HSA Questions? Worth it to invest even with the fees?

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My HSA is through healthequity. There's a nice selection of Vanguard funds available, but they jack up the prices with a 0.033% monthly fee (which I think the math works out to be annual ~0.39 expense ratio) in addition to whatever the fund expense ratio is. However, this is still attractive as an investment because of all the tax advantages you get with an HSA. The plan is to use this to increase retirement savings and pay for medical bills out of pocket.  What are the pros/cons/things to consider with this approach? Thanks

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Still 3x lower than every 401k option I have w/ my employer.

Keep copies of all your medical bills, then at any point in the future you can take withdraws to cover them, even if its 10 years after you paid it.

Look around for other providers with lower expenses, then maybe once a year go and transfer from your fund, to a lower cost fund. This might take a little more work on your end, but it might save you some decent fees over the years.

Transfer your money to another HSA.

I have this as it is the only option with my employer. If I leave my current employer, I'll look into a cheaper option.

Being charged 40bp for these funds is light years better than the garbage rates on the garbage funds that HealthEquity used to offer.  The emerging market fund I'm in has a total all-in expense ratio of 0.51% per year.  The old emerging markets fund I was in was 1.57% per year.  

Triple tax-free compounding for decades is worth 40bp to me.

It is the only option for your employer to put the money TODAY. Once it is in that account, you should be free to transfer it to anywhere else you want. I wouldnt try to transfer it every paycheck to a different custodian, but once a year, or every time your balance hits 5k, or some Target number, then initiate a transfer to the cheaper custodian. Over the next 20-30 years it should save you a large amount of money in fees.

With $10,000 invested, the HealthEquity fee would cost an additional $40 per year. Most HSAs have monthly fees which amount to $30-50 per year. You then have to look into what the trading fees will be with the investments. The potential savings aren't worth the hassle to me.

If your account balance is 20k or more, I'd look at alternatives with a flat monthly fee.

e.g. BofA

Fees: http://healthaccounts.bankofamerica.com/what-are-the-account-fee...
$4.50/mo = $56/year.

Investment options: https://benefitsolutions.bankofamerica.com/common/InvestmentPerf...
Expense Ratio of 0.17% on the S&P tracker.

Landing page with faqs on how to set up etc: http://healthaccounts.bankofamerica.com/learn-individuals.shtml

I have HSA brokerage account at Saturna with $0 fees (if you have at least one trade per year). Good thing about it is you can invest in stocks also.
Opening an account and even contributing to it is a bit pain (you cannot do either online. They have one consolidated form all account openings, which is really a pain to fill out). But once you open the account, all trades are done thru Pershing Web Site, which I had no problems.

kleinjoshuaa said:   My HSA is through healthequity. There's a nice selection of Vanguard funds available, but they jack up the prices with a 0.033% monthly fee (which I think the math works out to be annual ~0.39 expense ratio) in addition to whatever the fund expense ratio is. However, this is still attractive as an investment because of all the tax advantages you get with an HSA. The plan is to use this to increase retirement savings and pay for medical bills out of pocket.  What are the pros/cons/things to consider with this approach? Thanks
  My employer also picked healthequity.  After two years and their fees, I did a partial rollover over to SelectAccount.  They have some Vanguard funds or if you have $10K or more, have them open a Schwab brokerage account.

Payroll contribution remains with healthequity but I'm planning to rollover to SelectAccount every year or so.  HealthEquity can only rollover cash.

oko said:   I have HSA brokerage account at Saturna with $0 fees (if you have at least one trade per year). Good thing about it is you can invest in stocks also.
Opening an account and even contributing to it is a bit pain (you cannot do either online. They have one consolidated form all account openings, which is really a pain to fill out). But once you open the account, all trades are done thru Pershing Web Site, which I had no problems.
 

  To be clear, the one trade can cost $15-25 dollars. I've been pleased with my HSA there, although it does take a little hassle to set up. They were very helpful answering questions about it over the phone, don't be shy about calling them up.


Lake Michigan Credit Union, no fees, attractive rates.

I'd say it's not that bad of a deal, at least compared to a taxable account. Transfer out later if you find a better deal.

I wasn't aware that you could submit receipts years in the future.  Can you reference something from the tax code or external site which verifies this further. I'm in a HDHP with HSA and just paying my health expenses out of pocket to allow my maxed HSA  to accumulate and grow fir retirement. 

Would my current insurance Explainstion of Benefits listing service provided and the expense which is my responsibility be sufficient as a future record? It would be easier to archive these EOBs than individual provider receipts.

Thanks.

I have HSA Bank, and their investing website is TD Ameritrade with no recurring fees other than trade commissions. Lots of options for commission free trading (including a lot of Vanguard funds), and access to just about the entire market if I want to pay the commissions.

I'd look at moving your funds to a different carrier after they get deposited by your employer.

rsmiele said:   I wasn't aware that you could submit receipts years in the future.  Can you reference something from the tax code or external site which verifies this further. I'm in a HDHP with HSA and just paying my health expenses out of pocket to allow my maxed HSA  to accumulate and grow fir retirement. 

Would my current insurance Explainstion of Benefits listing service provided and the expense which is my responsibility be sufficient as a future record? It would be easier to archive these EOBs than individual provider receipts.

Thanks.

  
Check out madfientist.com.  He has covered HSAs extensively.
 

Thanks for the madfientist.com referral.

Does anyone have an HSA managed by Fidelity?  Is it possible to set up a Fidelity HSA account and do an in service transfer from my company's HSA provider?  Can the existing HSA provider or plan refuse an in service transfer request? 

stardent said:   Lake Michigan Credit Union, no fees, attractive rates.
  
yeah i have one too. Didnt sign up for what employer offered because there is a fee..

lmcu pays a small dividend for the deposit also

rsmiele said:   Thanks for the madfientist.com referral.

Does anyone have an HSA managed by Fidelity?  Is it possible to set up a Fidelity HSA account and do an in service transfer from my company's HSA provider?  Can the existing HSA provider or plan refuse an in service transfer request? 

  
I am not an expert on HSAs, but...  Check your summary plan description for company HSA.  It should address transfers.
 

rsmiele said:   Thanks for the madfientist.com referral.

Does anyone have an HSA managed by Fidelity?  Is it possible to set up a Fidelity HSA account and do an in service transfer from my company's HSA provider?  Can the existing HSA provider or plan refuse an in service transfer request? 


No they can not refuse a transfer out but they can charge a fee. The concept of in-service transfer does not exist for HSA.

And Fidelity does not offer HSA unless your employer has arrangement with them. Same for other brokerages.



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