How much am I losing using my Fidelity HSA instead of my company's HSA?

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passive101
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How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

My company uses Optum Bank for their HSA. I have my own at Fidelity that has zero fees. I fully fund it with after tax dollars for simplicity and I like that I'm invested in just 100% VT

Am I really losing that much using after tax dollars compared to getting the tax reduction on funding it directly from my paycheck into the company HSA?
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retired@50
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by retired@50 »

How much do you put into the HSA account each year?

What is your marginal income tax rate?

What are the fees you'd be forced to pay (if any) at Optum? Include expense ratios, AUM fees, whatever...

Can you move money out, from Optum, to Fidelity, periodically to avoid fees on a portion of the HSA balance?

Having the answers to these questions would help you (or the forum) calculate how much you're losing.

Also, see this link for more details on the tax considerations: https://www.bogleheads.org/wiki/Health_savings_account

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

retired@50 wrote: Tue Jul 05, 2022 11:10 pm How much do you put into the HSA account each year?

What is your marginal income tax rate?

What are the fees you'd be forced to pay (if any) at Optum? Include expense ratios, AUM fees, whatever...

Can you move money out, from Optum, to Fidelity, periodically to avoid fees on a portion of the HSA balance?

Having the answers to these questions would help you (or the forum) calculate how much you're losing.

Also, see this link for more details on the tax considerations: https://www.bogleheads.org/wiki/Health_savings_account

Regards,
I fully fund the HSA each year. $3650. I'm in the 22% tax bracket for most paychecks.
I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
retiringwhen
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by retiringwhen »

passive101 wrote: Tue Jul 05, 2022 11:16 pm I fully fund the HSA each year. $3650. I'm in the 22% tax bracket for most paychecks.
I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
I'd suggest that the biggest thing is you are paying 7.65% FICA taxes on the $3650 so you are paying $280. OTOH, that increases your SSA contribution for future benefits...
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

[/quote]

I'd suggest that the biggest thing is you are paying 7.65% FICA taxes on the $3650 so you are paying $280. OTOH, that increases your SSA contribution for future benefits...
[/quote]

$280 doesn't sound terrible to be paying extra so I can invest in anything I want at Fidelity. I'm not sure how to quantify that into how much more I'd get in SS benefits in the future though.
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retired@50
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by retired@50 »

passive101 wrote: Tue Jul 05, 2022 11:16 pm I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
Without the fee structure, any financial analysis will be incomplete.
I suppose you could look into the fees in detail, if you're willing to read the literature on the HSA plan at work.

As the prior poster pointed out, you're paying social security taxes on that money, when you don't need to, plus you might be missing out on a company match for HSA contributions, if one is offered in your plan.

Not being able to transfer money to Fidelity periodically isn't really a problem unless they have some high expense ratios or AUM fees or something like that.

Having the fee detail is important to make a fully informed decision.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

retired@50 wrote: Tue Jul 05, 2022 11:28 pm
passive101 wrote: Tue Jul 05, 2022 11:16 pm I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
As the prior poster pointed out, you're paying social security taxes on that money, when you don't need to, plus you might be missing out on a company match for HSA contributions, if one is offered in your plan.
They put $250 in the beginning on the year into it, so I'm not missing out on a match at all. It just has $250 in cash in it since the account is active and I've been an employee for a year.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by TropikThunder »

passive101 wrote: Tue Jul 05, 2022 11:16 pm only let me move money out if I quit or the company no longer uses them as the HSA company.
That’s illegal.

It’s also not Optum’s policy.
Last edited by TropikThunder on Wed Jul 06, 2022 12:05 am, edited 1 time in total.
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

These are the available funds my company plan lets me invest in.

