Health savings accounts are one of the most-favored investment options in the U.S. tax code. Your HSA contributions are tax-deductible, they grow tax-free and withdrawals avoid taxes if used for qualified health expenses, such as doctor's visits, prescription drugs and dental care.
All those advantages can be squandered if you use a high-fee HSA. Investment research firm Morningstar recently evaluated 10 large HSA providers and found that account maintenance fees vary greatly and investment menus could be improved.
"Account maintenance fees are the most important factor in choosing an HSA if you plan on using it as a spending vehicle," said Leo Acheson, a senior analyst at Morningstar. "Because interest rates are low, maintenance fees have a much larger impact on balances than rates for the average account holder."
Some providers, such as Alliant Credit Union and The HSA Authority, do not charge any monthly fees. Others will waive the maintenance charge if account deposits cross a certain threshold. And a few banks will levy a fee regardless of the balance. (See table below.)