HSA investing fee (PayFlex)

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Sabet123
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Joined: Sat May 25, 2019 10:47 am

HSA investing fee (PayFlex)

Post by Sabet123 » Sun Aug 11, 2019 2:46 pm

I received an email this week from PayFlex saying that effective 10/1/19, they would be charging a “minimal monthly fee” of .02% which “aligns with industry standards.” The fee comes out of the cash balance that I have to maintain under the plan.

Curious to hear if others received this email and what other administrators charge. Thanks for everyone’s input!

anon_investor
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Re: HSA investing fee (PayFlex)

Post by anon_investor » Sun Aug 11, 2019 2:58 pm

Sabet123 wrote:
Sun Aug 11, 2019 2:46 pm
I received an email this week from PayFlex saying that effective 10/1/19, they would be charging a “minimal monthly fee” of .02% which “aligns with industry standards.” The fee comes out of the cash balance that I have to maintain under the plan.

Curious to hear if others received this email and what other administrators charge. Thanks for everyone’s input!
I have a Payflex HSA and did not receive that email, but I currently pay no fees (my employer must pay them).

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Nate79
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Re: HSA investing fee (PayFlex)

Post by Nate79 » Sun Aug 11, 2019 3:25 pm

Sabet123 wrote:
Sun Aug 11, 2019 2:46 pm
I received an email this week from PayFlex saying that effective 10/1/19, they would be charging a “minimal monthly fee” of .02% which “aligns with industry standards.” The fee comes out of the cash balance that I have to maintain under the plan.

Curious to hear if others received this email and what other administrators charge. Thanks for everyone’s input!

My company just sent out the same email. Maybe we work for the same company lol. I'm try to find if there are any fees to transfer out once a year to a no cost HSA like Fidelity.

cas
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Re: HSA investing fee (PayFlex)

Post by cas » Sun Aug 11, 2019 3:41 pm

Sabet123 wrote:
Sun Aug 11, 2019 2:46 pm
which “aligns with industry standards.”
LOL. The elephant in the room with that comment is that Fidelity does NOT charge an AUM fee for their HSA accounts.*** Given that Fidelity's HSA account is a standard-issue Fidelity brokerage account, I can't see them adding an AUM fee for HSA assets either. I'm not sure where Fidelity sits as far as HSA "investment account" assets under management, relative to other HSA custodians. But as far as overall investment management size and name recognition, they're so big that the rest of the HSA administrators look like gnats in comparison. So PayFlex trotting out "industry standards" as a justification amuses me. Seems hard to credibly claim "industry standard" if giant Fidelity doesn't do it!

Beyond that, I'm interested in HSA trends: I've seen a couple of people recently mention PayFlex adding this (investment) AUM fee. (Or maybe it was you in both threads.) And I saw one person mentioning they were just notified that an AUM fee was being added to their HSA Bank HSA investment account. I've seen no one else mention a new AUM fee for HSA Bank investment accounts, so I categorized that one as "currently unconfirmed." (There seem to be large numbers of Bogleheads whose employer HSA account is with HSA Bank, so I would have expected more extensive comment on Bogleheads if it were a widespread new fee.) Health Equity and (some?) Optum Bank accounts (Optum Bank seems to have a wide variety of fee set-ups) also already had an AUM fee on investment accounts, according to my understanding. (I think I may have heard that Health Equity's fee applies to some mutual funds in their line-up and not others.)

But, if both PayFlex and HSA Bank really are adding new AUM fees, I find the trend curious: Why are the the other HSA custodians going in the opposite direction from (giant) Fidelity (and Lively), with its move to lower fees? Is this some sort of reaction to a significant proportion of people with large balance HSA investment accounts jumping ship to Fidelity? (Speculation: The other HSA vendors couldn't make a profit on their remaining low balance investment accounts, so they added the AUM fee, hoping the remaining clients either won't notice or will feel too captive to their employer-based HSA account to move?) Or is it a completely independent trend? (Speculation: Although Bogleheads went wild over the new individual Fidelity HSA account, Bogleheads are probably an odd minority when it comes to paying attention to these things? Maybe it has something to do with the (now-defunct) new Dept of Labor Fiduciary Rule that caused a lot of investment managers to move to AUM fees rather than other sorts of ways of squeezing money out of their accounts?)

***Fidelity also currently charges $0 monthly/annual HSA fees for individual accounts; last I heard they charge $48/year for employer accounts (often picked up by the employer). Their wording when opening the individual account did not preclude the possibility that sometime in the future they could add an HSA monthly/annual fee for individual accounts.

Lively also currently charges $0 in any kind of fee, although they, like the rest of the HSA administrators, are tiny compared to Fidelity.

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Nate79
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Re: HSA investing fee (PayFlex)

Post by Nate79 » Sun Aug 11, 2019 4:03 pm

Payflex used to charge a $2/month fee to have money in the investment portion of the HSA but got rid of it 2 years ago. Looks like they are reversing course.

