Health equity investment fee. High or low?

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RL1013
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Health equity investment fee. High or low?

Post by RL1013 » Tue Sep 10, 2019 6:14 pm

Hi all,

Health equity fees for self managed investment is .033% per month which equates to .40% per year. This is on top of other fund fees. I am planning to put all the funds in international bond fund. So if I invest $10,000 in that and just for example sake returns 2% annual yield, then yield will be 2%*10000 = 200. Annual Fees will be .033%*12*10000 approximately $40. Which means 20% of my yield is gone in fees. Is my math correct? Is this fee high or standard? Are there better options?

I want to invest in bonds as it's my wife's account and she doesn't want her HSA money to be invested in stock index or REITS. She considers it as kind of a medical emergency account for her.

tenkuky
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Re: Health equity investment fee. High or low?

Post by tenkuky » Tue Sep 10, 2019 7:34 pm

Don't do it. Absolutely no reason to pay an "investment fee" of 0.4% over the ERs of underlying funds.
Plus, you have to have a minimum in cash drag before you can start investing.
I had enough of HealthEquity and every year I do an indirect rollover to Lively, an excellent fee-free HSA with TD investment options with no cash drag. If you do a direct trustee transfer, (unprintable) HealthEquity charges $25 (at least for me).
Very happy with keeping pennies with them and bulk of my investable HSA in Lively.
Fidelity HSA is another good option with no fee.

Lyrrad
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Re: Health equity investment fee. High or low?

Post by Lyrrad » Wed Sep 11, 2019 1:14 am

Even though my employer covers all the investment fees and trustee to trustee transfer fees, I still decided to transfer all my funds from HealthEquity to Fidelity this past year. It’s possible that my employer won’t cover these fees in the future, or that I’ll leave my employer some day and HE will start charging fees. I plan to transfer funds at the beginning of each year after maximizing my HSA from my paycheck.

Since I’m in CA or NJ, my understanding is that I have to pay state taxes on dividends or capital gains, and since I plan to keep my funds in equities, I decided to transfer the funds before incurring large capital gains in my account.

I selected Fidelity since I have more confidence that fees will remain low in the long term, and I should have the option to transfer the ETF I purchased in kind to another HSA provider in the future without having to sell the funds and potentially owe state capital gains taxes.

Wyodoc
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Re: Health equity investment fee. High or low?

Post by Wyodoc » Wed Sep 11, 2019 5:38 am

tenkuky wrote:
Tue Sep 10, 2019 7:34 pm
Don't do it. Absolutely no reason to pay an "investment fee" of 0.4% over the ERs of underlying funds.
Plus, you have to have a minimum in cash drag before you can start investing.
I had enough of HealthEquity and every year I do an indirect rollover to Lively, an excellent fee-free HSA with TD investment options with no cash drag. If you do a direct trustee transfer, (unprintable) HealthEquity charges $25 (at least for me).
Very happy with keeping pennies with them and bulk of my investable HSA in Lively.
Fidelity HSA is another good option with no fee.
I’m also at HE through my job. HE requires 2000 in cash before you are able to invest. So there’s a cash drag of 2000 plus the 0.4% investment fee so I agree it makes sense to switch. So did you liquidate the investments and remove that cash plus the cash in the account? Withdrawal that money and send it to another provider like Lively (I’m actually looking at Fidelity) and then repeat once a year? I deposit money in my HSA every 2 wks w paycheck. Would this cause any issues with HE and low balance?

Overall I think HE is a ripoff and I’d love to open another HSA...
Thanks!

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Tamarind
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Re: Health equity investment fee. High or low?

Post by Tamarind » Wed Sep 11, 2019 6:00 am

I had to make this choice too a few years ago and I concluded:

1) The fee is worth it to invest if your employer insists on using HE. Especially if you are going to max out the HSA contribution, or you intend to stay with your employer for a while, in which case the costs of not investing are higher.

2) The moment you can you should move to a different HSA custodian. I use Lively, many recommend Fidelity.

tenkuky
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Re: Health equity investment fee. High or low?

