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Vanguard May Offer HSA Soon??!!
Old 11-13-2007, 09:47 AM   #1
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Vanguard May Offer HSA Soon??!!

After reading another poster's finance blog that mentioned any institution currently qualified to serve as custodians of IRA's can also serve as custodians of HSA's (Health Savings Accounts). So I got to thinking, why hasn't Vanguard offered an HSA account type yet?

I called up the Voyager customer service, and had a nice chat with one of the guys at vanguard and I asked about any potential upcoming HSA offering from vanguard. The CSR said that Vanguard has talked about it at length and that information regarding their decision on it would be forthcoming in a few months. It didn't sound like offering HSA's was a done deal, but I'm inferring from this conversation that there is a high likelihood that VG will offer the HSA's sometime in the next year or two.

I'd like to switch custodians from my current HSA provider, however I'm not too pleased with the alternatives available in the market today.

Just an FYI for those looking to start an HSA or looking to move your current HSA funds to a new parking spot and like cheap access to low-cost vanguard index funds.

Hopefully the vanguard hsa will be lower cost than the current offerings (hsaadministrators and ex-ante seem to be the current best choices for access to low cost vanguard funds).
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Old 11-13-2007, 11:11 AM   #2
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Originally Posted by FUEGO View Post
After reading another poster's finance blog that mentioned any institution currently qualified to serve as custodians of IRA's can also serve as custodians of HSA's (Health Savings Accounts). So I got to thinking, why hasn't Vanguard offered an HSA account type yet?

I called up the Voyager customer service, and had a nice chat with one of the guys at vanguard and I asked about any potential upcoming HSA offering from vanguard. The CSR said that Vanguard has talked about it at length and that information regarding their decision on it would be forthcoming in a few months. It didn't sound like offering HSA's was a done deal, but I'm inferring from this conversation that there is a high likelihood that VG will offer the HSA's sometime in the next year or two.

I'd like to switch custodians from my current HSA provider, however I'm not too pleased with the alternatives available in the market today.

Just an FYI for those looking to start an HSA or looking to move your current HSA funds to a new parking spot and like cheap access to low-cost vanguard index funds.

Hopefully the vanguard hsa will be lower cost than the current offerings (hsaadministrators and ex-ante seem to be the current best choices for access to low cost vanguard funds).
Thanks for the heads up. A Vanguard option for HSA's would be a good option to have available.
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Old 11-13-2007, 11:30 AM   #3
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I am interested in VG HSA, and I really wish they would develop something that functions like a full service checking account with interest. I hear that Fido is going to announce something like MySmartCash (?) which allows your money to be assigned to a real FDIC insured bank but the funds are held and managed by Fido, and you can see the activity on the Fido site. You would be able to write unlimited checks while making 3.5% interest, unlimited free ATM, etc. I would give anything if VG would do the same thing.
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Old 11-13-2007, 11:53 AM   #4
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I am interested in VG HSA, and I really wish they would develop something that functions like a full service checking account with interest. I hear that Fido is going to announce something like MySmartCash (?) which allows your money to be assigned to a real FDIC insured bank but the funds are held and managed by Fido, and you can see the activity on the Fido site. You would be able to write unlimited checks while making 3.5% interest, unlimited free ATM, etc. I would give anything if VG would do the same thing.
Maybe a bunch of us Vanguard fans ought to bombard their "Beneficial Suggestion" box with customer suggestions.

They used to say "If you build it, they will come". Maybe we could switch that to "Vanguard, we are coming. Please build it"!
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Old 11-13-2007, 02:10 PM   #5
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I did mention to the Voyager representative that I know there is significant demand from many members of multiple online communities that favor vanguard as a custodian for their other investment assets. And I informed him that many folks are viewing HSA's as a quasi-IRA, just another method of saving on taxes when you contribute and having tax free gains.

