My HSA just got a lot better!

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My HSA just got a lot better!

Postby jlg » Mon Jan 28, 2013 11:30 am

My company switched from JPMC HSA to Optumhealth HSA this year. I was pissed, as we had just started with JPMC last year and now we had to learn all about the twists and turns that a new custodian would provide. As most of us know, cost is not at all straightforward when it comes to HSA. With JPMC with had a few schedule which changed based on dollars invested, what portion my company was paying and if you invested your funds or not. The investment options were poor, but there was an S&P 500 index fund for 20bps.

With Optumhealth we pay no fees - which is awesome. However, they have an annoying policy which keeps you from investing 100% of your funds. You cannot invest in the offered mutual funds until your balance reaches $2100. However, what this means is that you can invest $100, as the minimum investment you can make is $100 and you must have $2000 in cash first. I do a lump sum contribution and thus when I tried to invest $6450 for this years contribution, it only allowed me to invest $4450 and the remaining $2000 had to stay in cash (earning something pathetic - 0.45%?)

However, where Optumhealth got you was with the expense ratios if you choose to invest. The cheapest fund offered was the MainStay S&P 500 Index for a ridiculous 60bps!?! What? Highway robbery. For the sake of simplicity (and having already rolled over funds from JPMC this year), I decided that this was only a small percentage of my portfolio and I would suck up the fees.

Today I login to my Optumhealth account and I see that THEY ADDED NEW FUND OFFERINGS!

Vanguard 500 Index Inv VFINX
Vanguard Wellington Inv VWELX
Vanguard Global Equity Inv VHGEX

(Plus two other funds not worth mentioning.)

I quickly exchanged my MainStay shares for VFINX and will be saving myself 43bps per $10,000!! I'm checking with other folks to see if they also see these options, of if I hit some magical threshold. So AWESOME!

Paying only the ER on VFINX for my HSA is pretty sweet. I can still consider a transfer to HSA Bank if I want to access low cost Bond funds ... but in total I may end up paying more on an annual basis. I don't consider HSA funds "special", so holding 100% equity (minus $2000 in cash) does not bother me.

Just wanted to share with folks who may care.
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Re: My HSA just got a lot better!

Postby tainted-meat » Mon Jan 28, 2013 11:43 am

Thanks for the heads up. I also have Optum Health Bank and checked the options after reading your post. To my pleasant surprise those funds are now on mine as well. Vanguard, here I come :D
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Re: My HSA just got a lot better!

Postby stoptothink » Mon Jan 28, 2013 12:07 pm

I have Health Equity. Same thing, the first $2k remains in the savings account and you can only invest the surplus. Our investment options are nowhere near as good as yours, no index funds and the costs are absurd. Better than leaving it in the savings account, which I believe pays .05% on the first $5k.
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Re: My HSA just got a lot better!

Postby ftobin » Mon Jan 28, 2013 12:52 pm

stoptothink wrote:I have Health Equity. Same thing, the first $2k remains in the savings account and you can only invest the surplus. Our investment options are nowhere near as good as yours, no index funds and the costs are absurd. Better than leaving it in the savings account, which I believe pays .05% on the first $5k.

You might want to check your options again. Your selection might be more limited, but it appears Health Equity has Vanguard Large Cap Index. Dodge and Cox Income Fund is reasonably-priced if you want a bond fund.
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Re: My HSA just got a lot better!

Postby Easy Rhino » Mon Jan 28, 2013 12:57 pm

Don't hate on the $2k cash requirement too much, remember that the typical use of an HSA is for healthcare spending, and the cash buffer helps reduce the need for customers to transfers funds back and forth or weird 'overdraft' situations.

But hey, you're saving 43bp on $8k a year so that's almost $35 a year. I'm still a boglehead, and I'd cheer about that as well :)
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Re: My HSA just got a lot better!

Postby Cuzz35 » Tue Jan 29, 2013 12:16 am

My HSA bank requires you to keep $1k in cash. When I first looked at the funds I grimaced but they do have Vanguard 500 index at. 06! Plus my employer puts in 1k a year and pays all account fees.

Congrats on getting some good funds.
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Re: My HSA just got a lot better!

Postby zaboomafoozarg » Tue Jan 29, 2013 12:33 am

I thought you could just have an HSA at any company you wanted.
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Re: My HSA just got a lot better!

Postby ftobin » Tue Jan 29, 2013 12:47 am

zaboomafoozarg wrote:I thought you could just have an HSA at any company you wanted.

The benefit if having it go through an employer is that often they'll pay account fees, and you don't have to pay Social Security and Medicare on the income. If you claim a deduction later, you don't get the SS and Medicare back -- just your income taxes.

I personally go with the option of holding my HSA independently, since lower expense ratio I'll get through funds of my choosing will eventually outweigh the extra SS and Medicare payments. If I had low-cost funds available I'd stick with my employer's HSA provider.
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Re: My HSA just got a lot better!

Postby yukonjack » Tue Jan 29, 2013 12:57 am

Not sure about the original post. I've been in Wellington with Optum HSA for several years now and the minimum cash balance is $600. It had been $500 but was recently increased.
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Re: My HSA just got a lot better!

