HSA investments costs stretch high and wide

The growing popularity and use of health savings accounts and the ability to invest those assets brings up questions on what participants are paying for that service. Researchers at Morningstar analyzed the 10 largest providers and found a great deal of disparity in the types of fees charged and their sizes.

Researchers assumed a $13,000 account balance, based on the average U.S. account balance in mid-2019, and a $2,000 cash balance, as most providers offer fee waivers or other discounts above that mark. The cheapest fund options were used to build active and passive portfolios with a stock-to-bond ratio of 60% (45% U.S. equity, 15% ex-U.S. equity) to 40%.

Fidelity proved to be the least expensive in both portfolio scenarios despite relatively high active-fund fees. Fidelity, however, does not impose additional maintenance or investment fees. These fees are charged by the provider for the service of offering the investment options and are additional to the fee ratios charged by the investment fund company.

The report also noted the opportunity cost incurred by minimum cash account balances in the form of missed market exposure.