Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

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Topic Author
docG
Posts: 5
Joined: Mon Apr 05, 2021 7:46 pm

Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by docG »

I have an employer-related HSA, the employer contributes $200 a year and the HSA is set up at HealthEquity. HealthEquity is very expensive in terms of cost. They have a monthly admin fee of $1, there is also a monthly investment fee of 0.03%. With an account of 10k, the annual cost is about $1*12+$10000* 0.03%*12 = $48 (effective annual cost ~0.48%). This is on top of the mutual fund cost (they do have low ER Vanguard funds). And I really don't like HealthEquity requires a minimum of $1000 in cash (un-investable).

I learned from this forum about rolling over the HSA to other custodians. Would this be feasible in my case as the employer has designated HealthEquity and they continue 'matching' some funds in this plan? Can I open a side HSA (for roll-over) in addition to my employer-related HealthEquity? Which would you recommend?
systemr
Posts: 51
Joined: Sun Oct 04, 2020 12:42 am

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by systemr »

docG wrote: Wed Apr 07, 2021 2:43 pm I have an employer-related HSA, the employer contributes $200 a year and the HSA is set up at HealthEquity. HealthEquity is very expensive in terms of cost. They have a monthly admin fee of $1, there is also a monthly investment fee of 0.03%. With an account of 10k, the annual cost is about $1*12+$10000* 0.03%*12 = $48 (effective annual cost ~0.48%). This is on top of the mutual fund cost (they do have low ER Vanguard funds). And I really don't like HealthEquity requires a minimum of $1000 in cash (un-investable).

I learned from this forum about rolling over the HSA to other custodians. Would this be feasible in my case as the employer has designated HealthEquity and they continue 'matching' some funds in this plan? Can I open a side HSA (for roll-over) in addition to my employer-related HealthEquity? Which would you recommend?
yes i'm doing this right now, doing a partial HSA transfer to fidelity which has no fees for the account nor investing. health equity is a big scam and they hold all your investments in one account so should you want to transfer investments they can't transfer assets but would sell and you'd incur taxes if like me you live in a state (CA) that taxes gains in HSAs.

Employer contributions go in, I also contribute directly and periodically I remove everything but $25.

https://answers.healthequity.com/app/an ... -transfers

https://www.fidelity.com/customer-servi ... fer-assets
Gus Chiggins
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Joined: Thu Apr 16, 2015 8:35 am

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by Gus Chiggins »

Yes you can. My wife has HealthEquity, including a match, and we do regular partial trustee-to-trustee transfers to Fidelity. Personally, I think Fidelity is the best retail HSA out there to park investments. No administrative fees and a wide variety of low cost mutual funds and ETFs. Fidelity does lack higher quality expense tracking tools if that matters to you.

Points of caution:
1. HealthEquity requires a minimal amount be left in the HSA or they will close the account, which would cause an administrative headache to get corrected, so make sure to only do a partial transfer and leave the required amount in the HealthEquity HSA.
2. You can technically do a rollover (i.e. distributing the money to yourself and then depositing with Fidelity), but I personally avoid this as it requires more effort, can only be done once every twelve months (from date of rollover) and can create some tax risk if you screw something up. I highly recommend trustee-to-trustee transfers, which lessen or avoid all those issues.
3. You can initiate the partial trustee-to-trustee transfer through HealthEquity by using their form or through Fidelity by using their online request tool. I initiate through Fidelity and have found it very easy, but it may be a little faster to use HealthEquity’s form.
cshell2
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Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by cshell2 »

Yes. I do this. My employer has us set up with HSA Bank. Two or three times a year I funnel off any amount over 3K to the account I set up at Fidelity. The 3K amount is because that's the point where HSA Bank is not charging me $2/month service charge and I like to have a few thousand in cash in case I do get a big medical bill I can't cash flow.
Topic Author
docG
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Joined: Mon Apr 05, 2021 7:46 pm

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by docG »

Gus Chiggins wrote: Wed Apr 07, 2021 2:58 pm Yes you can. My wife has HealthEquity, including a match, and we do regular partial trustee-to-trustee transfers to Fidelity. Personally, I think Fidelity is the best retail HSA out there to park investments. No administrative fees and a wide variety of low cost mutual funds and ETFs. Fidelity does lack higher quality expense tracking tools if that matters to you.

Points of caution:
1. HealthEquity requires a minimal amount be left in the HSA or they will close the account, which would cause an administrative headache to get corrected, so make sure to only do a partial transfer and leave the required amount in the HealthEquity HSA.
2. You can technically do a rollover (i.e. distributing the money to yourself and then depositing with Fidelity), but I personally avoid this as it requires more effort, can only be done once every twelve months (from date of rollover) and can create some tax risk if you screw something up. I highly recommend trustee-to-trustee transfers, which lessen or avoid all those issues.
3. You can initiate the partial trustee-to-trustee transfer through HealthEquity by using their form or through Fidelity by using their online request tool. I initiate through Fidelity and have found it very easy, but it may be a little faster to use HealthEquity’s form.
Thank you so much, now I have more confidence to pull the trigger.
Topic Author
docG
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Joined: Mon Apr 05, 2021 7:46 pm

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by docG »

systemr wrote: Wed Apr 07, 2021 2:54 pm you'd incur taxes if like me you live in a state (CA) that taxes gains in HSAs.
Never thought some states can tax HSA gains, good to know.
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FIREchief
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Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by FIREchief »

Does the Health Equity HSA impose a fee for each partial withdrawal/transfer?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Gus Chiggins
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Joined: Thu Apr 16, 2015 8:35 am

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by Gus Chiggins »

FIREchief wrote: Wed Apr 07, 2021 3:07 pm Does the Health Equity HSA impose a fee for each partial withdrawal/transfer?
It may be employer specific, but not that I’m aware of (from my personal experience and anecdotally from other HealthEquity discussions on this forum).
Gus Chiggins
Posts: 31
Joined: Thu Apr 16, 2015 8:35 am

Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by Gus Chiggins »

cshell2 wrote: Wed Apr 07, 2021 3:01 pm Yes. I do this. My employer has us set up with HSA Bank. Two or three times a year I funnel off any amount over 3K to the account I set up at Fidelity. The 3K amount is because that's the point where HSA Bank is not charging me $2/month service charge and I like to have a few thousand in cash in case I do get a big medical bill I can't cash flow.
Heck, $24/yr tax free on a $3,000 balance blows away what you could get in a HYSA right now anyway.
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grabiner
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Re: Can I open a side HSA for rolling in employer HSA (and still keep contributing to employer HSA due to matching)?

Post by grabiner »

docG wrote: Wed Apr 07, 2021 3:06 pm
systemr wrote: Wed Apr 07, 2021 2:54 pm you'd incur taxes if like me you live in a state (CA) that taxes gains in HSAs.
Never thought some states can tax HSA gains, good to know.
It's now only CA and NJ. In those states, you may want to invest your HSA in Treasury bonds to avoid the tax, as long as Treasury bonds (including TIPS) fit your investment needs.
Wiki David Grabiner
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