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Three Fees Your HSA Provider Might Not Be Telling You About

Three Fees Your HSA Provider Might Not Be Telling You About


When comparing HSA providers, knowing how much they’ll charge is a major consideration. And while some fees are easy to calculate, there are a couple of under-the-radar costs you may not know about until they come out of your account. We’ll show you what they are and how to find them.


Typical HSA Provider Fees

First, let’s quickly review the main fees HSA providers typically charge:

Administrative fee: This is the fee charged by your provider for administering your HSA.

Investment fee: HSA providers charge this fee to allow access to investments.

Transactional fees: These fees are typically charged for specific account-related actions. Typical examples are if an account holder tries to make a purchase with non-sufficient funds or if they need to correct an excess contribution.


Lesser-Known HSA Provider Fees

Now, here are three other expenses you might not be aware of, but can be a significant cost (especially if you’re investing your HSA funds):

Expense ratio: This fee is deducted directly from your investment balance by your fund company; fund companies charge it to allow access into their managed funds. Typically, expense ratios are measured as a percentage of the total funds in your account. If you have $10,000 invested in a fund with an 0.75% expense ratio, you’d lose $75 from your account that year.

Since expense ratios are deducted directly rather than being charged as separate bills, they’re very easy to miss. You can find the expense ratio for a particular fund in that fund’s prospectus, and you can use this calculator to compare long-term costs of funds with different expense ratios. At HealthSavings, we pride ourselves in offering funds from both Vanguard and Dimensional, which have some of the lowest expense ratios on the market.

Investment transaction fees: Some HSA providers charge a fee for making trades in your investment account. Depending on how involved of an investor you are, this could really cost you. If your provider charges an $7 fee for making trades and you make just one trade per month, you’d lose $84 each year in trading fees. HealthSavings doesn’t charge any investment transaction fees, so you don’t have to worry about any surprise costs here.

Opportunity cost: This isn’t an actual fee, but it still can cost you. Many HSA providers require account holders to maintain a threshold in their cash accounts (typically, $1,000 or $2,000) in order to begin investing. If your HSA provider requires a minimum investing balance, your opportunity cost is the difference in what you could have earned by investing those funds subtracted from what you actually earned in interest.

For example, if your HSA provider had a $2,000 minimum cash balance, with an average market rate of 6% you would miss out on $120 (6% of $2,000) that year from not being able to invest those funds. Subtract the interest you made on that $2,000 (probably just a couple dollars) from $120, and you’ll have that year’s opportunity cost. And your opportunity cost will increase each year as your balance compounds over time.


At HealthSavings, we think every dollar should have the chance to grow for you, so we offer first-dollar investing across the board, eliminating opportunity cost. And with 50% of our customers investing their funds, we’ve seen the results of telling a different story by promoting HSAs as part of a holistic retirement strategy. Learn more about investing your HSA for the future here.

Author: James Denison