Since a Health Savings Account or an HSA has so much more potential than an ordinary savings account, you’ll want to get all you can from it. Here are two main things you’ll want to check: the rate of return on your investment, and the fees that your HSA administrator charges.
HSA administrators, like banks, earn their profit through several fees that they charge you. Most fees are pretty small, but those can add up over the years. Remember, you can use your HSA even after you retire and sign up for Medicare.
It would be wise to pay attention to the fees being charged. Some administrators will have set-up fees, a monthly fee, an annual fee, and some might even charge if you decide to close your account. If you want to avoid these fees, there are two approved HSA administrators that I am aware of that don’t have these charges – the Avidia Bank and the Fayetteville Bank.
Aside from the fees I just mentioned, there could also be charges for ATM withdrawals checks, use of debit cards, and paying your bills online.
Investment options also vary. All HSA administrators offer a basic savings account and the interest rate will depend on your account balance. It can range from less than one percent to up 4.5 percent or more. Aside from savings accounts, certain administrators also offer full brokerage services that allow you to buy bonds, mutual funds, stocks or other similar investments. HSA Bank and HSA Resources Bank are two of the most popular HSA administrators that offer brokerage services. All HSA earnings are tax-free while the funds are in the account.
Although December 1st is the official deadline to have an HSA-qualified insurance plan in order to claim your 2012 tax deduction, you don’t have to set up your savings account this year. So, take the time to investigate your options. Of course, you can reimburse yourself for health care costs right back to the day you open your HSA, so having it in place does reduce your risk for unexpected medical bills.
Wiley Long is President of HSA for America, and a passionate advocate for consumer-based solutions that will improve price transparency and lower health insurance and medical costs for people purchasing individual and family health insurance plans.