Yield Plus HSA option

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Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 5:43 pm

Hello Bogleheads,

Our HSA has the option of "Yield Plus" as a way to get a higher interest rate on the non-invested portion of our account. I am curious if this is a relatively safe option? It is NOT an FDIC insured program but is promoted as being very safe. Does anyone else use this option who uses Health Equity HSA or is familiar with a group annuity funding agreement provided and backed by a third-party insurer, Great Western Insurance Company (GWIC) ? Thanks in advance for your comments.

Current Rates
Basic (eligible for federal deposit insurance)
Interest Rate Schedule
This is the default interest rate for your cash balance (non-invested HSA funds). Your HSA cash balance is held at an FDIC-insured or NCUA-insured institution and is eligible for deposit insurance, subject to applicable requirements and limitations.

APY is accurate as of 11/1/2013.

Balance Tier Average Daily Account Balance- Interest Rate/ Annual Percentage Yield (APY)
1 $0.01 - $2,000.00- 0.05%/ 0.05%
2 $2,000.01 - $7,500.00- 0.10%/ 0.05% - 0.09%
3 $7,500.01 - $10,000.00- 0.20%/ 0.09% - 0.12%
4 Over $10,000- 0.40%/ 0.12% - 0.37%


Yield Plus
Interest Rate Schedule
This is an alternative option for the cash balance in your HSA. It is a group annuity funding agreement provided and backed by a third-party insurer, Great Western Insurance Company (GWIC). Click here to review the Yield Plus Program Terms and Conditions.

NOT A DEPOSIT
NOT ELIGIBLE FOR FDIC OR NCUA INSURANCE
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
NOT GUARANTEED BY HEALTHEQUITY OR AN INSURER
MAY GO DOWN IN VALUE
Transfers of your cash balance between the Basic or the Yield Plus option will be effective on the first day of the calendar month following your election.

Balance Tier Average Daily Account Balance- Interest Rate/ Annual Percentage Yield (APY)
1 $0.01 - $2,000.00- 0.10%/ 0.10%
2 $2,000.01 - $7,500.00- 0.25%/ 0.10% - 0.21%
3 $7,500.01 - $10,000.00- 1.00%/ 0.21% - 0.41%
4 Over $10,000- 1.50%/ 0.41% - 1.40%

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whodidntante
Posts: 3927
Joined: Thu Jan 21, 2016 11:11 pm

Re: Yield Plus HSA option

Post by whodidntante » Sun Aug 19, 2018 5:49 pm

I would transfer the money to a different custodian who offers decent investments.

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 5:56 pm

I would transfer the money to a different custodian who offers decent investments.
Whodidntante, we have excellent investment options under this HSA. The Yield Plus question I'm asking about is in regards to just the cash portion of our HSA. We must leave a minimum of $1k in our account and the rest can be invested in Vanguard mutual funds.

jcgvt01
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Joined: Mon Apr 03, 2017 2:07 pm

Re: Yield Plus HSA option

Post by jcgvt01 » Sun Aug 19, 2018 6:11 pm

I use it. Never had a problem. The rates haven’t changed in years though last I checked.

I do like the investment choices offered by HealthEquity, though the management is not so cool.

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 6:23 pm

jcgvt01 wrote:
Sun Aug 19, 2018 6:11 pm
I use it. Never had a problem. The rates haven’t changed in years though last I checked.

I do like the investment choices offered by HealthEquity, though the management is not so cool.
Thanks for your reply jcgvt01. Have you had problems with Health Equity's management? What's not so cool about it?

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Hodor
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Re: Yield Plus HSA option

Post by Hodor » Sun Aug 19, 2018 6:26 pm

That doesn't seem like a very good interest rate for a non-guaranteed account. How much money would you be putting in there?

I'm also a little confused as to how these can both be true:
backed by a third-party insurer, Great Western Insurance Company (GWIC)
NOT GUARANTEED BY HEALTHEQUITY OR AN INSURER

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 6:41 pm

Hodor wrote:
Sun Aug 19, 2018 6:26 pm
That doesn't seem like a very good interest rate for a non-guaranteed account. How much money would you be putting in there?

I'm also a little confused as to how these can both be true:
backed by a third-party insurer, Great Western Insurance Company (GWIC)
NOT GUARANTEED BY HEALTHEQUITY OR AN INSURER
Agreed Hodor, I'm a bit confused myself.

