Why so few HSA accounts offered?

[safari]

I read through all of this excellent thread started by TromboneAl:

http://early-retirement.org/forums/index.php?topic=5634.0

A year ago I looked at getting an HSA to replace my regular private health insurance with BCBS. My BCBS premiums have gone up about 1000% over the last 7.5 years! Recently, I started looking at HSAs again. Last year there were few choices when it came to getting an HSA account. Most were offered by a few banks with various fees and just a money market fund. A very few other banks had the option of some mutual funds, but also various fees. By the way, I already know about this one:

http://www.hsaadministrators.com/

An HSA account is little different from an IRA account, yet although many companies (Charles Schwab, Fidelity, TD Ameritrade, etc.) offer IRA accounts with very reasonable, or no, fees, I can't find any of them that offer HSA accounts. Why is that? Am I missing something?

 

[mykidslovedogs]

Here is a unique HSA comparison tool that allows you to find banks that offer good investment opportunities for HSA accounts: I have posted this in another thread, but maybe you missed it earlier?:

http://www.vimo.com/hsa/

 

[GangnamStyle]

Wow.

I seemed to have missed or purposely overlooked the HSA threads. A bit silly since health plans are the biggest problem I see with ER.

Just digested the threads here and on fatwallet... will let this percolate a bit, but it seems... fantastic.

You get an immediate tax shelter, the funds are available for emergency medical expenses tax free (immediately if you need them), the funds open up at 65 for your use (and become part of the estate), and you can claim health costs that you paid out of pocket years after occurance. The only downside I would see is if they changed the tax code to take a "small one time fee" that slowly turns into a tax on those that have saved.

Time to think on this a bit but wow.

 

[safari]

Hmm, since no one has responded to my question does that mean no one knows the answer? I recall reading an article about a year ago, I think, about how the investment industry was chomping at the bit to offer HSA accounts, but Charles Schwab, etc. still don't have them. What happened? They seem so similar to an IRA and IRAs are ubiquitous, but HSAs seem to mostly just be at banks with lots of fees, few investment options, etc.. Why is that?

 

[REWahoo]

safari, a one-time poster offered the following explanation (the post was deleted as the remainder was spam, including the posters username):

actually a HSA is very different from a IRA in terms of what a company has to do behind the scenes with software and reporting. Mutual fund companies want do part of 100,000 low balance accounts, which is why they are only offering a mutual fund option with other HSA providers (min balance of 1000-3000)

 

[safari]

Okay, thanks for that info. I remember the article that I read (I think it was a newspaper or magazine website) that said that investment firms were preparing to launch their HSA accounts. I think the article was dated about 2 years ago. I wonder what happened?

I am considering the switch to a BCBS HSA $5000 max out-of-pocket HDHP and need to find a place for the account. I prefer having the option for investing in mutual funds rather than just a simple, low-interest savings account. I can afford to make the maximum contribution per year and still have money outside of the HSA account to pay medical bills.

By the way, does anyone know if the funds in the HSA account can be withdrawn tax-free to pay the HDHP premiums? That would be sweet! Probably not allowed though.

 

[REWahoo]

I am considering the switch to a BCBS HSA $5000 max out-of-pocket HDHP and need to find a place for the account. I prefer having the option for investing in mutual funds rather than just a simple, low-interest savings account. I can afford to make the maximum contribution per year and still have money outside of the HSA account to pay medical bills.

By the way, does anyone know if the funds in the HSA account can be withdrawn tax-free to pay the HDHP premiums? That would be sweet! Probably not allowed though.

Nope, you can't use HSA funds to pay your HDHP insurance premiums without penalty.

www.hsaadministrators.com allows investing in Vanguard funds.

There have been lots of threads on HSA's, you might want to do a search to see what you come up with.