Post by tenkuky » Wed Sep 11, 2019 8:10 am

Wyodoc wrote:
Wed Sep 11, 2019 5:38 am
tenkuky wrote:
Tue Sep 10, 2019 7:34 pm
Don't do it. Absolutely no reason to pay an "investment fee" of 0.4% over the ERs of underlying funds.
Plus, you have to have a minimum in cash drag before you can start investing.
I had enough of HealthEquity and every year I do an indirect rollover to Lively, an excellent fee-free HSA with TD investment options with no cash drag. If you do a direct trustee transfer, (unprintable) HealthEquity charges $25 (at least for me).
Very happy with keeping pennies with them and bulk of my investable HSA in Lively.
Fidelity HSA is another good option with no fee.
I’m also at HE through my job. HE requires 2000 in cash before you are able to invest. So there’s a cash drag of 2000 plus the 0.4% investment fee so I agree it makes sense to switch. So did you liquidate the investments and remove that cash plus the cash in the account? Withdrawal that money and send it to another provider like Lively (I’m actually looking at Fidelity) and then repeat once a year? I deposit money in my HSA every 2 wks w paycheck. Would this cause any issues with HE and low balance?

Overall I think HE is a ripoff and I’d love to open another HSA...
Thanks!
I never put anything in HE investments. I chose to front-load my HSA in first 3 months, and then transferred everything but a few $ via indirect rollover (if you take everything, they close your account and charge you the $25!). There is no low balance if you don't have in investments. You can only do this once every 12 months.
There is a specific process for this I mastered after initial mess-ups by HE. PM me for the step-by-step.

tenkuky
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Re: Health equity investment fee. High or low?

Post by tenkuky » Wed Sep 11, 2019 8:12 am

Tamarind wrote:
Wed Sep 11, 2019 6:00 am
I had to make this choice too a few years ago and I concluded:

1) The fee is worth it to invest if your employer insists on using HE. Especially if you are going to max out the HSA contribution, or you intend to stay with your employer for a while, in which case the costs of not investing are higher.

2) The moment you can you should move to a different HSA custodian. I use Lively, many recommend Fidelity.
The employer can insist all they want, can't stop employee from opening another HSA and transferring out. The AUM persistent fee is not worth HE IMHO. For less than 20 min of process each year, you can put in Lively or Fido.

Topic Author
RL1013
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Re: Health equity investment fee. High or low?

Post by RL1013 » Wed Sep 11, 2019 12:06 pm

Thanks everyone for the replies. I will look into Fidelity and Lively. Can anyone who has experience with lively tell me if they have vanguard or other good low cost funds as investment options?

TropikThunder
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Re: Health equity investment fee. High or low?

Post by TropikThunder » Wed Sep 11, 2019 1:44 pm

RL1013 wrote:
Wed Sep 11, 2019 12:06 pm
Thanks everyone for the replies. I will look into Fidelity and Lively. Can anyone who has experience with lively tell me if they have vanguard or other good low cost funds as investment options?
Lively uses TD Ameritrade as their investment platform. TDA has a couple hundred ETF’s commission free but none of them are Vanguard (Vanguard doesn’t kick any money back to TDA) so BND for example would cost $6.95 per trade. Similar for mutual funds, the have a “No Transaction Fee” list and others will cost $49.99 per trade. That said, there are cheap non-Vanguard ETF’s in their commission free list that are just as good as Vanguard’s.

In all honesty, Fidelity is probably better but Lively was first to the no cost HSA so a lot of people just don’t want to switch again.

feh
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Re: Health equity investment fee. High or low?

Post by feh » Wed Sep 11, 2019 3:54 pm

Is there a wiki page, or rules of thumb elsewhere I could follow regarding transfers?

We have an HSA at Optum from an old employer. Currently funding another HSA at Health Equity through current employer. Most of our assets are held at Fido, so I'd like to get all these monies over there in a new account.

Are there timing issues I need to be concerned about?

Thanks.
Last edited by feh on Wed Sep 11, 2019 10:03 pm, edited 1 time in total.

tenkuky
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Re: Health equity investment fee. High or low?

Post by tenkuky » Wed Sep 11, 2019 7:55 pm

RL1013 wrote:
Wed Sep 11, 2019 12:06 pm
Thanks everyone for the replies. I will look into Fidelity and Lively. Can anyone who has experience with lively tell me if they have vanguard or other good low cost funds as investment options?
You can approximate a 3-fund type portfolio with no-fee ETFs at Lively/TDA very easily
SPTM for Total Market
SPAB for Total Bond
SPDW for International developed

Low, low ERs (<0.05%)

tenkuky
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Re: Health equity investment fee. High or low?