On a side note, it is amazing how the customer service gets stepped up a notch from the regular CSRs to the Voyager CSR's (for folks w/ over $100,000 in assets w/ Vanguard). They chat with you, provide helpful advice about things tangentially related to what you are asking about and are more conversational in tone than the usual transactional-hurry-up you get at most places.
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Old 11-13-2007, 02:17 PM   #6
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RR,

I actually thought of that myself. If enough people request something that is a reasonable request, particularly if a competitor is offering it, seems like we would have better success.

It might work!

TG
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Old 11-13-2007, 03:44 PM   #7
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Another thanks for the heads up. After reading the recent discussions here about HSAs, we've gotten quite interested. A Vanguard HSA would surely be something we would look into.
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Old 11-14-2007, 11:18 AM   #8
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Funny timing on two counts.

1. I wrote a post last Friday where I mentioned that I was looking up the possibility of rolling over my HSA to E-Trade (our brokerage service). I've written E-Trade two emails asking them if they offer the service, but I haven't gotten a response yet
E-Trade Rollover Post

2. Probably related to the reason they haven't e-mailed me, E-Trade is obviously experiencing some problems right now. While I'm not moving my accounts out of E-Trade at the moment, I'm also not likely to initiate any transfers To E-Trade in the near future, at least until things calm down a little.
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Old 11-14-2007, 11:31 AM   #9
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I just found out that E-Trade did indeed reply to my message, they just stored it in their message center instead of e-mailing me. Oh well. They say they don't offer HSA rollovers, and don't plan on it.

I'm writing Vanguard now to ask if they will support HSA rollovers soon, and if anyone else is interested, here is the Vanguard contact us page. Took me a little digging to find the link.
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Old 11-14-2007, 12:33 PM   #10
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Funny timing on two counts.

1. I wrote a post last Friday where I mentioned that I was looking up the possibility of rolling over my HSA to E-Trade (our brokerage service). I've written E-Trade two emails asking them if they offer the service, but I haven't gotten a response yet
E-Trade Rollover Post
Dave,

It isn't really funny timing in this case. Your blog was the "another poster's finance blog" I referenced in the original post here. It got me to thinking - why not give vanguard a call and see what is on their mind.

I'll definitely be interested in what kind of a response they would be willing to put in writing in an email response to you. I was sort of surprised that I actually got any information out of them (them being a big corporate entity and all).

Maybe we should start an active "petition" campaign to convince Vanguard that there is an unmet need in the HSA market and Vanguard could serve that need in a synergistic manner for many of their account holders. For now, this market appears to be growing every year by leaps and bounds. The size of market as judged by assets under management should grow exponentially as account holders continue to contribute each year and the underlying assets also experience growth due to capital appreciation and dividends.
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Old 11-14-2007, 12:37 PM   #11
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Maybe we should start an active "petition" campaign to convince Vanguard that there is an unmet need in the HSA market and Vanguard could serve that need in a synergistic manner for many of their account holders. For now, this market appears to be growing every year by leaps and bounds.
Might get them to speed thing up, if they aren't yet ready to spring an HSA option soon.
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Old 11-14-2007, 12:42 PM   #12
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I know a number of large corporations who are strongly (strong arming more like it) encouraging their employees to change to their new high deductable/HSA health care plan. This was last year, and I assume that other companies will follow along. My assumption is that it greatly reduces their expenses, and in my opinion, it works out really well for my family

As things are, we spend very little on health care anyway, so I am able to use the HSA as another tax advantaged vehicle, and hopefully when we retire, we'll have this growing pool of money we can use for health care without paying taxes. Works out well.
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Old 11-14-2007, 12:44 PM   #13
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Dave,
It isn't really funny timing in this case. Your blog was the "another poster's finance blog" I referenced in the original post here. It got me to thinking - why not give vanguard a call and see what is on their mind.
Oh, well aren't I silly? Now I'm comparing my blog post to myself I guess. Soon I'll make my own topic where I'll argue with myself.

Thanks for pointing out Vanguard by the way, I'm certainly going to be interested in the first major brokerage house that offers HSA administration.
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Old 11-14-2007, 01:02 PM   #14
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I have no experience in the field of internet-based petition campaigns. But I imagine if one were to spearhead the effort, there's probably dozens or 100's of us that don't speak or post our opinions for every one that does. Between this forum, the vanguard diehards forum and a few other early-retirement community forums, we've probably got thousands of vanguard clients (or potential vanguard clients) viewing our collective posts. Plus the untold number of googlers that might happen upon a search for "HSA Vanguard" or some permutation/combination.