My Available Funds
Investment name Ticker symbol Asset Class
American Funds Capital World Gr&Inc R6 RWIGX International
BlackRock Equity Dividend K MKDVX Large Cap Blend
Dodge & Cox Income DODIX Intermediate Term Bond
Fidelity Low-Priced Stock FLPSX Mid Cap Value
INVESCO DISCOVERY R6 ODIIX Small Cap Growth
Invesco Oppenheimer Developing Markets Inst ODVIX International
John Hancock Fdmlt Large Cap Core JLVIX Equity
Lord Abbett High Yield F3 LHYOX Fixed Income
Schwab Target 2020 Index Fund I SWYLX Large Blend
Schwab Target 2030 Index Fund I SWYEX Large Blend
Schwab Target 2040 Index Fund I SWYGX Large Blend
Schwab Target 2050 Index Fund I SWYMX Large Blend
Schwab Target 2060 Index Fund I SWYNX Large Blend
T. Rowe Price Blue Chip - I TBCIX Large Cap Growth Stock
Vanguard 500 Index - A VFIAX Indexed
Vanguard Equity-Income - A VEIRX Large Cap Value
Vanguard Extended Market Index Inst VIEIX Mid Cap Index
Vanguard Global Equity VHGEX World Stock-Large Blend
Vanguard Inflation-Protected Inst VIPIX Inflation-protected Bond
Vanguard Life Strategy-Growth VASGX Aggressive Allocation
Vanguard LifeStrategy-Conservative Growth VSCGX Conservative Allocation
Vanguard LifeStrategy-Moderate Growth VSMGX Moderate Allocation
Vanguard Mid Cap Index Inst VMCIX Mid Cap Blend
Vanguard REIT Index Inst VGSNX Alternative Blend
Vanguard Short-Term Federal Adm VSGDX Short Term Bond
Vanguard Short-Term Investment Grade Inst VFSIX Short Term Bond
Vanguard Small Cap Index Inst VSCIX Small Cap Index
Vanguard Total Bond Mkt Port VBTIX Fixed Income
Vanguard Total Stock Market Inst VITSX Large Cap Blend
Vanguard Treasury Money Market VUSXX Money Market
Vanguard Wellington - A VWENX Equity
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

TropikThunder wrote: Wed Jul 06, 2022 12:00 am
passive101 wrote: Tue Jul 05, 2022 11:16 pm only let me move money out if I quit or the company no longer uses them as the HSA company.
That’s illegal.

It’s also not Optum’s policy.
I called and asked them and they told me that I can use the money, but can't roll it over while I'm employed to Fidelity :confused
After looking over the fees it looks like they charge $20 to move money, but I don't know the specifics of that yet.
Last edited by passive101 on Wed Jul 06, 2022 12:19 am, edited 1 time in total.
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passive101
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

retired@50 wrote: Tue Jul 05, 2022 11:28 pm
passive101 wrote: Tue Jul 05, 2022 11:16 pm I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
Without the fee structure, any financial analysis will be incomplete.
I suppose you could look into the fees in detail, if you're willing to read the literature on the HSA plan at work.

Having the fee detail is important to make a fully informed decision.

Regards,
I found the fees for the investment account

0.0300% of your average daily investment balance, not to exceed $999.00 in any given month.

$2.50 per ATM transaction. In addition to our fee, the bank/ATM you use to withdraw funds may charge you their own fee.

$20.00 per Outbound Transfer or Rollover to another HSA Custodian.

$1.50 printed statement fee. If you do not choose online delivery for your account statements, we may charge this fee for every statement we mail to you. Note: there is no charge for online statement delivery.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by invest4 »

passive101 wrote: Tue Jul 05, 2022 11:16 pm I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
This.

Easy choice from my perspective…stay with Fidelity. I would wager you will have less choice and higher fees with Optum…no thanks.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

invest4 wrote: Wed Jul 06, 2022 2:04 am
passive101 wrote: Tue Jul 05, 2022 11:16 pm I don't think the fees are very much at Optum, but they only let me move money out if I quit or the company no longer uses them as the HSA company.
This.

Easy choice from my perspective…stay with Fidelity. I would wager you will have less choice and higher fees with Optum…no thanks.
One of my concerns is how much more I'm paying in taxes since the money I'm using is after taxes and using Optum would be before taxes. If they're not that far off for the trade-off I think I'll continue using Fidelity.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by markjk »

passive101 wrote: Tue Jul 05, 2022 11:02 pm Am I really losing that much using after tax dollars compared to getting the tax reduction on funding it directly from my paycheck into the company HSA?
Yes. Over time that is an enormous hit. The benefit of an HSA is you get to use both pre-tax money to fund the account and the earnings are tax free. Your missing out on half the benefit if you fund with post-tax money.

There are plenty of posts on the compounding effects/costs with pre or post tax money. Look them up. It's not a small deal, it's a huge deal. You are leaving a lot of money on the table long term if you don't take advantage of the pre-tax funding in an HSA.

