Help with Health Equity HSA

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jerome99
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Help with Health Equity HSA

Post by jerome99 » Wed May 29, 2013 9:11 am

Not sure if anyone else is "forced" to use the above, but they have made some changes to the investment options available and now all Vanguard funds are gone.

After some research, the lowest expense bond fund available is listed below. Can anyone shed light on it? I need this space to meet my bond allocation.

MetWest Total Return Bond Fund

Class M Shares – MWTRX

Expenses- .62

Novine
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Re: Help with Health Equity HSA

Post by Novine » Wed May 29, 2013 9:19 am

I'm in the same boat although not in need of a bond fund. They took away all the halfway decent choices and gave us a bunch of crappy funds with high expense ratios. Morningstar has some details on the fund.

http://quotes.morningstar.com/fund/MWTRX/f?t=MWTRX

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FNK
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Re: Help with Health Equity HSA

Post by FNK » Wed May 29, 2013 9:32 am

Weren't they paying relatively decent interest on cash?

Also, can't you roll over to a better trustee?

jerome99
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Re: Help with Health Equity HSA

Post by jerome99 » Wed May 29, 2013 9:47 am

I never reviewed their return on cash. Yes, I can do a roll over but would be more simple if this bond fund met my needs

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PaddyMac
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Re: Help with Health Equity HSA

Post by PaddyMac » Wed May 29, 2013 9:49 am

I believe that is one of Christine Benz's favorite Bond funds, and M* rates it Gold and 5 stars. Compare its returns to whatever you were getting in their Chart tab.
We've owned it for years in one of our SEPs.

FWIW, I'd kill to have it in our HSA, which only has mediocre Wells Fargo funds...

scottyja
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Re: Help with Health Equity HSA

Post by scottyja » Wed May 29, 2013 2:21 pm

I'm with Health Equity also, and the 3 funds I'm investing in are going away. I just posted another topic asking about opening a second HSA, which looks like the route I'm going to take. I am somewhat glad that I'm not alone in this Health Equity change. I would encourage all of you to send them an email expressing your disappointment with their fund options. Maybe if enough of us threaten to take business elsewhere they'll listen.

dad2000
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Re: Help with Health Equity HSA

Post by dad2000 » Wed May 29, 2013 2:53 pm

My employer is just starting with Health Equity. My plan is as follows (are there flaws or better options here?):

1. Open a second account with HSA Bank, to be used as a stealth IRA
2. Pay for actual medical expenses out of pocket
3. Ensure that the combined contributions to both accounts don't exceed the annual max
4. It looks like I can avoid fees if I start with $3k, go with electronic statements, and minimize transactions.
5. As far as investment options, I have a 5% allocation to CCFs which is split across 401K/Roth, using PCRAX/PCRIX. I plan to replace PCRAX with DBC using the TDAmeritrade free ETF option.

scottyja
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Re: Help with Health Equity HSA

Post by scottyja » Wed May 29, 2013 3:56 pm

If it helps, here are all the new funds with corresponding expense ratios. Sorry about the formatting, perhaps someone here knows how I can paste it in a more readable format?

