IRS has a question). Here is the regulation on HSA distributions:
    http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204081

    “If you are no longer an eligible individual, you can still receive tax-free distributions to pay or reimburse your qualified medical expenses.”

    “Eligible individual” means one who is eligible to contribute into an HSA.

    Now, if you are eligible to contribute to your HSA, it usually makes sense to do that versus contributing to an FSA where the funds must be spent by the end of the year.

  39. I currently have an HSA through Aetna with VERY ERs on their limited number of funds. I would like to switch to a new HSA. I live in California which is one of the few states which does not exempt earnings from state taxes. I would like to invest in a high quality TIPS fund for my HSA in order to make the earnings tax free in California. Any thoughts on which HSA administrator would be the best for my circumstance?

    Thanks!

    • You can easily do that through HSA Bank just by buying a TIPS ETF. I can’t recall if HSA Administrators offers the Vanguard TIPS fund as well, but I’d check into that if you don’t like HSA Bank for some reason.

  40. HSA Bank experience: Recently set up and funded my account in a one-time deposit in order to get it invested and working for me as soon as possible. Then I sat by for two weeks as it just sat there because HSA Bank had “set up a new online system.” Called a handful of times to see when their system might be back online in order to initiate my Ameritrade account. Twice told it would be the next day, then the next time I called, I was told I had been told the previous time it would not be for another 1.5 weeks (which was untrue). I feel like some of my frustration could have been prevented if someone would have been honest and up front with me from the start. Customer service representatives certainly not helpful, or not well informed; unsure of which. Will certainly not recommend to colleagues or other solo practice physicians. There are lots of HSA services out there, I would recommend another which is better run and more reliable.

  41. Hi, I’ve been researching HSA and stumbled upon your blog. So informative, thank you! I’m brand new to HSA. I’m looking for an HSA bank without the need for investment at this time. I was wondering if anyone has heard of Inland Bank or American Midwest Bank. These banks were mentioned from one of the comments on an online article I was reading. These banks offer free HSA. What about SelectAccount? Thanks in advance for any input!

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