Postby jlg » Tue Jan 29, 2013 9:49 am

yukonjack wrote:Not sure about the original post. I've been in Wellington with Optum HSA for several years now and the minimum cash balance is $600. It had been $500 but was recently increased.


http://www.optumhealthbank.com/using-your-health-savings-account/investment-opportunities/~/link.aspx?_id=1D796CABD39341BF84E047565509DFF9&_z=z

"Your actual investment options may vary depending on your specific HSA plan."

What I also gather is that different plans include different fee schedules and, likely, investment minimums. Why mine is so high? I have no idea. I don't understand why these "plans" aren't transparent or operate like a no-fee IRA.
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Re: My HSA just got a lot better!

Postby brisni » Tue Jan 29, 2013 12:41 pm

Thanks for the heads up. My employer also uses OptumHealthBank. I just checked, and yes the 3 vanguard funds are there. You would think they would announce ahead of time. Anyway, I went ahead and changed my allocations to take advantage.

- Brian
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Re: My HSA just got a lot better!

Postby itworks » Tue Jan 29, 2013 2:41 pm

Thanks for the information. Logged into my Optum Health Bank account and I am disappointed those vanguard funds are not available. I am going to email my employer's benefits representative asking about the possibility to add them.

@jlg: Yes different plans include different fee schedules and, likely, investment minimums. Mine is $2000 + 100 (same as you), monthly fee paid by the employer, but, there are still a myriad of fees that I am less used to.
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Re: My HSA just got a lot better!

Postby grabiner » Tue Jan 29, 2013 11:46 pm

ftobin wrote:
zaboomafoozarg wrote:I thought you could just have an HSA at any company you wanted.

The benefit if having it go through an employer is that often they'll pay account fees, and you don't have to pay Social Security and Medicare on the income. If you claim a deduction later, you don't get the SS and Medicare back -- just your income taxes.


However, you can let the employer make contributions to its designated provider, and then transfer funds to a different HSA custodian, just as you can do with an IRA. You may have to pay fees at the second custodian, but that could be worth it if you get better investment options.
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Re: My HSA just got a lot better!

Postby Hub » Wed Jan 30, 2013 3:37 pm

grabiner wrote:
ftobin wrote:
zaboomafoozarg wrote:I thought you could just have an HSA at any company you wanted.

The benefit if having it go through an employer is that often they'll pay account fees, and you don't have to pay Social Security and Medicare on the income. If you claim a deduction later, you don't get the SS and Medicare back -- just your income taxes.


However, you can let the employer make contributions to its designated provider, and then transfer funds to a different HSA custodian, just as you can do with an IRA. You may have to pay fees at the second custodian, but that could be worth it if you get better investment options.
Yes, once my balance gets significant this is my plan. That will be several years from now, but it appears the options are slowly but surely improving for investing within HSAs.

Mine is in JPMC and ours is free until you open the investment account with a $2000 minimum and then the fees are $24 annual and the best fund is an S&P500 at 0.45% (OGEAX). Not too bad, but still pretty expensive on balances below $10,000.
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Re: My HSA just got a lot better!

Postby jlg » Tue Feb 12, 2013 8:32 pm

Got an email from OptumHealth Bank indicating that they are removing the following funds in 30 days:


Federated Master Trust Money Market FMTXX
Federated US Govt 2-5 Year FIGTX
John Hancock Classic Value PZFVX
John Hancock Money Market Fund JHMXX
Mainstay S&P 500 Index Fund MSXAX
Thornburg Value Fund TVAFX

They dont' go as far to announce the new funds, but rather talk about them as "Alternatives" to the removed funds. In any case, having the Vanguard S&P 500 fund has been a great replacement for the Mainstay S&P index. Lets hope this is a trend for all HSAs!
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Re: My HSA just got a lot better!

Postby ejvyas » Wed Feb 13, 2013 2:32 pm

Got an email about the new funds :beer
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Re: My HSA just got a lot better!

Postby Hub » Tue Feb 19, 2013 11:06 am

Speaking of HSA's I just found out my wife's Disability Insurance premiums are qualified HSA expenses. Which is nice. I'll go ahead and place those receipts into the "save this forever" folder.
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Re: My HSA just got a lot better!

Postby tarnation » Tue Feb 19, 2013 11:20 pm

Hub wrote:Speaking of HSA's I just found out my wife's Disability Insurance premiums are qualified HSA expenses. Which is nice. I'll go ahead and place those receipts into the "save this forever" folder.

This was a new one on me. I checked Pub 502, it says
Code: Select all
Insurance Premiums You Cannot Include
You cannot include premiums you pay for:
-Life insurance policies,
- Policies providing payment for loss of earnings,

To me this sounds like it specifically says that disablitiy ins it NOT qualified medical expense.
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Re: My HSA just got a lot better!

Postby Hub » Wed Feb 20, 2013 12:10 am

Thank you for the correction. I read long-term care insurance on the approved list and thought long-term disability insurance in my head. Sorry for the careless info.
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Re: My HSA just got a lot better!

Postby itworks » Sat Mar 02, 2013 6:11 pm

Logged into my optum health bank account and was pleasantly surprised that the three Vanguard funds are also added. Weird that there is no email communication on this change. And, this was contradictory to what my company benefit representative told me 3 weeks ago, who said there is no plan to adjust the fund choices.
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