Post by tenkuky » Wed Sep 11, 2019 7:59 pm

feh wrote:
Wed Sep 11, 2019 3:54 pm
Is there a wiki page, or rules of thumbs elsewhere I could follow regarding transfers?

We have an HSA at Optum from an old employer. Currently funding another HSA at Health Equity through current employer. Most of our assets are held at Fido, so I'd like to get all these monies over there in a new account.

Are there timing issues I need to be concerned about?

Thanks.
The timing issues depend on whether you are doing a direct trustee-to-trustee transfer or an indirect "rollover". The latter has 1 limit per 12 months, the former has no limits. But transfers may have a fee so check that first. I do indirect rollovers once a year and am happy.
Compare fees of investments and overall account, "inactivity fees", minimal balance fees, "cash drag" aka how much you have as minimum to invest and see what is best for you. Old HSA should be no problem, current one depends on how quickly you hit your annual max.

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Re: Health equity investment fee. High or low?

Post by willthrill81 » Wed Sep 11, 2019 9:23 pm

I too have a Health Equity HSA at work, and I recently transferred the funds to Fidelity, which I really like. I'll just continue doing periodic transfers from HE to Fidelity going forward.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Tamarind
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Re: Health equity investment fee. High or low?

Post by Tamarind » Wed Sep 11, 2019 9:29 pm

TropikThunder wrote:
Wed Sep 11, 2019 1:44 pm
RL1013 wrote:
Wed Sep 11, 2019 12:06 pm
Thanks everyone for the replies. I will look into Fidelity and Lively. Can anyone who has experience with lively tell me if they have vanguard or other good low cost funds as investment options?
Lively uses TD Ameritrade as their investment platform. TDA has a couple hundred ETF’s commission free but none of them are Vanguard (Vanguard doesn’t kick any money back to TDA) so BND for example would cost $6.95 per trade. Similar for mutual funds, the have a “No Transaction Fee” list and others will cost $49.99 per trade. That said, there are cheap non-Vanguard ETF’s in their commission free list that are just as good as Vanguard’s.

In all honesty, Fidelity is probably better but Lively was first to the no cost HSA so a lot of people just don’t want to switch again.
In fact I had just switched to Lively when word came out about Fidelity's offering. I also like being able to support a startup in the space. The SPDR index ETFs work just fine as substitutes for the three fund at TD Ameritrade, but in my case my HSA is allocated 100% to SPTM (TSM-equivalent). ER is 0.03%.

Wyodoc
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Re: Health equity investment fee. High or low?

Post by Wyodoc » Thu Sep 12, 2019 5:38 am

willthrill81 wrote:
Wed Sep 11, 2019 9:23 pm
I too have a Health Equity HSA at work, and I recently transferred the funds to Fidelity, which I really like. I'll just continue doing periodic transfers from HE to Fidelity going forward.
How much did HE charge you for a transfer? I’m looking into doing an indirect transfer to save money on the transfer fee but curious how much they charge...

cas
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Re: Health equity investment fee. High or low?

Post by cas » Thu Sep 12, 2019 6:09 am

feh wrote:
Wed Sep 11, 2019 3:54 pm
Is there a wiki page, or rules of thumb elsewhere I could follow regarding transfers?

We have an HSA at Optum from an old employer. Currently funding another HSA at Health Equity through current employer. Most of our assets are held at Fido, so I'd like to get all these monies over there in a new account.

Are there timing issues I need to be concerned about?
Here is a good post discussing choosing between the trustee-to-trustee and indirect rollover methods. (The specific example doesn't involve Health Equity, so some details may differ, but the high-level flow and advice is good for any HSA vendor): "Tips for closing out BenefitWallet HSA via direct rollover to new HSA" (Feb 2018) viewtopic.php?f=1&t=241923

Indirect rollovers have some advantages, but messing one up has really, really bad consequences. If you want to try that path, I would recommend reading this post: "reasons to avoid indirect HSA rollover?" (Dec 2018) viewtopic.php?f=10&t=266089

I'd recommend reading the whole thing, but make sure you read down at least to this comment by SpiritRider for one example of how subtle things about the indirect rollover process can land you in IRS misery. (This particular example may or may not apply to Health Equity's procedures, but my more general point is to highlight how messing up a detail on an indirect rollover can have really, really bad consequences. Doing one requires some prior research so you get all the details right on the first try.)
You have it exactly backwards and are misinterpreting the Pub 969 quote. [ . . . ] I hate to be the bearer of extremely bad news. Only the first distribution amount of $2,500 is eligible for tax-free rollover. All the other distributions that exceed your unreimbursed qualified medical expenses are non-qualified distributions, subject to ordinary taxes and if < age 65, subject to a 20% excise tax penalty, are not eligible for rollover and constitute excess contributions if not removed.

