Recommend an HSA administrator

[Sue J]

2014 will be our first year to have a HDHP (ACA Bronze plan) with an HSA. I understand the concept and the requirements. Now I'm shopping for an HSA administrator. I'd like to find one that has low fees and preferably has Vanguard funds in their investment options.

So far I've found -
HSA Adminstrators - Health Savings Account - HSA Administrators
$45 annual fee and .0008 quarterly custodial fee. VG funds available.

HSA Bank - Navigate to a Health Savings Account - HSA Bank
$3/mo if you have under $4925. TD Ameritrade funds. Trading fees may apply.

Optum Bank - OptumBank.com - Optum Bank
Low monthly fees ($3 - $5.50 a month) and VG funds available.

We will probably fund this with $6550 - $7550 (over age 55) in January. I'd keep a minimum (if needed to avoid a fee) in the checking and invest the rest until needed as expenses happen.

Can you recommend any of these or any other HSA adminstrator? Optum Bank looks like a good candidate but I had never heard of them until I searched.

Thanks.

[audreyh1]

Questions to ask yourself:

Do you intend to use your HSA for paying medical bills in the near future?

or,

Will you leave it as a long term investment and pay any medical expenses out of pocket in the short term.

This indicates the type of account you want. In the first case, you want something that works more like a checking account. In the later, the funds available for investment become more important.

I see you want both - part in checking and part in long term investments.

We plan to go with HSA Administrators as our goal is long-term growth and then paying medical bills we incur after age 65. But we may not invest until closer to the end of the year, so I have lots more time to decide.

You say "We" - you each will have a separate HSA account. I don't think there is such a thing as a joint HSA account. Individuals only. Plus, in order to each take advantage of the $1000 catch up contribution for 55+ you really want to do it that way anyway, instead of one of you having the account. Of course that means double the fees.

Quote:

Each spouse who is an eligible individual who wants an HSA must open a separate HSA. You cannot have a joint HSA.

from http://www.irs.gov/publications/p969/ar02.html

You can get by with only one of you owning an account, as accounts can be used to pay spouses medical bills. But then you are limiting your annual contributions by $1000.

[Sue J]

Our medical costs for the last 3 years have been $2500 - $3500 for the both of us combined. That's the negotiated rate if we had to pay all of it. Our insurance paid some but for purposes of the HDHP in 2014 I've done a spreadsheet showing the rate it would have been with nothing paid by insurance.

I think we would do a single HSA in my name and then I'd pay DH's bills with my HSA debit card. One catchup contribution of $1000 is fine. I've also just funded my Roth IRA for 2013 so $7550 is comfortable for the HSA.

As for using it for medical expenses throughout the year vs leaving it to grow and using it later, I'm not sure. Our ACA plan premium being low is going to free up $250 a month and that's before the tax savings of funding the HSA (another $755). And then our income being reduced by the $7550 HSA contribution should give us an additional tax credit for the subsidy adjustment when I file taxes for 2014 in 2015 since I estimated our income to be higher when I applied for ACA plans.

So I'm thinking that we can pay normal expected medical costs out of our regular monthly income and then reimburse out of the HSA, if needed. It would be nice to leave all or most of it in the HSA.

Hmm, lots to think about.

[pb4uski]

We use HSA Bank/HSA administrators since we like VG funds. We just contribute, don't really use it other than for tax-free growth.

They have been fine. The fee is annoying but when combined with the low ER of the VG funds available makes with worth the annoyance.

[RunningBum]

Check out a credit union if you are eligible. Mine has no charge and pays 1.5% money market. At some point I may switch since my balance it getting high enough that a fee won't bother me, but that's a pretty good safe rate. I've heard of other credit unions with no fees, but I don't know how common they are.

[audreyh1]

Timely article from M*: Best Practices for Health Savings Accounts

[Sue J]

I found a local credit union that offers the checking account part with no fees. The interest rate is 0.10%. But no investment options. I originally planned to go with just the checking account type of HSA and fund it as we went along.

In an effort to get DH involved in some part of our financial life I asked for his input on the HSA and he likes the idea and asked if we could fund the maximum for the year. If we are parking that much money we should put most of it in an investment so that's why I'm now looking for the type of account that offers investments.

Thanks for the Morningstar article, audreyh1. Here's the link for non-members -
http://ibd.morningstar.com/article/a...d=12,%20brf295

[travelover]

I've been using Patelco credit union. For several years, I just used the checking account option at $2 a month. They have added an investment option that is about $7 additional a month. The investment options include some Vanguard funds.

They just provide yearly summaries for tax purposes. You have to keep track of receipts, etc - which is a good thing compared to my prior PITA HSA administrator.

