Uncovering Hidden Costs: Challenges of HSAs Revealed

New report reveals consumer challenges of Health Savings Accounts

A new report suggests that while Health Savings Accounts (HSAs) can provide tax advantages, they also come with hidden costs that could eat away at the benefits.

The report by the Consumer Financial Protection Bureau (CFPB) details a range of hidden fees and also highlights relatively low interest rates, challenges the federal regulator says can diminish the benefits of the tax-advantaged plans.

“Health savings accounts are promoted for the tax benefits that chip away at the price tag of health care,” said CFPB Director Rohit Chopra. “Many consumers do not realize the fees, switching costs, and low interest yields that will come with the accounts.”

The CFPB notes that there are currently 36 million HSAs in the US and the accounts hold a total of $116 billion.

According to the CFPB, the benefits - tax free account growth as long as funds are spent on medical costs - can be outweighed by a number of fees.

Specifically, these benefits are being offset by charges like monthly maintenance fees, paper statement fees, outbound transfer fees, and account closure fees.

It's often difficult to switch accounts if someone changes employers or health plans, too.

The CFPB says it will continue monitoring HSAs and that consumers should be aware of the potential pitfalls of these accounts.

Photo byAlexandr PodvalnyonUnsplash