You might be able to continue using Fidelity and still get the pre-tax benefit if you deduct your contributions at tax time. I'm not sure how that works if an HSA is funded with post-tax money but I suppose it's possible. You should really look into it if you are going to stick with Fidelity.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by djheini »

markjk wrote: Wed Jul 06, 2022 4:29 am
passive101 wrote: Tue Jul 05, 2022 11:02 pm Am I really losing that much using after tax dollars compared to getting the tax reduction on funding it directly from my paycheck into the company HSA?
Yes. Over time that is an enormous hit. The benefit of an HSA is you get to use both pre-tax money to fund the account and the earnings are tax free. Your missing out on half the benefit if you fund with post-tax money.

There are plenty of posts on the compounding effects/costs with pre or post tax money. Look them up. It's not a small deal, it's a huge deal. You are leaving a lot of money on the table long term if you don't take advantage of the pre-tax funding in an HSA.

You might be able to continue using Fidelity and still get the pre-tax benefit if you deduct your contributions at tax time. I'm not sure how that works if an HSA is funded with post-tax money but I suppose it's possible. You should really look into it if you are going to stick with Fidelity.
I contribute to a Fidelity HSA with post-tax money and then deduct it on my taxes, it's about as complicated as deducting student loan or mortgage interest - just answering a couple question and filling in a couple numbers in TurboTax. As mentioned previously, the main thing you're missing out on is avoiding social security tax (note that this is a moot point and you aren't losing anything if you're above the social security wage limit, which is around $147k), though you will also be paying the Medicare payroll tax this way.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by markjk »

djheini wrote: Wed Jul 06, 2022 4:51 am
markjk wrote: Wed Jul 06, 2022 4:29 am
passive101 wrote: Tue Jul 05, 2022 11:02 pm Am I really losing that much using after tax dollars compared to getting the tax reduction on funding it directly from my paycheck into the company HSA?
Yes. Over time that is an enormous hit. The benefit of an HSA is you get to use both pre-tax money to fund the account and the earnings are tax free. Your missing out on half the benefit if you fund with post-tax money.

There are plenty of posts on the compounding effects/costs with pre or post tax money. Look them up. It's not a small deal, it's a huge deal. You are leaving a lot of money on the table long term if you don't take advantage of the pre-tax funding in an HSA.

You might be able to continue using Fidelity and still get the pre-tax benefit if you deduct your contributions at tax time. I'm not sure how that works if an HSA is funded with post-tax money but I suppose it's possible. You should really look into it if you are going to stick with Fidelity.
I contribute to a Fidelity HSA with post-tax money and then deduct it on my taxes, it's about as complicated as deducting student loan or mortgage interest - just answering a couple question and filling in a couple numbers in TurboTax. As mentioned previously, the main thing you're missing out on is avoiding social security tax (note that this is a moot point and you aren't losing anything if you're above the social security wage limit, which is around $147k), though you will also be paying the Medicare payroll tax this way.
+1 Thanks for the confirmation.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Affable at 50 »

Look closely at the fees for Vanguard’s 500 index. There’s a solid chance this is offered at a low cost and it’s returns are comparable to VTI. I prefer to have the payroll deduction and save the 7.65%.

The triple tax advantage is best obtained by maximizing the pretax contributions, including both federal income tax and social security.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by wishIknewbackwhen »

The biggest difference may be for when you can fund your Optum HSA. Your Fidelity HSA will allow you to fully fund it at the beginning of the year, making for a full year of returns, while your employer HSA may stretch funding over the calendar year. In that case even modest returns would make up for having to pay FICA taxes on after-tax contributions.

As for the Optum HSA, you don't have to roll over the funds, but can ask them to make out a check to you which you can deposit into your Fidelity HSA. There's a whole thread on that: viewtopic.php?t=299714.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by SteelyEyed »

My employer uses Optum. I also have an HSA at Fidelity. To avoid the rollover fee, once a year I reimburse myself for the entire balance of the Optum account and perform an indirect rollover to Fidelity.

viewtopic.php?t=263661
Taxedtodeath
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Taxedtodeath »