[REWahoo]

I've used Health Savings Account - HSA Administrators for 8 years and been happy with them. They have a nice variety of Vanguard Funds and most are Admiral level regardless of the amount you have invested.

[bamsphd]

Quote:

Originally Posted by Sue J Thanks for the Morningstar article, audreyh1. Here's the link for non-members - http://ibd.morningstar.com/article/a...d=12,%20brf295

Yes, I don't know why but it never occurred to me that I could have more than one HSA account!

I also like the link to http://www.bogleheads.org/wiki/Health_Savings_Account

[audreyh1]

Quote:

Originally Posted by bamsphd Yes, I don't know why but it never occurred to me that I could have more than one HSA account! I also like the link to Health savings account - Bogleheads

For each HSA account you file an 8889 form if there has been deposit or withdrawal activity in a given year. Each HSA will send you a tax statement. For various reasons, some individuals may end up with more than one HSA account. Kind of like with IRAs. And like with IRAs you can "roll them over" - consolidate assets.

[audreyh1]

Another recent M* HSA article FAQs on HSAs

And if you don't have M* access, I encourage you to at least get the basic free account. There is a great deal of excellent info and articles available and I can't imagine evaluating mutual funds, ETFs, CEFs or dividend stocks without M* database of knowledge.

[zinger1457]

I use Wells Fargo as my HSA administrator. The monthly fee (~$4) is waived if your balance is over $5k. A decent choice of investment options for my needs, I'm just looking for index type funds.

[Gotadimple]

Sue,
I use HSA Bank. It sounds as if you want to accumulate rather than use the HSA funds to reimburse yourself for expenses. With the balance you are planning on depositing, you would avoid the monthly fee immediately.

I was planning on holding funds to pay premiums when I am Medicare eligibile, as well as any uncovered medical expenses.

So I have not invested any of these funds. Interest paid on deposits is good, but not as good as at a High Yield savings account. Customer service, when needed, is excellent.

-- Rita

[rericks1]

All of the administrators you are looking at are good ones. I have mine with SelectAccount which is an insurance company and one of the larger administrators. They have 3 options - one pays interest equivalent to a bank and is $1/mo with the fee waived with a deposit balance of at least $2500. They have other accounts at $2.50 and $4 a month that pay above market and well above market rates. If you want an investment account there are two options - any balance above $1000 can be transferred to mutual funds. They aren't Vanguard funds but they are institutional class and loads have been waived so the fees are reasonable. There is a 1.50/mo fee whenever you carry a balance in mutual funds. If you have $10000 in your total account you can open a brokerage account instead. The fee here is also $1.50 per month and you pay Schwab transaction fees at market rates.

I'm using my account for both current expenses and retirement so carrying their deposit account and keeping the balance at least $2500 and then using the investments for the other means a monthly fee in total of $1.50 / mo.

Good luck with your search.

[Cat-tirement]

A question for anyone familiar with HSA Administrators:

Since they include an account with HSA Bank, I wonder if you could change your mind in the future and move all your funds into the HSA Bank account, and terminate the HSA Administrator parent account. (This might be desirable to get a larger range of investments via HSA Bank's arrangement with TD Ameritrade.)

[Sue J]

Just to update ...

I opened an account with HSA Administrators a few days ago. I thought I'd be able to transfer money right away but I have to wait for info in the mail. I chose them because of the selection of Vanguard funds and the simple fee structure.

I think I will put $1500 -$2000 in right away, pay for expenses outside the HSA and then evaluate every few months and maybe get to the max of $7550 by year end. The tax deduction is attractive even though we are in the 10% bracket but the additional Obamacare subsidy for the smaller taxable income may be worth even more.

[sengsational]

I just asked "PayFlex", megacorp's chosen HSA administrator, what the fee structure would be if I (gasp) no longer was actively employed at megacorp.

I'm not hopeful about customer service: there's no way to message them except to call during their narrow business hours or snail mail. But they did have a fax number, so I typed an MS Word letter, printed it to PDF and dropped it on their fax machine with FaxZero, hehe.

[ziggy29]

Yeah, my Megacorp used UMB Bank, and I haven't moved it yet though I do plan to eventually because the investment transaction fees are ridiculous (though there is no fee since the balance is high enough to avoid it).

[REWahoo]

Quote:

Originally Posted by Cat-tirement A question for anyone familiar with HSA Administrators: Since they include an account with HSA Bank, I wonder if you could change your mind in the future and move all your funds into the HSA Bank account, and terminate the HSA Administrator parent account. (This might be desirable to get a larger range of investments via HSA Bank's arrangement with TD Ameritrade.)

I think you'll need to contact HSA Administrators with that question. My guess is what you are proposing would likely be seen by the IRS as withdrawing all your funds from your health savings account.