What bank and Where should or can I open up my HSA Health Savings Account

First I'd like to explain what a few of the advantages of an HSA are.

With the HSA, you can:

• Enjoy up to a 20-30% reduction in your out-of-pocket costs for medical expenses
  
• Earn income tax-free with interest in the cash account
  
• Determine your own investment strategy for potentially higher returns on your HSA balances
  
• Hold on to your savings even if you leave your employer
  
• Potentially pay lower premiums on your health insurance plan
  
• Carry over unspent balances from year to year – no “use-it-or-lose-it” policy
  
• Protect yourself from unexpected healthcare expenses with a Healthcare Line of Credit

Watch out for fees!!

I have a HSA qualified health insurance policy for myself. I haven't funded it yet but I know I should. When I was at my local bank today I noticed they had a brochure for HSAs. Since I know what to look for, my main concern was the HSA set up fee and the monthly maintenance fee. At this local bank, they have no monthly maintenance fee or enrollment fee, but there is a relatively small interest rate that increases based on the account balance. On the flip side I went to Chase bank online. I have to admit it was really tricky to find the fee schedule. After some searching I found it on the enrollment papers. Basically they want you to fill out the enrollment before you know what the fees will be. But they do like to advertise the interest rate in really big font on their HSA Website. Their monthly maintenance fee is $2.50 with no enrollment fee. This can add up to 30 dollars for the year. The 30 dollars might not seem like much but if you figure the most you can put into an individual HSA for 2010 is $3,050 the current advertised interest rate at Chase is .40% earning you $12.20 annually(Tax free). You are not coming ahead Chase at all for at least a couple of years if you continue adding to the HSA at the maximum amount and not taking any thing out.

The main lesson here is "Don't just shop the interest rate you are being offered". There isn't much to HSAs, they are all pretty much the same so just look out for the fees and don't even think about the investment possibilities until you have enough saved up and can cover your out of pocket max expense limit for about 2 years. In 2010 the Out pocket expense limit is $5,950 for individuals and $11,900 for families. As a financial advisor, I would recommend that these amounts be kept in the cash account and not tied to the market since you never know when you may need to access it.

If you have questions, I'm always available 312-823-8380 Paul Kaczmarczyk paul@infinityhealthinsurance.com

Additional HSA information can be found at www.treas.gov and click on Health savings accounts or www.infinityhealthinsurance.com

To your health!!