Twice a year I do a direct pull from Optum to fidelity and pay the $20 each time. I then invest in VTI at fidelity. The transfer takes between two and 5 weeks. The benefit of taking hsa money pre tax is worth paying the transfer fee each time. That tax drag is big over time.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by nolesrule »

passive101 wrote: Wed Jul 06, 2022 12:14 am
0.0300% of your average daily investment balance, not to exceed $999.00 in any given month.
Is that daily? Monthly? It's not really clear by the wording If that's daily it amounts to 1.095% annually.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by muffins14 »

djheini wrote: Wed Jul 06, 2022 4:51 am
I contribute to a Fidelity HSA with post-tax money and then deduct it on my taxes, it's about as complicated as deducting student loan or mortgage interest - just answering a couple question and filling in a couple numbers in TurboTax. As mentioned previously, the main thing you're missing out on is avoiding social security tax (note that this is a moot point and you aren't losing anything if you're above the social security wage limit, which is around $147k), though you will also be paying the Medicare payroll tax this way.
This is what I do as well. Since im above the SS tax cap, I just miss out on the 1.46% Medicare tax portion, which is about $50. In exchange for that $50, I get access to any investment I want, I get to lump-sum on Jan 1, and I get the satisfaction of one-stop shopping rather than maintaining a separate account at Optum for only an HSA
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by retiringwhen »

Taxedtodeath wrote: Wed Jul 06, 2022 7:43 am Twice a year I do a direct pull from Optum to fidelity and pay the $20 each time. I then invest in VTI at fidelity. The transfer takes between two and 5 weeks. The benefit of taking hsa money pre tax is worth paying the transfer fee each time. That tax drag is big over time.
As noted above, the only tax drag is FICA withholding. The contributions to the Fidelity account are fully claimable on your Federal tax return. I have both HealthEquity corporate sponsored HSA and my wife has her own Fidelity HSA. There is no income tax difference in their treatment on a tax owed basis. Paperwork is different of course as the contributions come off the top on your W-2 for Optum.

See for 8889 and Schedule 1, Line 13 on your Federal 1040.gar

For high income individuals, even FICA is not an issue if income is above the FICA cap.

Note, state taxes are jurisdiction dependent. For example, it doesn't matter in NJ since contributions are not deductible regardless. :annoyed
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by anon_investor »

retiringwhen wrote: Wed Jul 06, 2022 8:05 am
Taxedtodeath wrote: Wed Jul 06, 2022 7:43 am Twice a year I do a direct pull from Optum to fidelity and pay the $20 each time. I then invest in VTI at fidelity. The transfer takes between two and 5 weeks. The benefit of taking hsa money pre tax is worth paying the transfer fee each time. That tax drag is big over time.
As noted above, the only tax drag is FICA withholding. The contributions to the Fidelity account are fully claimable on your Federal tax return. I have both HealthEquity corporate sponsored HSA and my wife has her own Fidelity HSA. There is no income tax difference in their treatment on a tax owed basis. Paperwork is different of course as the contributions come off the top on your W-2 for Optum.

See for 8889 and Schedule 1, Line 13 on your Federal 1040.gar

For high income individuals, even FICA is not an issue if income is above the FICA cap.

Note, state taxes are jurisdiction dependent. For example, it doesn't matter in NJ since contributions are not deductible regardless. :annoyed
Actually I think even for a high income individual, the only loss is the payroll deduction for the 1.45% Medicare tax, which you cannot complain on your tax return. So that would be $52.925.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by AnEngineer »

passive101 wrote: Wed Jul 06, 2022 12:13 am
TropikThunder wrote: Wed Jul 06, 2022 12:00 am
passive101 wrote: Tue Jul 05, 2022 11:16 pm only let me move money out if I quit or the company no longer uses them as the HSA company.
That’s illegal.

It’s also not Optum’s policy.
I called and asked them and they told me that I can use the money, but can't roll it over while I'm employed to Fidelity :confused
After looking over the fees it looks like they charge $20 to move money, but I don't know the specifics of that yet.
They are at least being misleading if not lying. A rollover, sometimes called an indirect rollover, involves your HSA custodian giving you the money and then you putting it into another HSA within a time window. You're only allowed to do this once every 365 days (maybe leap year exception?). The procedure to pull the money out is exactly the same as reimbursing yourself for medical expenses: you tell them to cut you a check. If they refuse to give you your money on demand run very very far away and also complain loudly to your employer.

(Note: if you just pull out money willy nilly there may be tax consequences.)
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by tonyclifton »

The phrase “after tax dollars” is not correct. You can deduct your HSA contributions at tax time and will receive a tax benefit.

The choices you listed in your plan seem pretty good to me.

I also use Fidelity for HSA and it is great.

