HealthSavings Administrators has been in the healthcare savings and investment world since medical savings accounts (MSAs) were first introduced in 1997. After the legislation enacting HSAs passed in January 2004, they shifted their focus to HSAs – emphasizing, even then, the vital role that HSAs play as part of a comprehensive retirement strategy. Health Savings Administrators calls itself the "investors HSA". They offer first dollar investing, which allows participants to invest right away, no minimum balance required. The company manages nearly $800 million in investments with clients in all 50 states, including employer groups, brokers, financial advisors, and individual investors.
for Health Savings Administrators as an investment vehicle
The ideal investment health savings account (HSA) has no investment threshold, allowing the very first dollar you contribute to be invested. If you're using an HSA for investment purposes, seek an administrator that does not hold your dollars hostage in a checking account earning little to no interest.
HealthSavings Administrators has no investment threshold requirement. HealthSavings Administrators is one of five administrators in our study that allows first dollar investing.
HealthSavings Administrators investment offerings total 170 funds. For this study, we have decided to concentrate on the Vanguard lineup since it appears to be the most complete offering. Below is a breakdown, by asset class, of the Vanguard lineup.
At the The HSA Report Card we are big proponents of passive index investing and thus rate highly administrators that offer low-cost index funds for each of the major asset classes. In the table above, you can see that the HealthSavings Administrators Vanguard lineup offers low-cost index funds for every major asset class, save emerging markets. That said, HealthSavings Administrators participants can invest in a low cost emerging markets index fund from Dimensional Funds, which is another great fund family.
How expensive are the funds in the Health Savings Administrators Vanguard investment lineup?
HealthSavings Administrators offers its participants some very inexpensive funds. Of the 7 HSA administrators in our study that offer pre-selected investment lineups, Health Savings Administrators offers the second lowest cost funds. Average expense ratios across every asset class are less than 0.25%.
HealthSavings Administrators offers participants an FDIC-insured, interest-bearing account. Interest bearing accounts make sense for participants who are uneasy about investing their HSA dollars in the equity markets. Interest is credited monthly and based on the balance in your cash/debit card account. The interest rate available on different balances is as follows.
In our study of the top 10 investment HSAs, HealthSavings Administrators ranks as one of the most expensive administrators. HealthSavings Administrators charges its participants a fixed fee in addition to a custodial fee.
In this section, we have a little fun projecting fees for each administrator. Our goal was to keep fees as low as possible for each administrator. Keep in mind, we are assuming the HSA is being used solely for investment purposes, therefore only certain fees will apply. Given that every HSA offering is different, there is no perfect way to compare the top 10 administrators in our study. Nonetheless, we gave it a shot and believe there is value in presenting our findings.
In order to compare fees, we made a few simple assumptions:
Every dollar above the investment threshold was invested.
Current and future contributions were invested in a single fund.
No transaction fee (NTF) or commission-free ETF programs were utilized to buy the index funds.
If these index funds were not available under the NTF and/or commission-free ETF programs, we turned to the open market and executed a single trade per calendar year in order to keep transaction costs down.
For HealthSavings Administrators we made the following assumptions:
Every dollar was invested in VTSAX (expense ratio 0.04%)
Annual Administrative Fee: $45
Annual Custodial Fee: 0.25%
The chart below summarizes the projected fees for HealthSavings Administrators on different investment balances.
The following chart illustrates where HealthSavings Administrators stands in terms of fees compared to the other top 10 investment HSA administrators.
HealthSavings Administrators fees are on the high side, thus the poor grade on this measure. HealthSavings Administrators ranked as the 9th lowest cost provider in our study of the top 10 investment HSAs.
In our search for the very best investment HSAs, we looked for administrators that offered a hassle-free investment experience. HealthSavings Administrators gives investors the necessary tools to easily manage their account. The website is easy to navigate and automated account transfers are available. A receipt storage tool would make the HealthSavings Administrators offering even more attractive.
Pros & Cons
A HealthSavings HSA may be right for you if:
You are satisfied with the investment options in the pre-selected lineup
You are planning on making multiple transactions per calendar year
You desire first dollar investing
You have less than $15,000 in the investment account