Top 10 Investment HSAs; A Fee Comparison
When it comes to HSAs investors have had few resources available to help them navigate hundreds of plan providers. The HSA Report Card is here to provide HSA eligible participants with the resources required to pick the very best HSA for them. In this post, we focus on the annual fees charged by the top 10 investment HSA providers.
Annual Fees for Top 10 Investment HSAs
Individual Plans (Non-Employer Group)
| Administrator | Administrative | Investment | Custodial | Commission |
|---|---|---|---|---|
 |
$0 | $0 | - | $4.95 |
 |
$12 | $18 | - | $4.95 |
 |
$35.40 | $0 | 0.40% | - |
 |
$45 | $0 | 0.25% | - |  |
$30 | $36 | 0.45% | $6.95 |
 |
$0 | $0 | - | $6.95 |
 |
$33 | $0 | 0.36% | - |
 |
$0 | $0 | - | $14.95 |
 |
$0 | $36 | - | - |
 |
$35.40 | $36 | - | - |
As you can see, the types of fees HSA plans charge varies from provider to provider. Most plans charge maintenance/administrative fees to cover general administrative costs. The maintenance/administratiove fee should be low (preferably less than $3 per month). A lot of administrators will void the fee if a certain threshold is reached in the HSA checking account.
The majority of plans also charge an investment fee to individuals who participate in the mutual fund lineup or for access to a self directed brokerage account. Investment fees are charged as flat fees or as a percent of invested assets (wrap fees, custodial fees, assets under management fee, etc.). Over the long term, as investment balances grow, flat fees are kinder to investor's pockets.
Some HSAs offer brokerage accounts, which charge fees in the form of commissions. Don't pay commissions! If you have an HSA that is linked to a brokerage account, enroll in commission-free ETF programs or use no transaction fee (NTF) funds to keep transaction costs down.
Projecting Fees
As part of our study, we had a little fun projecting fees for each administrator. Our goal was to find the path to the lowest possible fees for each administrator. Keep in mind, we are assuming the HSA is being used solely for investment purposes. Given that every HSA 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 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 the 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.
Assumed Annual Fees for Each Administrator
| Administrator | Fund (ER) | Maintenance | Investment | Custodial | Commissions |
|---|---|---|---|---|---|
|
FZROX (Free) | $0 | $0 | - | NTF |
|
VFIAX (0.04%) | $12 | $18 | - | NTF |
|
VIIIX (0.02%) | 1$0 | $0 | 0.40% | NTF |
|
VTSAX (0.04%) | $45 | $0 | 0.25% | NTF |
|
SPTM (0.03%) | $30 | $36 | - | Free |
|
SPTM (0.03%) | $0 | $0 | - | Free |
|
VITSX (0.03%) | $33 | $0 | 0.36% | NTF |
|
VTI (0.03%) | $0 | $0 | - | 2$24.95 |
|
VITSX (0.03%) | $0 | $36 | - | NTF |
|
VTSAX (0.04%) | $35.40 | $36 | - | NTF |
NTF = No Transaction Fee
1 $2,000 held in checking account to avoid 2.95/mo fee. $2,000 also happens to be the investment threshold
2 Assumed only one transaction per year was made
Below is a chart that displays the projected annual fees for each administrator at different investment balances when we use the assumptions from the table above.
What can we learn from this study?
The most obvious takeaway from the chart above is that Fidelity’s offering is simply unbeatable when it comes to fees. No investment fee. No expense ratio fees. No custodial fee. Their offering is 100% free.
Another takeaway from the chart above is the disparity in fees charged by administrators with asset based fee structures and those with flat/static/fixed fee structures. One can clearly see that administrators with asset based fee structures benefit handsomely as investment balances grow. If you have a large investment balance in an HSA, opt for flat investment fees.
One other important thing to take into consideration when picking an HSA administrator is whether you plan on making a single yearly transaction or multiple/recurring transactions throughout the year. Saturna Capital offers great value only when one transaction per year is made. If you plan on making multiple or recurring transactions per year, opt for an administrator that offers commission-free ETFs or a NTF mutual fund program.
Fees do not tell the whole story. Obviously they are useful in evaluating investment HSA administrators, but should not be the sole criteria used to evaluate an administrator. In a future post we will look at features you should seek in an investment HSA administrator.