Since
Health Savings Accounts (HSAs) were established
by the Medicare Modernization Act of 2003, over
one million people have enrolled in a HSA/High
Deductible Health Plan (HDHP). Not surprisingly,
over 120 financial institutions have also jumped
on board to satisfy the demand of this new product.
Unlike the consumer, who is attracted to the reduced
health plan costs and tax savings of a HDHP/ HSA,
financial institutions are attracted to HSAs for
their potential of generating huge fees from a
simple, low cost savings /checking account. This
article will shed some light on the various fees
the average consumer can expect to pay for a HSA,
identify the major HSA providers and finally,
compare the first year fees the major providers
are charging consumers.
HSA
-A Banks Perspective
From
a banks perspective, a HSA is nothing more then
a regular savings or checking account. Internally,
they function just like your typical checking
account. However, at the end of the year, banks
are required to file forms, unique to HSAs. These
forms are an aggregate history of account activity
and makes coding of each transaction extremely
important. When reviewing the design of the programs
available from providers of HSA administration,
many of the restrictions implemented on accounts
have been installed to ensure proper recording
of account activity. Banks are not required to
provide additional services or HSA advice but
most will assist the consumer with determining
eligibility and contribution limits.
Fees
When
opening an HSA, consumers can expect to pay a
setup fee, in addition to a monthly or annual
fee. Start-up fees typically range from $25 to
$75 per account, while monthly fees can add another
$25-$70 annually. Additional charges include a
fee for each transaction, a per-check writing
fee, ATM fees, debit card fees and even a fee
to close the account. Below is a list of the fees
banks are now charging for HSAs.
Summary
of Fees
Associated with HSAs
FEES |
RANGE |
| Setup Fee |
$25-$75 |
| Annual Fee |
$25-$70 |
| Monthly Fee |
$2-$7 per month |
| Per Transaction Fee |
$1-$2 |
| Per Check Fee |
$1-$2 |
| Traditional Check Fee |
$1-$2 |
| ATM Fee |
$1-$3 |
| Debit Card Fee |
$25-$50 |
| Closing Fee |
$25-$75 |
On
a positive note, most HSA providers do offer tiered-interest
rates, which are based on the account balance.
However, before running to the bank and opening
a HSA because of a newly advertised interest rate,
take a closer look in the details. For example,
HSA Bank promotes the top tier interest rate of
4.00%. Unfortunately, you will need a $15,000
balance to reach the generous interest rate. Most
account holders of HSA Bank probably fall in the
interest rate tier of 1.61%, which is for account
balances between $500 - $5000. Regardless, there
are other HSA providers that do offer reasonable
interest rates for the first dollar of the account.
A
Typical HSA Fee Arrangement
When
an individual or company enrolls in a high-deductible
health plan, that individual or employee has the
right to choose their HSA provider regardless
of who provides their health plan. For example,
if you enroll in an Anthem Qualified High-Deductible
Health Plan (HDHP), you become eligible to contribute
to a tax-advantaged Health Savings Account (HSA).
Anthem
does not provide Health Savings Account administration
services, so you'll need to go to another company
for your HSA. According to Anthem, they performed
a thorough review of Health Savings Account administrators
and identified JP Morgan Chase Bank (“JP
Morgan”), one of the nation's leading financial
institutions, as a most sound choice. I am not
sure of what factors they used in their analysis,
but our “thorough review” identified
JP Morgan is one of the most expensive choices.
Let’s take a closer look.
Anthem
and JP Morgan have established a "referral"
relationship. For every new HSA, this referral
relationship nets JP Morgan $71.00 in first year
fees plus and $1.25 for each check you write and
other potential ATM fees if you use your debit
card to withdrawal money. Breaking it down, a
customer will need $50 to open the account, pay
a $20 setup fee, and a monthly fee of $4.25. In
addition, a minimum electronic, monthly contribution
of $20 must be made every month. Ouch! I thought
these accounts were supposed to be easy to setup?
Below
is a list of some of largest HSA providers along
with the fees customers can expect to pay in the
first 12 months of opening their HSA. Because
so many providers have different fees and methods
of calculating fees, we tried to compare the fees
in the fairest and most simple method. As a result,
a method was created to include all the fees the
average customer should expect to pay in the first
year of opening an HSA. The components that make
up the “First Year Fees” are listed
at the bottom of the chart.
FIRST
YEAR FEES OF HSA PROVIDERS
HSA
Provider |
City,
State |
First
Year Fees (1) |
Total
Estimated Fees (2) |
| MSaver |
Overland
Park, KS |
$85 |
$3,825,000 |
| First
HSA |
Reading,
PA |
$85 |
$1,912,500 |
| JP
Morgan Chase |
New
York, NY |
$71 |
$2,840,000 |
| 1
Point Solutions |
Dickson,
TN |
$60 |
$528,000 |
| HSA
Bank |
Sheboygan,
WI |
$52 |
$5,720,000 |
| Mellon
Financial |
Pittsburgh,
PA |
$52 |
$832,000 |
| Wells
Fargo |
San
Francisco, CA |
$51 |
$3,825,000 |
| Exante
Bank |
Salt
Lake City, UT |
$49 |
$1,817,263 |
| The
Bancorp Bank |
Wilmington,
Del |
$36 |
$360,000 |
| FlexHSA |
Rosemont,
IL |
$35 |
$147,000 |
| Great
Lakes HSA |
Cleveland,
OH |
$25 |
$75,000 |
TOTAL
FEES (3) |
|
|
$21,969,263 |
Great
Lakes HSA charges an annual fee of $25 for its
interest-bearing HSA account. They do not charge
a set-up fee, monthly fee, closing fee, transaction
fee, nor do they require a monthly deposit or
electronic contributions. More importantly, when
you have a question about your HSA, they will
not refer you to the Treasury Department website,
but have an in-house expert available to answer
your questions 7 days a week.
Great
Lakes HSA serves customers in 48 states and was
one of the first companies to offer full-service
HSA administration and support. For more information
about Great Lakes HSA, visit the website at www.greatlakeshsa.com.
____________________________________________________________
1)
First year fees include: Setup Fees, monthly fees,
annual fees, assumes one
withdrawal a month (annual withdrawals equal to
30% of total deposits, traditional checks were
not
purchased and monthly deposits of $100. Fees may
be different for the same HSA provider
depending on your health plan provider or actual
custodian of the HSA. In addition, fees may have
changed since the comparison was completed in
April, 2005.
2) Total estimated fees equals the total fees
that would be generated in the first 12 months
that each account is
opened. The number of accounts each provider has
opened is based on information supplied by company
officials and as mentioned in the May 5, 2005,
issue of INSIDE CONSUMER-DIRECTED CARE, article
can
be found at http://www.AISHealth.com/ConsumerDirected/CDarticles/ICDCrelease.html.
3) Based on industry estimates, the providers
on this list have generated over $21 million dollars
in fees over the last
18 months!
