Health Savings Account (HSA) Research

I've been doing comparison of various health savings account (HSA) providers, and there's a lot of variety. Here's my findings so far:

UMB
Setup fee: $0 for partnered health insurance providers
Monthly fee: $2.50

Debit Account:
Interest paid:
$0 – $999.99: 0.50%
$1,000.00 – $4,999.99: 0.75%
$5,000.00 – $14,999.99: 1.00%
$15,000.00+: 2.02%

Investing Account:
Monthly fee: $1.50
Transaction fee: $14.95
Options: 7 major mutual funds

Impression: It was hard for their agents to get their fees straight. Three calls resulted in three different sets of fees, although each fee bounced around between two values. The fourth time I called (to see if I'd get yet another quote) I got a guy I had gotten before so I couldn't see if I'd get yet another. Anyway, I took the value for the fees that was quoted two out of three times in each case.

They had a nice selection of mutual funds from seven major companies (including American Funds and Fidelity), but no Vanguard, which I was hoping to find.

HealthSavings Administrators
Setup fee: $20
Monthly fee: $3.25

Debit Account:
Monthly fee: $2.00 (for balances below $2,500)

Interest paid:
$0.00 – $99.99: 0.00%
$100.00 – $999.99: 0.15%
$1,000.00 – $4,999.99: 0.50%
$5,000.00 – $14,999.99: 1.00%
$15,000.00+: 1.50%

Investing Account:
Quarterly fee: 0.0008 * account balance, max $16 per mutual fund
Options: 22 Vanguard mutual funds

Impression: The reason I found this company was because I was looking for a company that offered Vanguard mutual funds, which they did. One of the few, apparently. On the downside, you're limited to 22 pre-selected Vanguard mutual funds.

An even bigger downside: you can't have both a debit account and an investing account. You have to choose one or the other. This means if you want to invest your money (and you do) then you don't have a handy debit card to make your purchases/payments with. You'd have to submit a reimbursment request for each transaction (or perhaps you can submit them all at once at the end of the year?).

On the plus side, they don't charge transaction fees to move money into or out of their 22 Vanguard mutual funds.

Chase
This one's tricky. Apparently Humana (who we're getting our high-deductible health plan through) negotiated their own rates with Chase, so these numbers might not apply perfectly to everyone. I imagine they're close though.

Setup fee: $0 for partnered health insurance providers
Monthly fee: $3.00 ($2.50 if you use a non-partnered health insurance provider)

Debit Account:
Interest paid: 1.01%, no matter the account balance (0.50% for non-partnered plans)

Investing Account:
Monthly fee: $2.50
No transaction fees.
Options: JPMorgan and American Century mutual funds only.

Impression: limited investing choices. The fees you're charged and interest you get may vary depending on who your insurance provider is (this is probably the case with a lot of companies). In short, the limited investing choices is the biggest con, and the 1.01% interest rate is the biggest pro.

First Horizon Msaver:
Setup fee: $0 for partnered health insurance providers
Monthly fee: $2.50

Debit Account:
Interest paid:
$0 - $499.99: 0.10%
$500 - $3,499.99: 0.20%
$3,500 - $4,999.99: 0.50%
$5,000 - $9,999.99: 0.75%
$10,000+: 1.00%

Investing Account:
Monthly fee: $2.50 if you only stick to 8 selected Goldmann Sachs mutual funds, $0 if you go their full brokerage account route.
Transaction fees: $29.95+ if you go their full brokerage account route.
Options: Potentially anything

Impression: I like their website. I like the fact that you can open a brokerage account that gives you access to whatever stocks or mutual funds (Vanguard!) you want, but the transaction fees are really high.

Fifth Third Bank
Setup fee: $0 for partnered health insurance providers
Monthly fee: $2.00

Debit Account:
Interest paid:
$0.01 - $2,999.99: 0.50%
$3,000.00– $4,999.99: 1.00%
$5,000.00+: 1.50%

Investment Account:
Monthly fee: $2.00
Transaction fees: $0
Options: 25 funds from a variety of companies

Impression: Uses a MasterCard debit card. I seem to notice that a lot of places don't accept MasterCard. Is that really the case?

HSA Bank
Setup fee: $18.00
Monthly fee: $2.25

Debit Account:
Interest paid:
Below $500: 0.25%
$500 - $2,499.99: 0.65%
$2,500 - $4,999.99: 1.00%
$5,000 - $14,999.99: 1.50%
$15,000+: 2.05%

Investment Account:
Everything is done through TD Ameritrade.
Transaction fee for stock: $10
Transaction fee for no-load mutual funds: $50 (high!)
Investment options: anything

Impression:
It doesn't appear like Ameritrade has very good customer reviews, and the fee for a no-load mutual fund is really high, but the benefit is that you can invest in anything you want.

HealthEquity (IntermountainHealthCare's preferred HSA vendor, based in Draper, UT) gets a dishonorable mention and no link because they refuse to disclose their interest rates until you actually sign up. Seriously?! What type of bank (or ANY financial institution) doesn't tell you their interest rates up front? I'll tell you what type: the type that have poor and uncompetitive interest rates. I'd be interested in talking to anyone who uses them to see if that's the case.

Health Savings Account (HSA)

Child and I have been looking into health insurance options. With a new baby, our rates are about to go up, and it's hard paying all the money we do when all of us are healthy as far as we can tell.

The option we've decided on is a Health Savings Account (HSA).

The idea is that instead of paying full premiums for regular health insurance, you pay a smaller premium for health insurance with a high deductible (high-deductible health plan, or HDHP). Along with that, you open a special health savings account (HSA) where you can deposit money (such as the money you saved by paying smaller premiums). This money is used to pay for any medical expenses.

There's a few pros and cons.

Pros:
If nothing ever happens to you, you're not out the money as you would have been if you'd spent it on insurance premiums. It just builds in your savings account.

Any money you put into the savings account is untaxed if you eventually use it for qualified medical expenses.

"Qualified medical expenses" are defined very broadly. Things like acupuncture, chiropractors, even lasik eye surgery are acceptable, as well as the more usual things like medications. You're still paying for the chiropractor, but if you'd be paying anyway, it's better to pay with untaxed money.

After age 65, you can take the money out for non-medical expenses without penalty, although it will still be income taxed if used for non-medical expenses. (In other words, it will be tax-deferred.)

Cons:
You have a very high deductible; usually $3,000 to $10,000. This means that if something big happens, you have a very large out-of-pocket expense before insurance kicks in.

This also means that for smaller things like doctor visits and prescription medications, you'll be paying for everything since it's doubtful you'll reach your deductible.

Any money you put in the savings account is supposed to be used for medical expenses only. Before age 65, if you take it out for something other than medical expenses, the government hits you with a 10% penalty plus income tax.