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Re: Health equity investment fee. High or low?

Post by willthrill81 » Thu Sep 12, 2019 8:57 am

Wyodoc wrote:
Thu Sep 12, 2019 5:38 am
willthrill81 wrote:
Wed Sep 11, 2019 9:23 pm
I too have a Health Equity HSA at work, and I recently transferred the funds to Fidelity, which I really like. I'll just continue doing periodic transfers from HE to Fidelity going forward.
How much did HE charge you for a transfer? I’m looking into doing an indirect transfer to save money on the transfer fee but curious how much they charge...
There didn't charge me a transfer fee.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Health equity investment fee. High or low?

Post by mbnc » Thu Sep 12, 2019 9:19 am

My employer also uses Health Equity. Like the others, I didn't like the minimum cash balance and the 0.4% fee. My other accounts are with Fidelity, so I opened a retail HSA with them several months ago. Every 2-3 months, I'll transfer what's accumulated in the Health Equity account to Fidelity. I've never been charged a transfer fee, but they do have a minimum balance on the account (mine is $25; this may vary), so I just make sure to mark it as a partial transfer and leave at least that much in the account.

It's a paper-based trustee-to-trustee transfer, which means it's simple, but slow. You go online and fill out a Transfer of Assets form, print it, sign it, and mail it to Fidelity. Then they review it and send it to Health Equity, then Health Equity cuts a check and sends it to Fidelity. It takes a couple of weeks for the paper to move around, but otherwise it's a painless process.

TropikThunder
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Re: Health equity investment fee. High or low?

Post by TropikThunder » Thu Sep 12, 2019 1:08 pm

mbnc wrote:
Thu Sep 12, 2019 9:19 am
My employer also uses Health Equity. Like the others, I didn't like the minimum cash balance and the 0.4% fee. My other accounts are with Fidelity, so I opened a retail HSA with them several months ago. Every 2-3 months, I'll transfer what's accumulated in the Health Equity account to Fidelity. I've never been charged a transfer fee, but they do have a minimum balance on the account (mine is $25; this may vary), so I just make sure to mark it as a partial transfer and leave at least that much in the account.

It's a paper-based trustee-to-trustee transfer, which means it's simple, but slow. You go online and fill out a Transfer of Assets form, print it, sign it, and mail it to Fidelity. Then they review it and send it to Health Equity, then Health Equity cuts a check and sends it to Fidelity. It takes a couple of weeks for the paper to move around, but otherwise it's a painless process.
+1, I’ve been doing it the same way (except Lively does the transfer request online, no paper form required). No fee for transfers in my experience (4 or 5 times now). It does take about two weeks though, since HE will freeze the money for a week before sending out the check (they say it allows incoming charges to post).

As mbnc said, just reviews your plan docs and make sure you leave the account minimum so they don’t close it. I made the mistake on my first transfer of taking 100% since I didn’t know about the minimum. They closed it, charged me $25 account closing fee, and then reopened it when my next payroll contribution posted. They did credit me the $25 when I complained though. But I don’t imagine they would do it twice.

dorster
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Re: Health equity investment fee. High or low?

Post by dorster » Thu Sep 12, 2019 8:55 pm

mbnc wrote:
Thu Sep 12, 2019 9:19 am
My employer also uses Health Equity. Like the others, I didn't like the minimum cash balance and the 0.4% fee. My other accounts are with Fidelity, so I opened a retail HSA with them several months ago. Every 2-3 months, I'll transfer what's accumulated in the Health Equity account to Fidelity. I've never been charged a transfer fee, but they do have a minimum balance on the account (mine is $25; this may vary), so I just make sure to mark it as a partial transfer and leave at least that much in the account.

