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No fees with HSA Bank...is it worth it?

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  • No fees with HSA Bank...is it worth it?

    I recently transferred my health savings account to HSA Bank and was told if I maintain a $5000 daily balance there will be no fees on the banking side or the investment side with TD Ameritrade.  The monthly fees would be $5.50 if I kept the entire amount invested. Is it worth avoiding the fees, or would it be better to keep it all invested?

  • #2
    I have $5000 in cash and the rest in TD Ameritrade. Not a rational decision, I'll admit, as the opportunity cost of keeping that money on the sidelines is greater than the $5/mo... but I really don't like fees. I think about it like part of my "health care" emergency fund, which is exactly what it's supposed to be!

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    • #3
      I agree about not liking fees...but I also think there could be massive lost opportunity cost. If my investment only made 1%, the $6750 contribution would grow to a $6818 in one year thereby covering my $66 annual fee.

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      • #4
        I will probably pay the fees when the balance of my HSA increases enough to make the overall expense ratio more palatable.

        For example, suppose there I keep $100 in the cash account and the rest in TD Ameritrade index funds. Here are the overall account expense ratios for account totals:













































        cash investment portion total annual fee ER
        100 6650 6750 60 0.89%
        100 13400 13500 60 0.44%
        100 20150 20250 60 0.30%
        100 26900 27000 60 0.22%
        100 33650 33750 60 0.18%

         

         

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        • #5
          I pay the fees and invest the money.
          Helping those who wear the white coat get a fair shake on Wall Street since 2011

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          • #6




            I will probably pay the fees when the balance of my HSA increases enough to make the overall expense ratio more palatable.

            For example, suppose there I keep $100 in the cash account and the rest in TD Ameritrade index funds. Here are the overall account expense ratios for account totals:













































            cash investment portion total annual fee ER
            100 6650 6750 60 0.89%
            100 13400 13500 60 0.44%
            100 20150 20250 60 0.30%
            100 26900 27000 60 0.22%
            100 33650 33750 60 0.18%

             

             
            Click to expand...


            Wrong way to look at it. It's really just the first $5K you care about. So $5.50 a month x 12 months = $66 a year. So $66 out of $5000, or a little more than 1%. The account pays like 0.5%. So if your return is 2%+ investing, you're coming out ahead. Seems a pretty easy bet to make.
            Helping those who wear the white coat get a fair shake on Wall Street since 2011

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            • #7
              If you use your HSA debit card to pay for health expenses, do you need to have that amount available in cash or will it automatically draw down your investment account?

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              • #8




                If you use your HSA debit card to pay for health expenses, do you need to have that amount available in cash or will it automatically draw down your investment account?
                Click to expand...


                It needs to be in cash. They won't even pull the amount for the fees from TD Ameritrade. When I got behind on fees they sent me a letter about it so I had to transfer a few bucks to HSA Bank from TD Ameritrade.
                Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                • #9
                  I'm looking at my HSA account as just another vehicle for retirement.  I'm not planning on actually using the money to pay for medical expenses - I'll pay those expenses out of pocket. It does seem that paying the annual expenses and keeping the majority of the money invested will provide for better long term returns.

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                  • #10
                    I dont use it as an actual HSA, just a retirement vehicle. I think the fee is lame, but invest the whole thing and pay the fee.

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                    • #11




                      I’m looking at my HSA account as just another vehicle for retirement.  I’m not planning on actually using the money to pay for medical expenses – I’ll pay those expenses out of pocket. It does seem that paying the annual expenses and keeping the majority of the money invested will provide for better long term returns.
                      Click to expand...


                      Not true. You are probably better off spending it on health care now than on a sailboat at age 65. It's only triple tax free if spent on health care.
                      Helping those who wear the white coat get a fair shake on Wall Street since 2011

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                      • #12
                        Well as long as you have receipts for medical things you can offset those later no matter how you actually spent it. Im saving it until later, it will take a massive shift somewhere for there not to be enough HC dollar demand to use it after retirement.

                         

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                        • #13
                          True. I meant to clarify - not to spend on CURRENT medical expenses - I'll pay those expenses out of pocket. I'm sure I'll have plenty of medical expenses in retirement to gain the triple tax free benefit. And like Zaphod said, I can always hold onto medical receipts as I near retirement.

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                          • #14
                            Is it possible to pay for fees without using money in the account? Would it be better to let the money that is in the account grow tax free and write a check out for the fees from other funds?

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