One option to consider is to keep doing what you are doing but keep the company sponsored HSA to get the employer contribution.

Also, to restate, you seem to have several excellent low cost funds to choose from in your employee sponsored HSA. So you would get the most HSA bang for the buck by using the employer sponsored plan due to tax savings.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by ekid »

A lot of misinformation higher in this thread.

On top of that it sounds like the OP doesn't understand the question.

Over a lifetime the difference is large, with Optum on the losing end. OP, get professional help, probably at your SHIP or accountant.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Statistical »

ekid wrote: Wed Jul 06, 2022 10:21 am Over a lifetime the difference is large, with Optum on the losing end.
No it is not. You are right there is a lot of misinformation in the thread.

The difference is relatively small. Still Optum comes out ahead by using Direct Payroll deduction and saving FICA. Optum provides access to low cost passive index funds which are comparable to Fidelity.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by ekid »

Statistical wrote: Wed Jul 06, 2022 10:24 am
ekid wrote: Wed Jul 06, 2022 10:21 am Over a lifetime the difference is large, with Optum on the losing end.
No it is not. You are right there is a lot of misinformation in the thread.

The difference is relatively small. Still Optum comes out ahead by using Direct Payroll deduction and saving FICA. Optum provides access to low cost passive index funds which are comparable to Fidelity.
OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Statistical »

ekid wrote: Wed Jul 06, 2022 10:40 am
Statistical wrote: Wed Jul 06, 2022 10:24 am
ekid wrote: Wed Jul 06, 2022 10:21 am Over a lifetime the difference is large, with Optum on the losing end.
No it is not. You are right there is a lot of misinformation in the thread.

The difference is relatively small. Still Optum comes out ahead by using Direct Payroll deduction and saving FICA. Optum provides access to low cost passive index funds which are comparable to Fidelity.
OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
Both would be pre-tax. Funding by payroll is pre-tax. Funding by checking account you get a tax deduction on your tax return making it pre-tax. Using either custodian you avoid income tax on the contributed amount. From that respect the two choices are exactly identical.

Both custodians also offer good low cost passive index funds with near zero fees so roughly comparable there as well.

The only significant differences is if contributions are made by payroll deduction they are also exempt from FICA (an up to 7.65% "bonus"). So the difference is small however since Optum is the employer's chosen HSA and the only way to get that additional "bonus" it would be slightly better not worse than Fidelity.
Last edited by Statistical on Wed Jul 06, 2022 10:53 am, edited 2 times in total.
bonfireofthevanities
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by bonfireofthevanities »

My company uses Optum for HSA also.

I fully fund the Optum HSA pre-tax early in the year (usually from my bonus paid in Q1), and then initiate a partial transfer from the fidelity side, leaving just a nominal amount in the Optum account. I have never been charged any fees from either Optum or Fidelity following this approach.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by sailaway »

ekid wrote: Wed Jul 06, 2022 10:40 am
Statistical wrote: Wed Jul 06, 2022 10:24 am
ekid wrote: Wed Jul 06, 2022 10:21 am Over a lifetime the difference is large, with Optum on the losing end.
No it is not. You are right there is a lot of misinformation in the thread.

The difference is relatively small. Still Optum comes out ahead by using Direct Payroll deduction and saving FICA. Optum provides access to low cost passive index funds which are comparable to Fidelity.
OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
Which is Statistical's point? If you make your own contributions (ie, Fidelity) you save income tax, but if you make a payroll deductions, you also save FICA. For those above the SS limit, they are only saving the Medicaid portion, but that still covers a lot of fees each year. OP is probably under the SS limit, although "22% most paychecks" is an odd phrasing and could mean they have bonuses or other that put then over the limit.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by KingRiggs »

ekid wrote: Wed Jul 06, 2022 10:40 am
Statistical wrote: Wed Jul 06, 2022 10:24 am
ekid wrote: Wed Jul 06, 2022 10:21 am Over a lifetime the difference is large, with Optum on the losing end.
No it is not. You are right there is a lot of misinformation in the thread.

The difference is relatively small. Still Optum comes out ahead by using Direct Payroll deduction and saving FICA. Optum provides access to low cost passive index funds which are comparable to Fidelity.
OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
The money OP would be contributing through Optum IS pre-tax-money. It is deducted before his pay is taxed. Also has the advantage of saving SS tax. That said, the difference is probably not huge over time with the amounts OP is contributing.