Fund Name ER Fund Name
PCRDX 1.19% PIMCO COMMODITY REAL RET STRAT D
RNWEX 1.01% AMERICAN FUNDS NEW WORLD R4
DREGX 1.68% DRIEHAUS EMERGING MARKETS GROWTH
ODVNX 1.70% OPPENHEIMER DEVELOPING MARKETS N
HEMZX 1.57% VIRTUS EMRG MKTS OPPTY FD CL A
ARTKX 1.22% ARTISAN INTERNATIONAL VALUE INVESTOR
LISOX 1.13% LAZARD INTL STRATEGIC EQUITY OPEN
OIDNX 1.69% OPPENHEIMER INTERNATIONAL DIVERSIFIED N
OIGAX 1.18% OPPENHEIMER INTERNATIONAL GROWTH A
MINGX 1.21% MFS INTERNATIONAL VALUE R3
PRRRX 1.10% PIMCO REAL RETURN R
CHTBX 0.95% ASTON/TCH FIXED INCOME N
MWTRX 0.62% METROPOLITAN WEST TOTAL RETURN BOND M
PIOBX 0.85% PIONEER BOND FUND CL A
CMPIX 0.90% PRINCIPAL INCOME A
PDBAX 0.85% PRUDENTIAL TOTAL RETURN BOND A
SMGIX 0.95% COLUMBIA CONTRARIAN CORE Z
WCEYX 0.84% IVY CORE EQUITY Y
IEDAX 1.22% ING LARGE CAP VALUE A
LCEIX 0.91% INVESCO DIVERSIFIED DIVIDEND INVESTOR
FDSAX 0.98% SUNAMERICA FOCUSED DIVIDEND STRATEGY A
FEFAX 1.45% FIRST EAGLE FUND OF AMERICA CL A
NICSX 0.77% NICHOLAS
PEMGX 1.08% PRINCIPAL MIDCAP A
RYBHX 1.50% RYDEX S&P MIDCAP 400 PURE GROWTH H
BALFX 0.64% AMERICAN FUNDS AMERICAN BALANCED F-1
FMFTX 1.42% FIDELITY ADVISOR MATERIALS T
ICBMX 1.39% ICON MATERIALS S
RYBAX 1.86% RYDEX BASIC MATERIALS ADV
RRREX 0.77% DWS RREEF REAL ESTATE SECURITIES S
FHETX 1.43% FIDELITY ADVISOR REAL ESTATE T
PETDX 1.14% PIMCO REAL ESTATE REAL RETURN STRATEGY D
HLPPX 1.75% REMS REAL ESTATE VALUE OPPORTUNITY P
SASMX 1.28% CLEARBRIDGE SMALL CAP GROWTH A
JGMRX 1.45% JANUS TRITON R
GOBAX 0.96% LEGG MASON BW GLOBAL OPPORTUNITIES BD A
MGGBX 1.00% MANAGERS GLOBAL INCOME OPPORTUNITY
PFODX 0.90% PIMCO FOREIGN BOND (USD-HEDGED) D
GTRAX 1.31% PRUDENTIAL GLOBAL TOTAL RETURN A

Average 1.18%
Median 1.14%
Min 0.62%
Max 1.86%

pparedes
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Re: Help with Health Equity HSA

Post by pparedes » Wed May 29, 2013 7:44 pm

Thanks scottyja for the information on the fees. Based on the options below, would anyone want to rank the funds by appropriate tax efficiency (http://www.bogleheads.org/wiki/Principl ... _Placement)?

On a similar vein, based on the high costs of these funds would you be better off opening up a separate account or are these choices just OK enough to not go through hassle of opening another account and transferring once a year?

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grabiner
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Re: Help with Health Equity HSA

Post by grabiner » Wed May 29, 2013 9:11 pm

pparedes wrote:Thanks scottyja for the information on the fees. Based on the options below, would anyone want to rank the funds by appropriate tax efficiency (http://www.bogleheads.org/wiki/Principl ... _Placement)?
Does it matter? HSAs are exempt from federal tax, and subject to state tax only in AL, CA, and NJ.

If you do pay state taxes, the only funds likely to be tax-efficient are PIMCO Real Return (a TIPS fund) and Rydex S&P Mid-Cap 400 Pure Growth. But these two are very expensive, and the state taxes are relatively low. I would probably go with MetroWest Total Return even in a state which taxes HSAs; it's the least expensive fund, and it is in a class which benefits from federal tax deferral.

In a state which doesn't tax HSAs, the PIMCO commodity fund is another possibility; while the fund is expensive, it is in an asset class with no low-cost options, so it isn't as bad relative to the alternatvies.

