questions on The HSA Authority

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cas
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questions on The HSA Authority

Post by cas »

As discussed in another recent thread, Morningstar published a report comparing 10 HSA vendors yesterday: viewtopic.php?t=222116 ("[2017 Health Savings Account Landscape] via Morningstar")

The report is complimentary about an HSA vendor called The HSA Authority, which is an HSA vendor that was not on my radar screen before. I searched the bogleheads archives, and there isn't a whole lot of discussion about this vendor.

The Morningstar report is necessarily directed at a general audience, and I'm trying to customize the analysis to my specific situation. Anyone out there with experience with The HSA Authority who can answer a couple of questions for me? (Yes, calling HSA Authority would also generate answers, but it is always nice to compare customer service answers with experiences of actual customers.)

1. HSA Authority requires $1000 minimum in checking before you can open an investment account. Once the investment account is open, do you have to keep $1000 in the checking or can you move everything over to the investment account side? I found one comment in the bogleheads forum that said you could go to $0 on the checking side with no repercussions, but would like to confirm that.

2. Looking through the fees page on their website, I see they have a $5/month "dormant account" fee. My HSA (currently at Benefit Wallet, which can be twisted into being not-awful, but also could be improved upon) is from a former employer. My current employer doesn't offer HSA-compatible health insurance, so my use of an HSA account is currently to stick the assets in an investment account and let it compound. I pay current health expenses out of pocket. Without any new contributions or withdrawals, I think I could be at risk of being seen as a "dormant account." Anybody else use an HSA Authority account without making any new contributions or pulling any money out for medical expenses? Any problems with "dormant account" fees? Do you know what it takes to avoid being tagged as a "dormant account?"

(And, yes, (predicting a comment about Saturna), I know about the advantages Saturna HSA has for investment-only HSA accounts. Saturna is very interesting, but I'm a bit wary of the $75 transfer-out fee (most HSA vendors seem to be $25) combined with the recent decision to raise the fee for investing in Fidelity funds (apparently used to be $14.95/transaction, but now $24.95 like for Vanguard funds. I'm a bit wary of the risk that they might start raising fees, knowing the $75 transfer-out fee will likely act as a slight deterrent to people leaving. So, I thought it was worth at least compiling more information on The HSA Authority, even though their $36 fee is higher than Saturna's $24.95 single-transaction or $25 no-activity annual fee.)
aristotelian
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Re: questions on The HSA Authority

Post by aristotelian »

+1, I am also interested in HSA Authority. Looks very good for a low annual fee. You might have to give them a call to get answers to these specific questions. If so, I would be curious to know what you find out!

I have narrowed my choices down to HSA Authority and SelectAccount.

Leaning toward SelectAccount, as it appears fees are as low as $18/year w/$2500 cash minimum or $30/year with no minimum.
Topic Author
cas
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Re: questions on The HSA Authority

Post by cas »

This is a bit of a rabbit trail away from the main topic (questions specifically on HSA Authority), but I found out some surprising (to me) general information on dormant account fees in HSAs while I was looking for specific HSA Authority information.

Apparently dormant HSA accounts are a widespread phenomenon: one estimate is that 24% of HSA accounts are considered dormant, due to a variety of reasons, including my reason of not being eligible to contribute any longer, and wanting to leave the money compounding in an investment account rather using it to pay current expenses. (Source: http://www.reuters.com/article/us-money ... SKBN1771AZ "Your Money: What to do with your dormant Health Savings Account").

This can cause problems in 2 ways:

1. In the shorter-term (probably 1-2 years), the HSA custodian may start charging dormant account fees. I had to search hard and dig deep into the fine print to find out the circumstances under which this may happen and how much the fee would be. I'm not sure the companies are even obligated to try to notify you if they start charging the fee.

2. In the longer term (governed by state law ... probably 3-7 years), the custodian may be required to hand your HSA over to the state as unclaimed funds (escheatment). I think laws generally require that the HSA custodian attempt to contact you before this happens.

There is a several-years-ago thread in the boglehead archives about this: viewtopic.php?t=101383 ("HSA - Bank Accounts - Inactivity Can Result in Problem?")

I guess all this shouldn't have been a surprise given that most HSAs have a checking account aspect, but I had shifted so much in my mind to putting HSAs in an investment-account-for-retirement category that it caught me a bit unaware. (Brokerages seem to be more tolerant of assets sitting compounding silently for years in retirement accounts than banks are tolerant of inactive checking accounts.)