It's a paper-based trustee-to-trustee transfer, which means it's simple, but slow. You go online and fill out a Transfer of Assets form, print it, sign it, and mail it to Fidelity. Then they review it and send it to Health Equity, then Health Equity cuts a check and sends it to Fidelity. It takes a couple of weeks for the paper to move around, but otherwise it's a painless process.
willthrill81 wrote:
Wed Sep 11, 2019 9:23 pm
I too have a Health Equity HSA at work, and I recently transferred the funds to Fidelity, which I really like. I'll just continue doing periodic transfers from HE to Fidelity going forward.
For those of you who have transferred from Health Equity to Fidelity, is this the form you use? Do you have to get medallion signature guarantees? I'm considering transferring from Health Equity to Fidelity every 6-18 months. As far as you know, could I transfer 100% of VTSAX (or whatever fund I choose to invest in at Health Equity) and cash minus $25 or $100 to avoid the minimum balance fee? Or would I need to convert everything back to cash at Health Equity before the transfer out?

Any insight or advice is appreciated!

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Re: Health equity investment fee. High or low?

Post by willthrill81 » Thu Sep 12, 2019 9:26 pm

dorster wrote:
Thu Sep 12, 2019 8:55 pm
mbnc wrote:
Thu Sep 12, 2019 9:19 am
My employer also uses Health Equity. Like the others, I didn't like the minimum cash balance and the 0.4% fee. My other accounts are with Fidelity, so I opened a retail HSA with them several months ago. Every 2-3 months, I'll transfer what's accumulated in the Health Equity account to Fidelity. I've never been charged a transfer fee, but they do have a minimum balance on the account (mine is $25; this may vary), so I just make sure to mark it as a partial transfer and leave at least that much in the account.

It's a paper-based trustee-to-trustee transfer, which means it's simple, but slow. You go online and fill out a Transfer of Assets form, print it, sign it, and mail it to Fidelity. Then they review it and send it to Health Equity, then Health Equity cuts a check and sends it to Fidelity. It takes a couple of weeks for the paper to move around, but otherwise it's a painless process.
willthrill81 wrote:
Wed Sep 11, 2019 9:23 pm
I too have a Health Equity HSA at work, and I recently transferred the funds to Fidelity, which I really like. I'll just continue doing periodic transfers from HE to Fidelity going forward.
For those of you who have transferred from Health Equity to Fidelity, is this the form you use? Do you have to get medallion signature guarantees? I'm considering transferring from Health Equity to Fidelity every 6-18 months. As far as you know, could I transfer 100% of VTSAX (or whatever fund I choose to invest in at Health Equity) and cash minus $25 or $100 to avoid the minimum balance fee? Or would I need to convert everything back to cash at Health Equity before the transfer out?

Any insight or advice is appreciated!
Yes, that's the form. If you go through the Fidelity little online 'wizard', it will complete all of the fields for you, and all you do is sign it and mail it in along with your most recent Health Equity statement (which I did myself again today). A Medallion signature is not needed. Yes, you can transfer as much of the funds in your Health Equity account to Fidelity as you wish, and I don't believe that it's necessary for you to sell your HE funds before you initiate the transfer. Considering that the only cost involved in doing this transfer is a stamp to mail the forms and it only takes five minutes, I'd recommend that you transfer the funds much more often than every 18 months, maybe every 2-3.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

finsterfolly
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Re: Health equity investment fee. High or low?

Post by finsterfolly » Fri Sep 13, 2019 8:39 am

Thanks for this thread! I just recently discovered that my HSA through HealthEquity had an investment option. My initial excitement was curtailed when I started reading the associated costs.

One slightly off-topic question. If I open an HSA account with Fidelity, do you know if they run a credit check. I froze my accounts 2 years ago after the Equifax breech.

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Re: Health equity investment fee. High or low?

Post by willthrill81 » Fri Sep 13, 2019 8:57 am

finsterfolly wrote:
Fri Sep 13, 2019 8:39 am
One slightly off-topic question. If I open an HSA account with Fidelity, do you know if they run a credit check. I froze my accounts 2 years ago after the Equifax breech.
No, they don't.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Health equity investment fee. High or low?

Post by abuss368 » Fri Sep 13, 2019 10:24 am

finsterfolly wrote:
Fri Sep 13, 2019 8:39 am
Thanks for this thread! I just recently discovered that my HSA through HealthEquity had an investment option. My initial excitement was curtailed when I started reading the associated costs.

One slightly off-topic question. If I open an HSA account with Fidelity, do you know if they run a credit check. I froze my accounts 2 years ago after the Equifax breech.
Credit checks are not processed for opening an HSA account.
John C. Bogle: "Simplicity is the master key to financial success."

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