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 6:47 pm

If anyone is bored, here is the link to the 11 page Yield Plus Account
Terms and Conditions. Thanks again
https://media.healthequity.com/document ... tions.pdf

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whodidntante
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Re: Yield Plus HSA option

Post by whodidntante » Sun Aug 19, 2018 7:26 pm

Windylotus wrote:
Sun Aug 19, 2018 5:56 pm
I would transfer the money to a different custodian who offers decent investments.
Whodidntante, we have excellent investment options under this HSA. The Yield Plus question I'm asking about is in regards to just the cash portion of our HSA. We must leave a minimum of $1k in our account and the rest can be invested in Vanguard mutual funds.
Presumably, you are investing most of the money above 1k. So I don't think it matters which option you pick, .05% vs .1%. For that yield difference vs an opaque insurance wrapper thingy, I would pick FDIC.

Nate79
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Location: Portland, OR

Re: Yield Plus HSA option

Post by Nate79 » Sun Aug 19, 2018 7:37 pm

So an extra 2 dollars a year?

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 8:38 pm

Yes, it's not even worth discussing at the minute amount that Nate79 pointed out. My thoughts behind the question was, building up a full year family deductible of $6k as part of our EF. Possibly up to the $7,500+ amount to gain the 1% or even the $10k for the 1.5%.
I hate having that amount invested at such a paltry rate but the day we could possibly need it could be a game changer for protecting our larger assets and investments. Thanks again for all your comments.

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jeffyscott
Posts: 7176
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Location: Wisconsin

Re: Yield Plus HSA option

Post by jeffyscott » Sun Aug 19, 2018 9:38 pm

Windylotus wrote:
Sun Aug 19, 2018 8:38 pm
Yes, it's not even worth discussing at the minute amount that Nate79 pointed out. My thoughts behind the question was, building up a full year family deductible of $6k as part of our EF. Possibly up to the $7,500+ amount to gain the 1% or even the $10k for the 1.5%.
I hate having that amount invested at such a paltry rate but the day we could possibly need it could be a game changer for protecting our larger assets and investments. Thanks again for all your comments.
Rather than $6000-$7500 in the base account, why not $1000 in the base account and $5000-$6500 in a bond fund in the investment account? The yield plus account sounds like it is basically dependent on a single insurance company. I'd take the risk of a bond fund that may be yielding 3% or so, since both are...
NOT A DEPOSIT
NOT ELIGIBLE FOR FDIC OR NCUA INSURANCE
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
NOT GUARANTEED BY HEALTHEQUITY OR AN INSURER
MAY GO DOWN IN VALUE

As the safest investment option, it appears that HSA offers Vanguard Short-Term Bond Index Adm, SEC yield is 2.85% and duration only 2.8 years. That seems highly likely to give you a better total return than the yield plus option, with minimal volatility.
press on, regardless - John C. Bogle

Windylotus
Posts: 51
Joined: Thu Nov 30, 2017 10:49 pm

Re: Yield Plus HSA option

Post by Windylotus » Sun Aug 19, 2018 10:27 pm

jeffyscott wrote:
Sun Aug 19, 2018 9:38 pm
Windylotus wrote:
Sun Aug 19, 2018 8:38 pm
Yes, it's not even worth discussing at the minute amount that Nate79 pointed out. My thoughts behind the question was, building up a full year family deductible of $6k as part of our EF. Possibly up to the $7,500+ amount to gain the 1% or even the $10k for the 1.5%.
I hate having that amount invested at such a paltry rate but the day we could possibly need it could be a game changer for protecting our larger assets and investments. Thanks again for all your comments.
Rather than $6000-$7500 in the base account, why not $1000 in the base account and $5000-$6500 in a bond fund in the investment account? The yield plus account sounds like it is basically dependent on a single insurance company. I'd take the risk of a bond fund that may be yielding 3% or so, since both are...
NOT A DEPOSIT
NOT ELIGIBLE FOR FDIC OR NCUA INSURANCE
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
NOT GUARANTEED BY HEALTHEQUITY OR AN INSURER
MAY GO DOWN IN VALUE

As the safest investment option, it appears that HSA offers Vanguard Short-Term Bond Index Adm, SEC yield is 2.85% and duration only 2.8 years. That seems highly likely to give you a better total return than the yield plus option, with minimal volatility.
jeffyscott that is a good point on the bond fund. I'm not thrilled on the idea of having to sell some of the investment account to come up with deductible money with using the bond fund but, it's yielding better than 1%. Would I just be better off keeping our deductible funds in our prime money market account currently yielding 2.06% and presumed to rise? I guess it would be more liquid at that point? Thanks

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