I am in the exact same boat - have Fidelity HSA from former employment, now have Optum with my current job. If I desired, I could do an indirect rollover once every 365 days. But my options are good at Optum (VTSAX) and the employer pays all fees. So I'll just keep both until I quit.
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ekid
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by ekid »

"Am I really losing that much using after tax dollars compared to getting the tax reduction on funding it directly from my paycheck"

Perhaps it is I who doesn't understand the question. I never had a job with benefits in my life.
123
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by 123 »

passive101 wrote: Wed Jul 06, 2022 12:05 am These are the available funds my company plan lets me invest in
...
Vanguard Total Stock Market Inst VITSX Large Cap Blend
...
You've got a great option in your employer's HSA with the institutional fund version of VTI for a Total Stock Market allocation.

If it were me I would tolerate the 0.03% Optum fee for the sake of getting the employer $250 funding and the saving of the SSA/Medicare tax on contributions, particularly if you're just letting the money sit and grow. That $250 employer funding will cover that 0.03% Optum fee on an annualized average balance up to around $833,333.33

But to each his/her own. YMMV
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AnEngineer
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by AnEngineer »

123 wrote: Wed Jul 06, 2022 11:12 am...
If it were me I would tolerate the 0.03% Optum fee
...
I agree, this is a low fee. Is this amount right, though? Is it actually 0.3%? It's worth checking the statements to see what it comes out to in dollars.
for the sake of getting the employer $250 funding and the saving of the SSA/Medicare tax on contributions...
You can also move the balance and still keep the account open to receive the $250 and make contributions. With a percentage based fee with a decent sized account this could be worth it. If the 0.03% is correct, though, that's a quite a bit of hassle for little gain.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Statistical »

passive101 wrote: Wed Jul 06, 2022 12:13 am
TropikThunder wrote: Wed Jul 06, 2022 12:00 am
passive101 wrote: Tue Jul 05, 2022 11:16 pm only let me move money out if I quit or the company no longer uses them as the HSA company.
That’s illegal.

It’s also not Optum’s policy.
I called and asked them and they told me that I can use the money, but can't roll it over while I'm employed to Fidelity :confused
After looking over the fees it looks like they charge $20 to move money, but I don't know the specifics of that yet.
Yeah something got lost in translation or the rep had no idea what they were talking about. You can ALWAYS rollover HSA funds from one custodian to another. It is your money you can move it anywhere you want. You can even do it yourself by taking the funds and depositing it into a new HSA. I would recommend a direct rollover (less chance for mistakes/problems) but you can do an indirect manual rollover as well.

The question is why would you want to move:
1) good selection of low cost funds
2) payroll contribution saves you on FICA taxes
3) looks like employer has a company match = free money

You certainly can use Fidelity instead but it looks like you are just leaving money on the table for no benefit.

You can even split the difference by using Optum to collect the funds and once a year move any balances over to Fidelity.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

nolesrule wrote: Wed Jul 06, 2022 7:47 am
passive101 wrote: Wed Jul 06, 2022 12:14 am
0.0300% of your average daily investment balance, not to exceed $999.00 in any given month.
Is that daily? Monthly? It's not really clear by the wording If that's daily it amounts to 1.095% annually.
From the wording it sounds like it's a daily fee to me, but I'm not sure.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by passive101 »

OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
[/quote]

Which is Statistical's point? If you make your own contributions (ie, Fidelity) you save income tax, but if you make a payroll deductions, you also save FICA. For those above the SS limit, they are only saving the Medicaid portion, but that still covers a lot of fees each year. OP is probably under the SS limit, although "22% most paychecks" is an odd phrasing and could mean they have bonuses or other that put then over the limit.
[/quote]

My paychecks vary but I average between 60-80k annually. This year will be close if I hit the 22% tax bracket.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Statistical »

passive101 wrote: Wed Jul 06, 2022 11:51 am My paychecks vary but I average between 60-80k annually. This year will be close if I hit the 22% tax bracket.
In which case you are under the SS limit so any payroll deduction contributions would be exempt from FICA saving you 7.65% on top of the income tax savings plus any employer bonus/match.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by EnjoyIt »

passive101 wrote: Wed Jul 06, 2022 11:51 am
My paychecks vary but I average between 60-80k annually. This year will be close if I hit the 22% tax bracket.
I think the above statement settles it. You should be using your employer HSA because you save on SS and medicare tax which comes out to $279. Thats a pretty big deal. Then once a year take those funds and transfer them to fidelity so that you avoid the .03% management fee. If it is a yearly fee, then not that big of a deal. If it is assessed daily. That will start to add up over the years so I would keep the balance small at optum even if they charge you $20 to move you money. Also, at fidelity you will have access to their zero funds which will save you even more in fees (supposedly.)
Last edited by EnjoyIt on Wed Jul 06, 2022 12:27 pm, edited 1 time in total.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by UpsetRaptor »

