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Self directed HSA? UMB Bank is charging me $3.75 monthly fee!

lesterhung 528 65 October 5, 2011 at 03:55 PM
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My employer set up my HSA account with UMB Bank. The bank charges a $3.75 monthly fee.
Is there anyway to avoid it? Like move it to another bank with $0 fee?
How about invest whats in it in stocks?

Thanks

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#2
Who is the insurance company?

Is your employer contributing anything toward the monthly premiums or toward your HSA?
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#3
employer is contributing the premium, but not the monthly fee.
Humana, via UMB Bank
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Quote from lesterhung View Post :
employer is contributing the premium, but not the monthly fee.
Humana, via UMB Bank
I've looked quite a bit and I haven't found anything on Humana's website on whether or not they restrict or allow you to use the HSA custodian of your choice. I'd simply contact Humana and ask if you can choose your own custodian. If so, I'd go with http://www.hsaadministrators.info/ and treat it like an investment account and allocate quite a bit of money (the actual percentage should be based on your age) in stock-type choices (index funds to be more specific). An HSA can be a great vehicle for you to use to save for your retirement.
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#5
what is the fee for? Some servicers charge fees for debit card use, if your plan comes with a debit card. My wife's FSA charges $5/mo for such a card. Rather absurd if you ask me.
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#6
the fee is for having an account with them. They told me the only way to avoid the fee is to close the account completely.
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#7
Having experience in the benefits industry, this has been a recurring theme that has been gaining traction with HSA's.

As a previous poster noted, it started with usage of debit cards linked to HSA's.

Now it has moved onto to static charges such as the $3.75/month the OP mentioned.

What you need to look at is the comparison of costs savings of having a tax advantaged plan like the HSA versus the yearly cost of the account, in this case $45/year.

Bottom line is if you are putting away a large sum every year, and/or are in a higher tax bracket (28%+), the tax savings will make up the fee you are charged. If you are putting away $300/year and sometimes forget to use all of the available benefit (which is interestingly a large percentage of people), maybe it is not for you, as the tax savings and yearly charge are pretty on par.

Hope this helps, please ask any questions (5+ years in benefits, HR, retirement)
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Quote from Sizz813 View Post :
Having experience in the benefits industry, this has been a recurring theme that has been gaining traction with HSA's.

As a previous poster noted, it started with usage of debit cards linked to HSA's.

Now it has moved onto to static charges such as the $3.75/month the OP mentioned.

What you need to look at is the comparison of costs savings of having a tax advantaged plan like the HSA versus the yearly cost of the account, in this case $45/year.

Bottom line is if you are putting away a large sum every year, and/or are in a higher tax bracket (28%+), the tax savings will make up the fee you are charged. If you are putting away $300/year and sometimes forget to use all of the available benefit (which is interestingly a large percentage of people), maybe it is not for you, as the tax savings and yearly charge are pretty on par.

Hope this helps, please ask any questions (5+ years in benefits, HR, retirement)
First off, thank you.
My employer contributes $39/month. I did not contribute anything.
But if its worth the tax benefts, I would definitely contribute to it.
My tax bracket should be in the 20%. What do you think?
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Quote from Sizz813 View Post :
If you are putting away $300/year and sometimes forget to use all of the available benefit (which is interestingly a large percentage of people), maybe it is not for you, as the tax savings and yearly charge are pretty on par.)
If people "forget" or choose not to use what's in their HSA by the end of the year it simply rolls over to the next year. The money is theirs. It never expires. I think you're confusing an HSA with an FSA.
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Quote from lesterhung View Post :
First off, thank you.
My employer contributes $39/month. I did not contribute anything.
But if its worth the tax benefts, I would definitely contribute to it.
My tax bracket should be in the 20%. What do you think?
So, your employer is contributing $39 toward your monthly premiums? How much does this leave you having to pay?

If this is your source of health insurance and your employer isn't contributing anything to your HSA, then yes, you should definitely be contributing to your HSA.

An HSA has a triple tax advantage: you can put money into your HSA tax free, it grows tax free, and it can be spent on qualified health expenses tax free. Not to mention that whatever is in your HSA once you reach 65 can be spent on non-qualifying expenses (anything you want) at your normal income tax rate, just like a traditional IRA. Also, there are no RMDs (required minimum distributions) like with a traditional IRA.

If you ever need to go to the doctor, buy a prescription, have surgery, etc. you'll want to pay your deductible out of your HSA because of the tax advantages. You'll also want to make sure you have the money available in the first place. You will not want to end up having a big health expense and a $5,500 deductible with no money in your HSA.

So, take advantage of the wonderful tax advantages the HSA offers and contribute to it on a monthly basis.
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Quote from Brian1 View Post :
If people "forget" or choose not to use what's in their HSA by the end of the year it simply rolls over to the next year. The money is theirs. It never expires. I think you're confusing an HSA with an FSA.
Maybe I should have been more clear on my response. You can rollover the benefit, but since he is paying out of pocket for the account, it might not make sense to have it if he doesn't use it, especially if it is a small sum every year (i.e. $300) as the fee will be a larger percentage of the total amount lowering its effectiveness.

The HSA has its pros and cons. Using the account as a form of retirement account is possible, although if you are younger there is an argument about opening a HSA and a Roth IRA combo if there is a chance you will keep the funds until age 65 or 59 1/2 in the Roth's case.

It really depends because there are so many different ways to tackle this if you add the retirement aspect into the mix.

You make a great point though, it does have other benefits besides 'medical'.

I would also explore using a Roth IRA as a tool for flexibility/savings/medical as it has other distinct advantages as well (maybe even more suited to his case if he does not have a specific need or medical condition that would constitute the use of the HSA).

With the Roth, your original principal and earnings come out tax free after age 59 1/2 and holding the account for 5 years. Also withdrawals prior to the age of 59 1/2 are accounted for on a FIFO (first in, first out) basis, which is now unheard of in the investment world. For example: You contribute $5k to your Roth IRA. It grows in value to $6k. So there is $5k in original after-tax principal and $1k in earnings. When you withdrawal money from a Roth, the original principal comes out first. Since it has already been taxed and is a return of your money, there are no additional taxes or penalties assessed. Once you start taking out earnings, you will be taxed at ordinary income tax rates plus a 10% early withdrawal penalty on the earnings only. You can even get the 10% early penalty waived for qualifying conditions (medical, educational, etc..).

A possible dis-advantage to the Roth is that you fund the account with after-tax dollars, i.e. money from your checking account. It will not lower your tax bracket or gross income like other accounts can (HSA, 401k, Traditional IRA). Also there is a cap of $5k per year under 50, $6k per year over 50 on contributions per year.

Like brian mentioned earlier, there are alot of pros and cons to the HSA and even the Roth. It really depends on how you plan on using the account. If you feel like you are a healthy person, rarely use any medical services, and can predict the future in the sense that you feel you will not need this money for medical expenses, the HSA is probably not for you. If you would like peace of mind in knowing you can use this account for medical and that it has the added benefit of being a pre-tax retirement account, then the HSA is for you. Although you can use the Roth account for medical expenses as well, it will be with after tax dollars.

The real benefit in the HSA is the ability to lower your taxable income at the same time as providing an umbrella of sorts to any medical expenses. It has the ability to be used as a retirement account, but that would be a secondary purpose as there are account better suited to accomplish that task.

Please ask any questions; forgot to mention I am also a CFP/ChFC Smilie
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