HSA Fees?

[zback]

I was going to open up a HSA with a local bank and when I asked about maintenance fees, this was their answer: "The annual fee is 50 basis points (0.50%) of the market value of the E-HSA.  It is charged on the market value on a monthly basis.  Other than that, there is NO other fees or charges associated with the E-HSA". Is that not crazy high, 0.5%?! Most places just have their routine fee, which seems to be less than $100.

[jfoxcpacfp]

Maybe a bit higher than larger institutions, but with a starter HSA, you're probably going to pay less. If the bank allows you to invest all of the HSA rather than keeping $1k or $2k in cash, you'll be very competitive until the account grows for a couple of years.

You can compare HSAs here and you can transfer your account to another institution at any time.

[ajm184]

If you have a large HSA, then 50 bps would be high imo.  As it appears you are just starting out (first time contributing to an HSA), 50 bps annually is not ideal but is reasonable from my limited experience with HSA's.  With a family contribution limit of $6,450 to an HSA per year; in the account you describe, and with no interest paid, the cost is $32.25.  I'm going to guess you will receive interest that should at least offset the account if you contribute the maximum allowed day 1.

Once you contribute for a 2 to 3 years (and don't actually withdraw) the challenge I have experienced is flipping the account to one where you can invest a portion of the HSA account into equities to get the opportunity for increased long term returns for a reasonable cost.  As an individual what I saw was a combination of bad fund selections within the HSA program or high fees.  With some employer leverage, things improve drastically.

I as an employee still pay based on total assets (guessing 25 bps), but the interest paid on the liquid portion of my HSA more than covers the expense, plus get access to Vanguard Institutional class funds within the long term portion of my HSA.