One thought of a way to implement the online petition in a simple, straight-forward, easy to implement manner would be to use a blog with the post being the petition, and the petitioners/signatories leaving a comment underneath. Not sure how to format this (ie - I'm a vanguard voyager member from timbuktu, alabama, and I want a vanguard HSA to which I expect to contribute $5650 per year for the indefinite future" - or simply "John Smith from Timbuktu, Alabama").

Either someone with an existing blog (such as hobbydave) could start the "petition" by posting a blog entry or another member could start a simple new blog (takes maybe an hour?). We get the URL to the blog post and then we could all spread the word at the various financial forums we belong to. And email it to family/friends if we know they use HSA's and might become vanguard clients.

Or maybe something a little more sophisticated. google revealed these: gopetition.com and www.petitiononline.com seem to offer a way to freely host petitions and collect the signatures into a database for the one starting the petition.
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Old 11-14-2007, 03:27 PM   #15
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As much as I would like to forward piles of traffic to my blog (time to add more advertising! Wahoo!), I think the best thing we could forward around would probably be the "contact us" link for Vanguard. If everyone who is interested sends an email or calls Vanguard and says they want an HSA, I have to imagine that would get up to the upper ranks as lost funds.

When I said I wanted them to administer my HSA account, I made sure to mention that I had a large number of other accounts which would follow my HSA account to Vanguard. So they have a lot more riding on this than just their HSA administration profits, but the chance they'll get more customers in general.
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Old 11-14-2007, 09:27 PM   #16
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Keep me posted.

Maybe they will offer health insurance I can qualify for.
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Old 11-15-2007, 12:09 PM   #17
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I received the response from Vanguard:

Quote:
Thank you for your e-mail. We appreciate the time you have taken to contact
us.

Vanguard is examining the feasibility of offering Health Savings Accounts
(HSAs), but has no firm plans at this time.

Vanguard is aware of some HSA programs featuring Vanguard mutual funds. It
appears that these parties are providing HSA administration and offering
Vanguard mutual fund investments via an investment-only relationship.
Vanguard has not formed a direct partnership in providing an HSA program at
this time.

Additional information regarding HSAs can be found under the 'Account Types
& Services' sub-link of our 'Personal Investors' homepage. Next, click the
two HSA-related links on the right-hand side of the page under the 'Also of
interest' heading.

If you have additional questions or would like more information on
consolidating your assets with Vanguard, please contact Vanguard
Specialized Services at 1-800-337-8476. We are available Monday through
Friday from 8 a.m. to 8 p.m. Eastern time. An associate will be pleased to
assist you.
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Old 11-15-2007, 01:34 PM   #18
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" Vanguard is examining the feasibility of offering Health Savings Accounts
(HSAs), but has no firm plans at this time."

I could see vanguard not coming out with an HSA, depending on how they view it. It might be costly from the administrative side, especially if folks use it w/ an attached debit card and take out $5 to pay for prescription drugs and $50-100 to pay for a dr's visit. I'd like to see a fee-free option for HSA's, and maybe they can charge $20-30/yr if you want an attached debit card (or funnel withdrawals through checks like their Money Market Funds, or have a debit/atm card with Vanguard-advantage type access).

Vanguard has done a really good job so far of letting us save them money and thereby save us money (ie - electronic statements and prospectuses in exchange for no $20 fees on small accounts).

On a different note, I finally have access to HSA investment options today through DW's employer. They are all JP Morgan funds, all of which have 1+% expense ratios (some close to 2%). Except an equity index fund (tracks SP500) w/ front end load waived w/ an ER of 0.45% or so. Overall not too bad, and convenient. It would be nice to have something other than an SP500 option, since this is primarily all I have available through my 401k. At least the HSA fees and fund er's are low...
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