Feed on
Posts
Comments

Note: This is the second post in my HSA enrollment series. To see the first post, go here.

As I said in my previous post , there are two different HSA-eligible HDHP accounts available to Intel employees: the Cigna HDHP and the Anthem HDHP. They both offer the same annual cost, deductibles and health care coverage for 2010:

 

Intel Sponsored HDHP features:

  • $0 Annual Fee
  • $1200 deductible for single coverage, $2400 for family coverage
  • 10% coinsurance after deductible is met
  • $2100 out of pocket maximum for single coverage, $4200 for family coverage
  • $3050 max annual contribution to HSA for single coverage, $6150 for family coverage
  • No limit on rollover amounts
  • 100% preventative care coverage

For Intel employees, JP Morgan Chase is the HSA administrator for the Cigna HDHP, and Mellon Bank is the HSA administrator for the Anthem HDHP. The administrator’s responsibilities include customer service, processing claims, preparing claim reports, and arranging for services such as network access and case management.

Essentially, the only difference between the two plans is the network of health care providers and the custodial bank fees, which I outline below.  I’ve bolded any noticeable difference in fees.

 

CIGNA HDHP/ JP Morgan Chase HSA:

  • FDIC-insured cash account
  • Currently earning 0.19% APY (as of 11/13/09)
  • Monthly account fee: $3 (Paid by Intel while actively enrolled in the Cigna HDHP)
  • Check processing fee: $1.35 per check
  • Monthly paper statement fee: $0.85 (can opt out to avoid fee)
  • Debit card transactions: no charge
  • ATM fees: No charge when using a JP Morgan or WaMu ATM
  • Check reordering fee: $0 (10 checks per order)
  • Replacement/additional debit cards: $15 per card
  • Account closing fee: $20
  • Once your account reaches $2000, you can transfer your funds to an HSA Investment Account

 JP Morgan Chase HSA Investment Account Features:

  • 8 funds to invest in
  • $1.67/month administrative fee
  • No online trading fees
  • Phone-assisted transaction fee: $10/call
  • No load fees or commissions (there will be fees shown on the prospectus, but they do not apply to HSA account holders)
  • Management fees: All mutual funds have management fees, which include shareholder servicing fees and 12b-1 fees. See prospectus for expense ratios.
  • Early redemption fees: Varies from 1-2% for select funds. See prospectus.
  • No minimum investment amount
  • HSA Investment Account is not FDIC-insured

Anthem HDHP/Mellon Bank HSA:

  • FDIC-insured checking account
  • Currently earning 0.25%APY through end of 2009
  • Monthly account fee: $3.00 if balance is less than $1,000 (Paid by Intel while actively enrolled in Anthem HDHP)
  • Check processing fee: $0
  • Monthly paper statement fee: $0
  • Debit card transactions: no charge
  • ATM fees: $1 per usage  (ATM access is not available for Blue Cross/Blue Shield Arizona yet)
  • Check reordering fee: $10 (40 checks per order)
  • Replacement/additional debit cards: $5 per card
  • Account closing fee: No charge
  • Once your account reaches $1500, you can transfer your funds to an HSA Investment Account

 Mellon Bank HSA Investment Account Features:

  • 20 funds to invest in
  • $2.90/month administrative fee
  • No online trading fees
  • No additional transaction fees, loads, or commissions
  • No minimum investment amount
  • HSA Investment Account is not FDIC-insured

Which Provider Did I Choose?
I don’t have a primary care provider (PCP) yet, and all my current specialists are located at Mayo Clinic, which is covered by either plan. So with regards to health care providers, I’m impartial to Blue Cross/Blue Shield or Cigna.  I was leaning toward Cigna just because my current plan is with them, and I’ve been very happy with the coverage.

After studying the HSA bank fees, I determined that it really didn’t matter for me which plan I chose. The interest rate is fairly pathetic for both. I don’t plan on reimbursing myself often, since I plan to use my HSA for savings. If I do ever need to withdraw funds, I’ll just do an ACH transfer.  But if you plan on using the ATM often, you might want to consider Chase (Cigna), and if you plan to write yourself checks then you might want to consider Mellon Bank (Anthem).  The other major difference I noticed is the account closing fee. Chase charges $20 to close your HSA account, while Mellon charges no fee. Hopefully, I’ll stay employed long enough that I won’t have to close my account anytime soon and deal with this annoying charge.

Note, there is a difference in the investment funds available through each plan. I plan on rolling over my HSA funds to an external account with better interest, more investment options, and lower expense ratios, which I will detail in another post. Chase seems to be more limited in their offerings, and requires a higher minimum to invest, so this might sway investors to choose Mellon (Anthem). However, if you plan to invest in either of these HSA accounts, then I’d recommend pouring over the prospectus of each of the funds and comparing expense ratios and performance. 

In the end, it came down to personal preference for providers. I ended up choosing the Cigna HDHP/Chase HSA plan out of personal preference for Cigna over Blue Cross/Blue Shield. 

You Can Use a Bank of Your Choice to Administer Your HSA
Remember that the HDHP insurance portion is a separate beast from the HSA account itself. You are under no obligation to use the plan’s "preferred" bank to administer you HSA. You just won’t get the benefits of payroll deduction if you choose a different bank. Remember, from my last post, contributions made through payrolldeductions are exempt from social security and medicare tax. If you use an external HSA account and contribute with "post-tax" money, you will miss out on this 7.65% tax savings.  I will contribute through payroll deductions to the JP Morgan Chase HSA account, and then transfer my money to an external HSA account that has better investment options. 
 

There are two options to move money to another HSA: direct rollover or trustee-to-trustee transfer. Direct rollover is where you take money out of one HSA and put it in another one within 60 days, and these are limited to once every 12 months. You can also do an unlimited amount of trustee-to-trustee transfers, which are handled by the banks directly, usually at a hefty charge. For example, Mellon charges $25 for each outbound transfer. The official rules on rollovers/transfers are on page 6 of IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans

Leave a Reply