Since my future SS income will be dependent on my contributions, I personally view paying the 6.2% SS tax as a positive - an investment in a future government-backed pension for myself that includes a COLA.

The 1.45% Medicare tax has no such direct personal benefit, however.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by EnjoyIt »

UpsetRaptor wrote: Wed Jul 06, 2022 12:23 pm Since my future SS income will be dependent on my contributions, I personally view paying the 6.2% SS tax as a positive - an investment in a future government-backed pension for myself that includes a COLA.

The 1.45% Medicare tax has no such direct personal benefit, however.
Of the 6.2% you give to SS, only a fraction of it is counted and that fraction decreases significantly depending on which bend point of the contribution phase you are in. This makes SS a poor investment compared to taking that money and investing it yourself.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by DS03 »

EnjoyIt wrote: Wed Jul 06, 2022 12:26 pm
UpsetRaptor wrote: Wed Jul 06, 2022 12:23 pm Since my future SS income will be dependent on my contributions, I personally view paying the 6.2% SS tax as a positive - an investment in a future government-backed pension for myself that includes a COLA.

The 1.45% Medicare tax has no such direct personal benefit, however.
Of the 6.2% you give to SS, only a fraction of it is counted and that fraction decreases significantly depending on which bend point of the contribution phase you are in. This makes SS a poor investment compared to taking that money and investing it yourself.
I'm not sure this is correct. If you contribute an additional $3k (let's say) to the company HSA, your SS income for that year (used to calculate future SS payments) is decreased by the full $3k, not just a portion of it. Multiply this by many years and there is definitely an impact.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Walkure »

Statistical wrote: Wed Jul 06, 2022 10:46 am The only significant differences is if contributions are made by payroll deduction they are also exempt from FICA (an up to 7.65% "bonus"). So the difference is small however since Optum is the employer's chosen HSA and the only way to get that additional "bonus" it would be slightly better not worse than Fidelity.
I'd like to point out that it's better than that, because the Employer share of FICA is also exempted from payroll deduction. All else being equal, that's another 7.65% that flows directly into your employer's bottom line as profit. Folks who have an ESOP, profit sharing, or other bonus structure might see some of that back in their pockets as well at the end of the year.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Artful Dodger »

passive101 wrote: Wed Jul 06, 2022 11:51 am OK, could be- but the entire point of an HSA/MSA is to put PRETAX money in it.
Which is Statistical's point? If you make your own contributions (ie, Fidelity) you save income tax, but if you make a payroll deductions, you also save FICA. For those above the SS limit, they are only saving the Medicaid portion, but that still covers a lot of fees each year. OP is probably under the SS limit, although "22% most paychecks" is an odd phrasing and could mean they have bonuses or other that put then over the limit.
[/quote]

My paychecks vary but I average between 60-80k annually. This year will be close if I hit the 22% tax bracket.
[/quote]

OP, I haven't seen anywhere that you are taking the HSA deduction when you file your taxes, so am double-checking that's the case. It's very easy and is on the 1040 right next to where the IRA deduction is taken. In most states, if you deduct your HSA contribution on your federal taxes you also get a state tax deduction. As others have mentioned, the additional benefit you get by making the HSA contribution via payroll deduction is the 7.65% FICA tax savings. Also as noted, not taking the FICA tax savings will up your future social security benefit slightly.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by EnjoyIt »

DS03 wrote: Wed Jul 06, 2022 12:36 pm
EnjoyIt wrote: Wed Jul 06, 2022 12:26 pm
UpsetRaptor wrote: Wed Jul 06, 2022 12:23 pm Since my future SS income will be dependent on my contributions, I personally view paying the 6.2% SS tax as a positive - an investment in a future government-backed pension for myself that includes a COLA.

