The San Francisco Business Times reports today that Wells Fargo set a record with 100,000 new Health Savings Accounts (HSA). It is no surprise to us that more individuals and employers are signing up for high-deductible, low-premium plans with tax advantages. I have advocated for the use of HSA’s for 10 years, as the most prudent strategy for individuals and small businesses to finance health care. What does surprise me is that so many people elect to pay $4.25 every month to a big bank like Wells Fargo for their HSA.
With the average HSA balance at $2,500, some quick math will show that Wells Fargo charges you about 2% per year to maintain your HSA. Yes, that’s right. For the convenience of keeping your money at the bank, you must pay Wells Fargo 2% of an average account balance. True, it does get waived for account balances over $5,000 — but as it turns out, people actually use these funds, to pay for out of pocket medical, dental, vision and pharmacy expenses. So accumulating $5,000 isn’t that easy, unless you are fully funding the account each year and staying super-healthy (with good teeth).
We recommend that our clients with HSA-compatible health plans consider credit unions and community banks. Not only does this help support the local economy by keeping money local, but consumers will discover that these banks offer the best rates, and often no fees. My personal HSA is with San Francisco Fire Credit Union. Why? It cost me $5 to join the credit union, and not only are the monthly fees zero, but I also got a free book of checks (and debit card), AND SF Fire is paying me 1.10% interest on the account balance. Every month. For the individual with an average balance of $2,500, the net difference over a year? About $75. Not huge, but that will pay for a couple of prescriptions, or a basic doctor’s visit.
If you are interested in finding an HSA-compatible health plan for you or your family, click here for an instant quote from multiple carriers. Small business owners that are interested in discussing setting up HSA’s for their employees, please email us at email@example.com to set up an appointment, or call 888-992-2244.