Best HSA-as-investment custodian

November 2, 2017 5:24 PM

I'm interested in using my HSA as a tax-advantaged investment vehicle. What custodian provides the lowest fees and access to good funds (e.g., Vanguard)?

I know this has been discussed before, but it's been awhile. Vanguard doesn't offer HSAs directly, but recommends HealthSavings Administrators which seems like a pretty good deal to me. Is it? Are there better options?

I know that I should make my contributions into whatever custodian my employer makes their contributions to to simplify the taxes and roll over later. I'm interested in figuring out where I'd roll over to so I can decide if I should go all-in on this as an investment.

posted by Cogito to Work & Money (8 answers total)

HealthSavings Administrators is OK. The fund list is great, but the web interface is a real piece of junk. It desperately needs to be replaced. Other than a bad web site, I haven't had any problems with them, and their fee structure seems no higher than others. I moved from Wells Fargo right as Wells Fargo sold their HSA business to Optum. I don't know how much of the Wells Fargo web site and plan they kept, but the site was quite good, and the fees were similarly low. The fund selection was poor.
posted by tybstar at 7:22 PM on November 2, 2017

Like you, I am researching the best place to move my existing HSA from a previous employer. I also use my HSA as an investment vehicle rather than a spending account. I haven't yet made a decision, but here is what I found.

Morningstar created a very detailed research paper comparing various HSAs. Here is a summary blog post of the study. They rated HealthEquity highly, but I am with HealthEquity now, and their wrap fee and account maintenance fees are too high. They do have a Vanguard Growth Market Fund (VIGIX), so that's a plus.

There is a good Wiki (and many threads) on Bogleheads.org on HSAs. On Bogleheads, the name that comes up the most often for HSA investment accounts is Saturna Capital. It doesn't offer an HSA card, so this service won't work as well for someone using the account for expenses. Be aware that the HSA landscape is shifting constantly as the companies change fees, and modify services and fund offerings.

Once you've made your decision, check back in - I'd be curious to know what you find out.
posted by Atrahasis at 7:55 PM on November 2, 2017

Note that Alliant Credit Union, which is mentioned in the Morningstar report, is shifting its HSA operations to HealthEquity. I'm having trouble finding HealthEquity's wrap fee and account maintenance fee; it's a slickly designed website but not terribly helpful for finding any possible downsides.
posted by Somnambulista at 9:08 PM on November 3, 2017

Response by poster: Here are the fees for HealthEquity. Looks like 0.033%/month or ~0.4%/year if your choose all the funds yourself. That seems not too bad, but if there are places that charge a flat rate, that’s probably better.
posted by Cogito at 3:10 PM on November 4, 2017

Saturna is cheapest if you only make one purchase a year. There's a new low-cost provider called Lively.
posted by medusa at 6:11 AM on November 5, 2017

I checked, and HealthEquity charges me another .48% for account maintenance, in addition to the .4% wrap fee. So, 0.88% to participate in a Vanguard fund, which seems a bit steep in a low-interest rate environment.
posted by Atrahasis at 7:59 AM on November 5, 2017

Response by poster: Are you using the "Self-driven" fund management choice, Atrahasis?
posted by Cogito at 4:22 PM on November 5, 2017

Yes, it is self-driven, as that is how I could pick a VG fund.
posted by Atrahasis at 11:05 AM on November 8, 2017