The 1.45% Medicare tax has no such direct personal benefit, however.
Of the 6.2% you give to SS, only a fraction of it is counted and that fraction decreases significantly depending on which bend point of the contribution phase you are in. This makes SS a poor investment compared to taking that money and investing it yourself.
I'm not sure this is correct. If you contribute an additional $3k (let's say) to the company HSA, your SS income for that year (used to calculate future SS payments) is decreased by the full $3k, not just a portion of it. Multiply this by many years and there is definitely an impact.
Bend points. You are forgetting the bend points of SS. Here is a link to explain it in detail
https://www.physicianonfire.com/ssa2017/

But the point is, if you contribute $100 to SS then prior to the first bend point only $90 is counted. OP making $80k/yr may very well have already reached past the first bend point. At the second bend point of the $100k contributed, only $32 is counted. Then after the second bend point only $15 is counted.

If I am correct and OP is past the first bend point, the choice of going to fidelity would cost OP ($3,650 * 6.2% = $226.30) of which only $72.42 is counted towards SS. OP can invest the $226.30 which will pay out far better than what those $72.42 in SS will provide.
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Statistical
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Statistical »

DS03 wrote: Wed Jul 06, 2022 12:36 pm
EnjoyIt wrote: Wed Jul 06, 2022 12:26 pm
UpsetRaptor wrote: Wed Jul 06, 2022 12:23 pm Since my future SS income will be dependent on my contributions, I personally view paying the 6.2% SS tax as a positive - an investment in a future government-backed pension for myself that includes a COLA.

The 1.45% Medicare tax has no such direct personal benefit, however.
Of the 6.2% you give to SS, only a fraction of it is counted and that fraction decreases significantly depending on which bend point of the contribution phase you are in. This makes SS a poor investment compared to taking that money and investing it yourself.
I'm not sure this is correct. If you contribute an additional $3k (let's say) to the company HSA, your SS income for that year (used to calculate future SS payments) is decreased by the full $3k, not just a portion of it. Multiply this by many years and there is definitely an impact.
What he means is the return on investment for SS has three bendpoints 90%/33%/15%. Unless your wages are very low your marginal dollar of wages is in the 33% or 15% tranches. The ROI on the 33% is very low essentially 0% if you are a male. The 15% one is a negative return (if you live to life expectancy lifetime benefits will be less than what you paid in for those 15% dollars).

So for most people the benefit of saving the avoided SS taxes outweighs the future SS benefit. Nothing prevents you from saving the FICA savings and adding that to your retirement assets. Hell if you wanted to you could use it purchase an annuity someday and get a SS like benefit from it.
Last edited by Statistical on Wed Jul 06, 2022 2:22 pm, edited 1 time in total.
mrb09
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by mrb09 »

SteelyEyed wrote: Wed Jul 06, 2022 7:36 am My employer uses Optum. I also have an HSA at Fidelity. To avoid the rollover fee, once a year I reimburse myself for the entire balance of the Optum account and perform an indirect rollover to Fidelity.

viewtopic.php?t=263661
Ditto for me. Avoids fees, and there's nothing Optum can say for or against, to them it is just a valid withdrawal, the rollover is on the Fidelity side.
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Re: How much am I losing using my Fidelity HSA instead of my company's HSA?

Post by Taxedtodeath »

retiringwhen wrote: Wed Jul 06, 2022 8:05 am
Taxedtodeath wrote: Wed Jul 06, 2022 7:43 am Twice a year I do a direct pull from Optum to fidelity and pay the $20 each time. I then invest in VTI at fidelity. The transfer takes between two and 5 weeks. The benefit of taking hsa money pre tax is worth paying the transfer fee each time. That tax drag is big over time.
As noted above, the only tax drag is FICA withholding. The contributions to the Fidelity account are fully claimable on your Federal tax return. I have both HealthEquity corporate sponsored HSA and my wife has her own Fidelity HSA. There is no income tax difference in their treatment on a tax owed basis. Paperwork is different of course as the contributions come off the top on your W-2 for Optum.

See for 8889 and Schedule 1, Line 13 on your Federal 1040.gar

For high income individuals, even FICA is not an issue if income is above the FICA cap.

Note, state taxes are jurisdiction dependent. For example, it doesn't matter in NJ since contributions are not deductible regardless. :annoyed
Correct. I guess big is a relative term. I like my few extra percent. Also yes NJ and their greed...

"you’re a one-issue voter and tax rate is your issue, we’re probably not your state.” -nj governor Murphy

Yup....
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