Topic Author
Sabet123
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Re: HSA investing fee (PayFlex)

Post by Sabet123 » Sun Aug 11, 2019 6:02 pm

It didn’t occur to me that my employer is paying any current fees. I wonder if it makes sense to reach out to them and ask if they were aware of the new fee (I know the individual in my company responsible for benefits so I wouldn’t be reaching out into a black hole). Although my guess is that many of my colleagues aren’t invested- they just put cash in and take it out each year. I only stopped doing that last year after learning from this forum how to maximize my long term growth!!

RangeleyLake
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Re: HSA investing fee (PayFlex)

Post by RangeleyLake » Sun Aug 11, 2019 7:18 pm

Just received the same email and will be moving our HSA to Fidelity.
RangeleyLake

rantk81
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Re: HSA investing fee (PayFlex)

Post by rantk81 » Sun Aug 11, 2019 7:41 pm

Same email for me too.

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Noble Knight
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Re: HSA investing fee (PayFlex)

Post by Noble Knight » Mon Aug 12, 2019 1:04 pm

I have PayFlex and haven't seen this email yet. I checked the fee schedule on their website and it's also not listed.

Planner01
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Re: HSA investing fee (PayFlex)

Post by Planner01 » Mon Aug 12, 2019 2:55 pm

We use another company for my employer’s HSA and they disclose a $2.50/month fee to use the investment platform. I think my employer pays for it.

KingRiggs
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Re: HSA investing fee (PayFlex)

Post by KingRiggs » Mon Aug 12, 2019 3:41 pm

My HSA is with The HSA Authority, with an annual fee of $36. I know I should probably switch to Fidelity, but I already switched custodians once to lower fees, and it was a bit of a hassle. The custodian (Devenir) offers several good, low-cost Vanguard funds.

Is it worth the hassle switching again to save $36? Any other advantages to Fido that I'm not thinking of? :confused

lstone19
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Re: HSA investing fee (PayFlex)

Post by lstone19 » Mon Aug 12, 2019 4:16 pm

My wife's employer-sponsored HSA is with Payflex and got that monthly investment fee email. Her employer has paid all other fees. Prior to retiring, my employer-sponsored HSA was also with Payflex but I had to pay the monthly fee (it was $1.75 at the time) for having an investment account. So it appears that who pays the fees is definitely something that can be employer or employee.

The amount there is small enough that it's probably not worth trying to move the money while she's employed (the fee schedule lists both a $25 closure fee and a $25 trustee to trustee transfer fee). We're very close to where we would start drawing down what is in there (we have about three years of unreimbursed medical bills) so likely this investment account fee is unlikely to approach even $25 for us.

lynneny
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Re: HSA investing fee (PayFlex)

Post by lynneny » Tue Aug 13, 2019 2:18 am

Yes, I got the email from Payflex too about the new .02 % fee. Really annoying. I already pay an account fee of $5/monthly, and have to keep $1,000 in cash.

I'm wondering if it's worth moving to the Fidelity HSA that many of you speak highly of. The new .02% fee on my $50,000 HSA balance would only be about $20 a year (if my math is correct), but that's in addition to the $60/yr account fee I pay now. So if Fidelity charges no fees, it might be worth moving to save $80/year. Even after paying a $25 account closure and a $25 wire transfer fee.

But, I retired last year to Mexico, and many U.S. financial institutions don't like doing business with U.S. expats. I don't know if that would be an issue with Fidelity, although I do use a U.S. mailing address/forwarding address. The main reason I stayed with Payflex is that when I told them I was moving to Mexico, they were fine with it. When I eventually start spending from my HSA, it'll be on medical expenses in Mexico, so it's not like I can pretend I live in the U.S.

Does anyone have any thoughts on this? Thank you.

lstone19
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Re: HSA investing fee (PayFlex)

Post by lstone19 » Tue Aug 13, 2019 2:32 am

lynneny wrote:
Tue Aug 13, 2019 2:18 am
I'm wondering if it's worth moving to the Fidelity HSA that many of you speak highly of. The new .02% fee on my $50,000 HSA balance would only be about $20 a year (if my math is correct)
I get $10 per month or $120 per year on $50,000.

But, I retired last year to Mexico, and many U.S. financial institutions don't like doing business with U.S. expats. I don't know if that would be an issue with Fidelity, although I do use a U.S. mailing address/forwarding address. The main reason I stayed with Payflex is that when I told them I was moving to Mexico, they were fine with it. When I eventually start spending from my HSA, it'll be on medical expenses in Mexico, so it's not like I can pretend I live in the U.S.
The last I knew, Fidelity does not do business with non-U.S. residents. But for an HSA, you are the person responsible for record-keeping. While most HSA custodians provide a way for you to submit information on what the distributions are for, you do not need to do so nor do you need to submit receipts of any sort. You just need to keep adequate records for you to prove the legitimacy of the distributions to the IRS should it ever be necessary.

rantk81
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Re: HSA investing fee (PayFlex)

Post by rantk81 » Tue Aug 13, 2019 7:08 am

FYI - I asked PayFlex if they would be able to transfer invested assets "in kind" to a new HSA Trustee. The answer is : Nope. I must liquidate my investments into cash before it is transferred over.

