HSA fees

[ScientistPhysician]

I started an HSA this year after opting out of my university HMO for a HDHP (never go to doctor and don't need to at this point).

I have to use PayFlex in order to get "free money" from my employer (~$600 a year). PayFlex is awful, they have limited funds available and the fees are sneaky. Once you start investing, they charge $2/month for an "investment account fee." Considering I can only invest the balance over $1000 in the account, it will take some time before the account principle is >> fees.  With only $2000 in the account so far ($1000 investable), it seems like a bad idea to start investing, considering the fees would be about 2% of the account annually. That's more egregious than most actively managed mutual funds and that's just for the privilege of investing in a limited set of vanguard and schwab ETFs and some crappy mutual funds.

My strategy has so far been to not invest to avoid the fees and just use the account for dental/medical bills to take advantage of the immediate tax savings worth >30%. Any thoughts or advice on when to start investing with the account?

[jz]

Just start.  Starting with $1000 investment you're  paying expenses of 2.4% for the first year.  I pay $7.50 monthly for the investment options.

[adventure]

Don't forget, you pay that small fee for: $600, and the opportunity to invest. What are the expense ratio on the fund options? A mediocre fee on a balanced fund is not all bad! I also say start. Money might grow faster too.

I have a limit to how much hassle I'll stretch for a low amount of money. Meaning, if you start now, it may save you time later and keeps things simple.

Good for you for having a pile in the HSA already. Are you already, or able to contribute the max each year?

[ScientistPhysician]

adventure wrote:

Don’t forget, you pay that small fee for: $600, and the opportunity to invest. What are the expense ratio on the fund options? A mediocre fee on a balanced fund is not all bad! I also say start. Money might grow faster too.

I have a limit to how much hassle I’ll stretch for a low amount of money. Meaning, if you start now, it may save you time later and keeps things simple.

Good for you for having a pile in the HSA already. Are you already, or able to contribute the max each year?

Click to expand...

Thanks for the advice. Yes I am already maxing and will continue to do so for as long as I have the eligible plan.

To clarify, I get the $600 so long as I use PayFlex-- I don't have to invest and I haven't so far, so the juice isn't running on the fees yet.

[Craigy]

Don't sweat the small stuff.

Definitely irritating though, once you've been there awhile you can figure out who to complain to about it.  Squeaky wheel might be a motivator.

[Gamma Knives]

If you want to keep using the account to pay out bills it may make sense to not go the investing route. If you want to use it as a retirement account (as many of us do) then I would max out your contribution for the year which I believe would be $6750 if you are married (actually I would max it out either way if you can given the tax advantages). At that point the $2 monthly fee is still annoying but a much smaller percentage and in a few years it will be negligible.

[East coast]

ScientistPhysician wrote:

I started an HSA this year after opting out of my university HMO for a HDHP (never go to doctor and don’t need to at this point).

I have to use PayFlex in order to get “free money” from my employer (~$600 a year). PayFlex is awful, they have limited funds available and the fees are sneaky. Once you start investing, they charge $2/month for an “investment account fee.” Considering I can only invest the balance over $1000 in the account, it will take some time before the account principle is >> fees.  With only $2000 in the account so far ($1000 investable), it seems like a bad idea to start investing, considering the fees would be about 2% of the account annually. That’s more egregious than most actively managed mutual funds and that’s just for the privilege of investing in a limited set of vanguard and schwab ETFs and some crappy mutual funds.

My strategy has so far been to not invest to avoid the fees and just use the account for dental/medical bills to take advantage of the immediate tax savings worth >30%. Any thoughts or advice on when to start investing with the account?

Click to expand...

I also have PayFlex - I've been happy with their set up.

What fees are sneaky? Totally possible that they offer different set ups for just about everyone, but others I've talked to that have it seem to be under the same terms as mine. The only fee I pay is the $2/month for investing.  Outside of that the only other fees are Non-Sufficient Funds Fee, Deposit Item Returned, Monthly Paper Account Statement, and Stop Payment.  All of which i will never participate in and can be found by clicking on the 'Fee Schedule' tab - I actually think they are about as transparent as possible about fees.

The funds they offer are excellent - mostly because I can just get VFIAX (S&P 500) at a .05% expense ratio. But can also get seven other Vanguard funds.

Every HSA charges fees of some sort, so I think this is a 'grass is always greener' situation you find yourself in.

[East coast]

For those that read this thread in the future and a heads up to ScientistPhysician...I just got an email that Payflex is getting rid of the $2/month investment fee starting in October.

There are a few other fee changes to the account, but this is the only one that will affect me.