I’ve recently been shifted from employee to contractor status, and I’m still figuring out how to work out my own benefits. I decided that my best financial bet is a Silver-level HSA-eligible health insurance plan, since I can put money into a HSA for future use or investment instead of into premiums, but I still have decent protection.
I don’t know how long I’m going to remain a contractor, so I don’t know how long I’ll be eligible to contribute to the HSA. What I was thinking makes sense is to start out with a very cheap administrator bank (which probably means no investment options) and if I don’t contribute for very long I can just spend the money back down over time and it won’t cost me much. If the money builds up, I can transfer to an administrator bank that might cost a little more but allows me to invest the money in stocks and/or investment funds.
So, does anyone have a recommendation for a cheap HSA bank that isn’t a pain in the butt to deal with?
FWIW, I have some minor and well-managed health conditions, so I don’t expect to be spending much in the short term, but I’m not young any longer so I’m definitely interested in investing in the long term. My recent health care expenses have largely been related to mental health, so I would definitely need an administrator who understands that mental health care is still health care.
I use Key Bank. It’s convenient mostly because my other personal and business accounts are there. In the same vein, I’d recommend checking out your current bank to see if it’s reasonable. Key has no monthly fees and pays 0.2% interest, which is not making me rich, but it could be worse. I don’t maintain a very large balance, anyway.
(When I was researching it, the best option that allowed investments has a $25 monthly fee. I’d need 5-10% return on investment just to break even.)
I’ve never had to prove any of my expenses to them. I have a debit card that lets me pay at the point of sale. I could get a book of checks for it, though I just use online bill pay for anything I don’t run as a debit/credit transaction. Records to prove that my expenses are eligible is between me and the IRS. I think that should be true for all HSA accounts; it’s FSAs that would require proof of the expense.
Wells Fargo has been painless for me. I made contributions for 3 years and they no longer charge a fee. They offer low fee index funds if you are a boglehead.
That’s all good to hear - the last time I looked into these things, so many of the banks were charging ridiculous fees.
dracio, the first thing I looked into was if any of the people who currently have my money (Citibank, TIAA-CREF, and Capital One) offer HSAs, but none of them do. It’s a bummer, because I don’t really want yet another institution to keep track of.
I’ve had an HSA since 2005 (with a short break while I was covered under a work plan that didn’t qualify and I ran the balance on the existing one to zero). I’ve always used a small local bank or a credit union, both of which were completely fee free - all of the national options I found were not fee free.
If you go rate shopping, make sure you’re dealing with a real FDIC insured bank. One company offers HSA savings accounts which are not FDIC insured. The bonds of the parent company are unrated as well, making your account the equivalent of a junk bond with a low rate after risk adjustment. At least as of a couple of years ago. http://blogs.reuters.com/shaneferro/2013/07/18/hsas-when-your-health-insurance-becomes-a-retirement-account/
Ours (though husband’s employer) is with Wells Fargo as well.
They charge a small monthly fee (3.75) if your balance is less than 5,000 dollars; the employer credits that back each month. Obviously if my husband left that employer the 3.75 credit would go away - though we’ve made an effort to pay as much out of pocket (i.e. skip the HSA) as possible to let the HSA balance increase. It should be well over 5K by the end of this calendar year.
I believe we’ll have to have more than 5K in the account to be able to invest in anything other than a regular interest-bearing account. Probably another year before we’d be in a position to do that - since we need to have enough “liquid” to cover expenses earlier in the year before we hit the deductible.
For what it’s worth, if you do become an employee somewhere and their plan uses a different provider, I’m pretty sure you can transfer whatever money you have into that provider.
Oh - forgot to mention: our account does pay interest, but it’s pretty nominal. Current balance is something like 4,100 dollars and last month’s interest credit was 15 cents.
Just wondering: as a contractor, can you contribute pretax? Depending on how your contracting arrangement works, whether you’re truly considered an independent contractor, or “just” an hourly employee with no benefits. If you can’t contribute pretax, there’s less of a current incentive to use an HSA (versus a regular savings account) since the tax benefit is only on the income.