I would have considered paying the $25 "transfer out fee" if they would have kept my funds invested... but if they aren't even able to do that -- then that just makes my decision to withdraw all but $0.01 into my checking account, and do the in-direct 60-day rollover myself. It will probably be faster (less time out of the market) this way too.

lynneny
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Re: HSA investing fee (PayFlex)

Post by lynneny » Tue Aug 13, 2019 1:22 pm

Thank you, Istone19, for correcting my math and other info. $120 a year is worse than I thought. Plus the existing $60 account fee.

I'd like to move to another HSA provider like Fidelity, and theoretically that should work if I just keep my own records and don't have to account for where the money is going (I didn't realize that). But Fidelity not dealing with expats does concern me and may be something I don't want to keep finessing as I get old. I may just start emptying the account, rather than keep it as planned as one of my last retirement accounts along with my Roth IRA.

MichCPA
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Re: HSA investing fee (PayFlex)

Post by MichCPA » Tue Aug 13, 2019 1:37 pm

KingRiggs wrote:
Mon Aug 12, 2019 3:41 pm
My HSA is with The HSA Authority, with an annual fee of $36. I know I should probably switch to Fidelity, but I already switched custodians once to lower fees, and it was a bit of a hassle. The custodian (Devenir) offers several good, low-cost Vanguard funds.

Is it worth the hassle switching again to save $36? Any other advantages to Fido that I'm not thinking of? :confused
I used to have HSA authority. The advantages with Fidelity are the wider variety of funds (although HSA Authority had good ones), the lower fee, better service people if you need to call, and better web portal.

The downside is you would have to pay a fee to buy Vanguard. On balance, its an improvement, you can go to the fidelity site and ship some forms to HSA authority in about 10 minutes. Pretty painless to switch.

transient_academic
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Re: HSA investing fee (PayFlex)

Post by transient_academic » Tue Aug 13, 2019 1:54 pm

I also got the email recently about the new AUM fee. I started scanning Bogleheads to see if anyone else posted about it.

My balance isn't huge but I'm probably going to move more on principle than "principal". I've honestly been waiting for an excuse to move to Fidelity at this point but was content to let it sit as long as PayFlex wasn't hitting me with a lot of fees.

lstone19
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Re: HSA investing fee (PayFlex)

Post by lstone19 » Tue Aug 13, 2019 1:55 pm

lynneny wrote:
Tue Aug 13, 2019 1:22 pm
I may just start emptying the account, rather than keep it as planned as one of my last retirement accounts along with my Roth IRA.
Others have pointed out to me that the inheritance rules for HSAs are not as good as for IRAs. Therefore, assuming your plan is to draw from t-IRAs (or other pre-tax retirement plans) first, you are better to draw from the HSA while converting the same amount from t-IRA to Roth. You essentially will have moved money from the HSA to the Roth while having the same in the pre-tax accounts as if you had taken it out directly.

lynneny
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Re: HSA investing fee (PayFlex)

Post by lynneny » Wed Aug 14, 2019 11:50 pm

I don't really care about leaving an inheritance, but that's a really good idea to use HSA withdrawals to convert a similar amount to Roth. Thank you..

rantk81
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Re: HSA investing fee (PayFlex)

Post by rantk81 » Thu Aug 15, 2019 10:00 am

In planning to move my investments from PayFlex to Fidelity, I closed my PayFlex investment account (and liquidated the mutual fund holding into cash) on Tuesday, right after the big market rally. And it missed the big market plunge on Wednesday. Not an intentional act of "market timing", but this seems to be working to my benefit :D

Can't wait until the cash is moved over to Fidelity, and I can re-deploy it into some nice FZROX

pkay
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Re: HSA investing fee (PayFlex)

Post by pkay » Tue Aug 20, 2019 9:04 pm

Been following this thread to see if there's anyone here who is still working and have ongoing HSA contribution via payroll deductions to Payflex HSA account. Anyone? I got the email about Payflex charging an AUM fee in October this year and was wondering what the best way is to transfer money out (not closing Payflex) to Fidelity without paying the $25 fee of trustee to trustee transfer each time make this type of transfer. I can't close Payflex account because I'm still employed and have a high deductible health plan.

-pkay

moneywise3
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Re: HSA investing fee (PayFlex)

Post by moneywise3 » Tue Aug 20, 2019 9:28 pm

I worked for a big corp and they had excellent benefits. However for HSA they always picked poor custodians. Couple times I caught a data breach that they hid under the carpet. I tried to tell my HR but they refused to pay attention. I had to login to mu account with an older username AND password! That was Health scope. Later they shifted to Datapath, which was equally poor. I once caught them not crediting monthly bonus to cash funds. Again complained to my HR but Datapath gave them some false info to get out of trouble. Made me believe something is wrong with the whole HSA marketplace.

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