Here is specific wording relevant to HSA vendors previously mentioned in this thread. Note the differences in level of disclosure and amount of detail. And, of course, this information isn't always listed in obvious places, and I'm never quite sure I've gotten the most recent version when using google.

The HSA Authority:

Dormant account fee is $5/month. (source: Fee Schedule at http://www.thehsaauthority.com/ContentD ... ntId=27023
A dormant Account is an Account that has been inactive. Generally, subject to state law, “inactive” means there has been no deposit, withdrawal or other communication from you about your Account for the period of time as follows:
(1) After 36 months for a savings Account;
(2) After 12 months for a checking Account; or
(3) After 18 months for a health savings Account.

Subject to applicable law, we will charge a dormant fee on the Account, and the Account will be presumed to be abandoned. (Source: Deposit Account Agreement at https://www.oldnational.com/docs/defaul ... losure.pdf
SelectAccounts:

I couldn't find any document that listed the dormant account fee. It isn't on their Fee Schedule. Source: https://www.selectaccount.com/wp-conten ... hedule.pdf
If you have not made a deposit to or a withdrawal from your account for a period of time that we consider substantial, then (unless prohibited by law) we may charge dormant account fees on the account in addition to regular monthly maintenance and other fees and we may stop paying interest on the account. Source: https://www.selectaccount.com/wp-conten ... eement.pdf p. 3, Item 11
Benefit Wallet:

Dormant account fee not listed on fee schedule. A rather vague comment that addresses escheatment, but doesn't address dormant account triggers or fees is given in their HSA Account Agreement:
The funds in your Account may be transferred to the appropriate state if no activity occurs in the account within the time period specified by state law. Source: https://mybenefitwallet.com/CMS/docs/default/DADs.pdf p. 7
Given my situation where I'm not eligible to make new contributions, sounds like maybe the safest thing is to find some small medical bill each year and make a single withdrawal every year. Given the SelectAccounts wording, sounds like even sending a letter or making a phone call each year saying "The account is still active" might not be enough to avoid dormant account fees, although it would probably stave off escheatment.
Last edited by cas on Wed Jun 28, 2017 2:24 pm, edited 1 time in total.
Topic Author
cas
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Re: questions on The HSA Authority

Post by cas »

For aristotelian:

While reading all the above fine print, I stumbled across a different surprising (to me) fact about SelectAccounts. Apparently they got some sort of IRS permission to be a "non-bank" offering HSA checking-account-like services. This means that, unless you pay an extra $3/month fee (the "SelectSaver" level), there is no FDIC insurance for the cash part of the account. (Getting the cash back is subject to the claims-paying ability of SelectSaver under Minnesota life insurance law.) I haven't decided how I feel about that, but I was surprised. (I think most HSA "checking accounts" are FDIC insured because they are run by official banks? But maybe I'm wrong.)

Nitty gritty details: https://www.selectaccount.com/wp-conten ... eement.pdf p.2, Items 2 and 3

I love the general concept of HSAs, but all these little fine-print surprises about HSAs make me itch.
dignan
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Re: questions on The HSA Authority

Post by dignan »

cas,
I have an account with HSA Authority.
1. You do not have to keep $1000 in the checking account. The whole amount can be invested.
2. Since I am contributing, I have not experienced any issues with dormant fees. You'll have to call them about this one.

I checked Alliant Credit Union and they have a dormant fee of $10.
http://www.alliantcreditunion.org/fees/
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indexfundfan
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Re: questions on The HSA Authority

Post by indexfundfan »

Does anyone know if the $36 can be paid from outside the HSA account?
My signature has been deleted.
Corgitodd
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Re: questions on The HSA Authority

Post by Corgitodd »

Reviving this older thread to learn if anyone has transferred their HSA Authority acount to Fidelity, and if so, what was the easiest route. I’m still undecided because I have VG Wellington Shares at HSA bank and I prefer VG funds.
SarahS
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Re: questions on The HSA Authority

Post by SarahS »

Following.

Does anyone know if the Fidelity HSA was included in the recent Morningstar analysis/article on HSA offerings? I don’t recall seeing it. If it was, how did it stack up with regard to fees?
Corgitodd
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Re: questions on The HSA Authority

Post by Corgitodd »

I have Wellington Admiral shares at HSA Authority, at only a $1k minimum entry. Fidelity has no cost stock index funds, but they dont seem to offer a no cost bond fund were I try to replicate Wellington’s balanced approach. I could transfer over the Wellington to Fidelity, but I think I’d get hit with Fidelity brokerage fees. As such, Fidelity might not be no cost for my situation. Cant decide if lower cost is worth the hassle of the transfer. Such the conundrum!
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