MOUNTAIN VIEW, Calif. -- Could it be "buyer beware" for health savings accounts?
A recent survey finds that cost matters--particularly in terms of overall returns and consumers that don't do their homework risk losing money on their HSAs.
Internet health care comparison-shopping site Vimo.com has released its ranking of the nation's most affordable health savings accounts and Patelco Credit Union is the only credit union that made the cut.
The $3.8 billion credit union also took the top spot for "Best HSA Interest Rate" and second in the "Most Affordable HSAs" category.
HSAs are tax-free savings accounts that can be used to pay for medical expenses including prescription and over-the-counter drugs incurred by individuals, spouses or dependents. These accounts are accompanied by high-deductible comprehensive insurance policies that cover preventive care and larger medical bills. Unused HSA money rolls over from year to year and can then be used to pay for medical care up to the plan's deductible.
The Vimo HSA Custodians Ratings Report also finds that there is little correlation between high fees and high returns in HSAs. The report reveals that not only do fee structures vary by HSA custodians, but also there are no standard fee disclosure notices. In addition, many custodians don't disclose the full range of fees associated with a given HSA product in marketing materials or their Web site. According to the report, annual fees range from $0 to $185 per year, with the average fee at $13.
Opportunity knocks for custodians willing to position themselves as an HSA resource.
"HSAs are a wonderful, triple-tax-advantaged savings vehicle but they're also a relatively new animal for most people," said Vimo CEO Chini Krishnan. "They are not quite a savings account, not really a 401k. So it's difficult to make an apples-to-apples comparison among the hundreds of different offerings. It's hard for people to make informed choices but it is important for consumers to get educated and shop around."
According to the report, there is a correlation between higher fee structures and higher service levels, which Vimo plans to investigate further in the near future.
"Our current report does not factor in many of the qualitative aspects of services provided by HSA providers. Consumers should be aware that some HSA custodians are able to keep their fees low precisely because they provide relatively few extra services," said Vimo Vice President of Partners Tom Cochrane. "It's also important to realize that the 'right' HSA will be different depending on whether you tend to spend each year's contributions, or save them. The inexpensive, high-return HSAs that we focus on in this report are probably best for the 'saver.'" --firstname.lastname@example.org