The other alternative, particularly if your state taxes HSAs, is to transfer the funds to another HSA provider, and then buy a stock index or TIPS ETF.
Wiki David Grabiner

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Kosmo
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Re: Help with Health Equity HSA

Post by Kosmo » Wed May 29, 2013 9:37 pm

I have Health Equity also and I was extremely displeased when I found this out yesterday. I was going to create a post, but you beat me to it. No only did they get rid of all the index funds they offered and replaced them with these high ER funds, but most of them also have sales loads in the range of 2-6%.

I most likely will contact them and ask why they don't offer any low cost index funds.

My belief is that since I can't control the market I should control what I can: asset allocation and expense ratio. So without spending too much time researching all the available funds (yes, I could do more research, but I have better things to do) I re-allocated my existing balance and all future contributions to:

90% BALFX (AMERICAN FUNDS AMERICAN BALANCED F-1, 0.64%)
10% MWTRX (METROPOLITAN WEST TOTAL RETURN BOND M, 0.62%)

stannius
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Re: Help with Health Equity HSA

Post by stannius » Wed May 29, 2013 10:46 pm

As soon as I read that they were rolling out a "Best-in-Class Fund Platform" I knew there would be trouble.

What's the deal with in-service rollovers? Can I just transfer the money as soon as it hits, to an outside more favorable HSA?

skylar
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Re: Help with Health Equity HSA

Post by skylar » Wed May 29, 2013 11:25 pm

Bah, and I was just getting ready to open an investment account for my HSA with them. Their old fund selection was bad, but at least they had one index fund (Vanguard Large Cap Signal Shares). This new line up is just awful. I guess I'll have to figure out how to transfer to a different custodian...

scottyja
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Re: Help with Health Equity HSA

Post by scottyja » Thu May 30, 2013 11:50 am

Kosmo wrote: I most likely will contact them and ask why they don't offer any low cost index funds.
Please do this. Their customer service email is memberservices@healthequity.com. I would hope enough of a backlash would do *something*.

moneyman11
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Re: Help with Health Equity HSA

Post by moneyman11 » Thu May 30, 2013 4:37 pm

My company has HealthEquity and I was as disgusted with the new choices as all here.

I called the company and insisted to speak with someone involved in the decision making. No emails, no voicemails please.

I was stunned when I actually did receive a personal call from a gentleman who said he was the investment advisor for HealthEquity - I asked if he was an employee of HealthEquity and he said he was.

I asked what the criteria for the funds selected was, and what he said was a investment advisor jargon laden spiel that basically boiled down to "past performance" and Morningstar ratings.

I then asked why no low-cost index funds were offered, and his reply came down to the belief that managed funds they chose were better. The discussion got more ... ummm ... heated from there, with me finally saying I'd be doing everything I could to encourage our company to leave if low cost index funds were not offered.

I was cautiously optimistic when the conversation ended with him saying they will possibly be adding some index funds (most likely from Vanguard!) in the coming weeks. We'll see, I'm pessimistic that anything will change, but who knows.

Please call and insist to speak to the person directly involved in choosing the funds (sorry, I didn't get a name), and insist on a call back.

Good luck!

scottyja
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Response from Health Equity

Post by scottyja » Fri May 31, 2013 10:15 am

I was surprised to get a pretty prompt and thorough email back from one of their research analysts. He did give the typical spiel about fund performance, but he also seemed to be very aware of the increased costs and willing to work with me (us). I honestly don't know the ins and outs of the brokerage world, but he said that Vanguard does not pay fees to brokerage firms, so Charles Schwab, who is the sub-custodian Health Equity contracts with, passes those fees to Health Equity.

