High fees, low interest rates on deposits, erode tax advantages on HSAs, agency contends

Monthly maintenance fees, paper statement fees, outbound transfer fees, and account closure fees for health savings accounts (HSAs) are being forced on consumers to pay, the federal consumer financial protection agency charged in a report issued Wednesday.

The Consumer Financial Protection Bureau (CFPB), in its “Health Savings Account Issue Spotlight,” contended that, in the case of health savings accounts, such fees and costs can also erode tax savings.

An HSA is a tax-advantaged account that generally comes with a high-deductible health plan, the bureau said. Typically, the HSA is in the form of a deposit account selected by an employer or a health insurance company. An employee makes tax-deductible contributions that can then be used for certain health care expenses. Unspent contributions can earn interest, and roll over each year. The individual and family contribution limits for 2024 are $4,150 and $8,300, respectively.

However, the CFPB noted that providers typically provide low interest rates on the accounts, typically with these rates less than 1%, and, sometimes, even 0%. The CFPB said that, as a result, consumers could incur significantly more in fees than they earn in interest.

“Many providers that offer health savings accounts charge various fees, including monthly maintenance fees and paper statement fees,” the agency noted in a release. “Expensive exit fees, like outbound transfer fees and account closure fees, can hold consumers, who may not have selected their accounts, captive to their current providers. The fees are costly and typically unavoidable.”

The CFPB said that, when a consumer ends up with an HSA with high fees and inferior terms, “it directly reduces the funds they can allocate to their health care needs.

“High deductible health plans have higher deductibles than other health plans, so many individuals with these plans, such as people with chronic illnesses, experience higher upfront out-of-pocket health care costs,” the bureau said.

The agency reported that HSAs hold more than $116 billion, a 500% increase since 2013. The number of accounts, the agency added, rose more than three times from 2013 to 2023, from 11.8 million to 35 million. “The significant growth in the accounts has coincided with the rising use of high deductible health plans,” the CFPB said.

CFPB Highlights the Hidden Costs of Health Savings Accounts