The proposed middle-ground is having Health Equity provide a Vanguard menu of funds and charge an administration fee of $45/year to participate, plus a maintenance fee of .08% per quarter up to a $20,000 balance. These are the exact same fees HSA Administrators use:

http://www.hsaadministrators.info/hsa-fees

This isn't thrilling news, but I can see where they're coming from. And the proposed fee structure is identical to one of the more common funds recommended here. I haven't compared this to HSA Bank, which contracts with TD Ameritrade. My wife's employer also uses Mellon Bank, so I want to investigate options there. At the very least, I'm impressed with the quick response and the attempt to resolve concerns. Any thoughts on their proposal?
Last edited by scottyja on Fri May 31, 2013 2:34 pm, edited 1 time in total.

dad2000
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Re: Help with Health Equity HSA

Post by dad2000 » Fri May 31, 2013 1:53 pm

I don't see that as being attractive at all. A fee of 32bp even if you maintain $20K, and much more if you don't. It would take most Bogleheadish savers at least 4-8 years to build up that kind of balance depending on their marital status.

Any comments on my alternative above, which is basically just to open up a second account with HSA bank. It seems palatable to the IRS and much less expensive.

skylar
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Re: Help with Health Equity HSA

Post by skylar » Mon Jul 29, 2013 10:38 pm

I finally got around to emailing HealthEquity complaining about the investment choices and this was the reply I got:
Thank you for your email and expressing your concern. HealthEquity recently needed to make the difficult business decision to no longer offer any index funds. This was especially challenging as our investment advisors are big fans of Vanguard. The costs associated with offering those kinds of options on a free investment platform had become unfeasible with all of the growth in our HSA members. We are motivated to help our members build health savings and invest for the future, but we want to keep the investment platform free of transaction costs to encourage additional usage. This is one of the features/benefits that sets us apart from most of the competition. There may be a possibility in the future to add index and other low-cost fund options to the lineup with the requirement of charging an account maintenance fee to help cover the costs of having them on the platform.
I sent them a reply indicating that a brokerage window might be an acceptable alternative, and also that the lack of better options would force me to take my money elsewhere. I would basically just use the HealthEquity account as a staging area for my payroll contributions, until I get around to transferring them (probably to HSA Bank).

Novine
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Re: Help with Health Equity HSA

Post by Novine » Tue Jul 30, 2013 8:31 am

At least you got a real response! All I got was a form response.

warren26
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Re: Help with Health Equity HSA

Post by warren26 » Tue Oct 01, 2013 2:51 pm

Just wondering if anyone has heard of new developments with Health Equity. My company also uses them for our HSA. I'm at the point now where I could start investing but based on my research and reading your posts it doesn't seem to be a great option. Did most of you decide to go with HSA Bank or stick it out with the 1 or 2 semi-palatable Health Equity options? thanks

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zaboomafoozarg
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Re: Help with Health Equity HSA

Post by zaboomafoozarg » Mon Dec 16, 2013 11:33 pm

I'm going to open an HSA with HealthEquity and give it a try. That's the provider my employer uses, so it's the only way I can get the full deductions (reduced SS and Medicare plus reduced income taxes). If it has a decent option like VLACX I will probably stick with it. If not, I'll just roll it into another plan later, once I get enough money in it to meet the minimums for using mutual fund investments (typically $3k to $5k depending on provider).

skylar
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Re: Help with Health Equity HSA

Post by skylar » Wed Dec 25, 2013 11:19 am

zaboomafoozarg wrote:I'm going to open an HSA with HealthEquity and give it a try. That's the provider my employer uses, so it's the only way I can get the full deductions (reduced SS and Medicare plus reduced income taxes). If it has a decent option like VLACX I will probably stick with it. If not, I'll just roll it into another plan later, once I get enough money in it to meet the minimums for using mutual fund investments (typically $3k to $5k depending on provider).
I believe you'll want to "transfer" rather than "rollover". The restrictions on transferring are much less than rolling over, although aside from terminology I'm really not sure what the difference is between the two methods.

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zaboomafoozarg
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Re: Help with Health Equity HSA

Post by zaboomafoozarg » Tue Jan 07, 2014 9:30 am

My HSA is opened now and it does match the list above - no low-cost options available. :( But BALFX isn't The Worst at a 0.64% ER for a roughly 70/30 stocks/bonds split, so I'll probably just use that.

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