Can I use a different HSA than PayFlex that came with aetna?

Question

So my insurance aetna came with a PayFlex HSA. I dont think I like the investment options

Harbor Bond   HABDX   Bond Fund   Managers Intermediate Duration
   Government MGIDX   Bond Fund   Dodge & Cox Income  DODIX   Bond Fund 
      Metropolitan West Total Return Bond MWTRX   Bond Fund   PIMCO Low
   Duration   PLDDX   Bond Fund   Davis NY Venture    NYVTX   Large Cap Stock
   Fund (Domestic)    Victory Diversified Stock   SRVEX   Large Cap Stock
   Fund (Domestic)    JPMorgan Large Cap Growth   SEEGX   Large Cap Stock
   Fund (Domestic)    Dodge & Cox International Stock Fund    DODFX   Large
   Cap Stock Fund (International)     Thornburg International
   Value  TGVIX   Large Cap Stock Fund (International)    Artisan Small
   Cap    ARTSX   Small and Mid-Cap Stock Fund    Oppenheimer Main Street
   Small & Mid Cap    OPMSX   Small and Mid-Cap Stock Fund    American Century
   Mid Cap Value  ACMVX   Small and Mid-Cap Stock Fund    Parnassus
   Small-Cap  PARSX   Small and Mid-Cap Stock Fund

What i dont like. The bond funds expenses are .5-.7% a year. they dont even return that on average every year. Eeeek

The equities ones are charging 1-1.5% in fees.

Like the JP morgan large cap one is charging 1.05%. it barely does better than the S&P 500.

The small cap ones arnt that outstanding either charging 1.3-1.8% in fees.

Can i just tell my work or Aetna to put my HSA money into a vanguard one or a place with better funds with lower fees?

I dont really like the fees of these funds.

*Edit: Also im not crazy 1-1.5% fees for a stock to mirror the S&P500 / try and beat the russell 2000 is high right? sadly i hold more individual stocks than i should so i dont do much etf/mutual fund shopping on my schwab account *

Answer 1

You can ask your employer for anything that you want.

However, most employers, if they are contributing their own money into your HSA, or you are contributing to your own HSA through payroll deduction, only work with one HSA, which is much easier for them to manage.

You are free to decline their HSA if you want. However, if they are kicking in free money into your HSA, I don't recommend that you decline it. Just pick the best option you have for investing.

As for the money that you are contributing, if you don't want to put your own money into your employer's Aetna HSA, you can open up an HSA with any institution you like. You can even do this and still keep Aetna HSA to take advantage of the employer's contributions. However, your annual limit is still the total of all contributions to all HSA's in your name, whether you make them or your employer makes them.

When deciding whether or not to use payroll deduction into the Aetna HSA or to go your own way, keep in mind that payroll deduction skips some payroll taxes.

Answer 2

There are some cases I'm aware of where a large employer will offer alternative HSA vendors, but this is not the norm as far as I'm aware, and would only be an option if your employer has already negotiated for this with your insurer. It's likely that this specific vendor is built in for the particular HSA product your employer has elected from Aetna.

If this really ticks you off on principle, you can check if they offer a stable value fund. If so, you can essentially treat this money as part of your emergency fund, and somewhat reduce your own emergency fund and invest that money however you see fit.

Answer 3

Much of this is incorrect. Aetna owns Payflex for starters, and it's your EMPLOYER who decides which banks and brokers to offer, not Payflex. An HSA is a checking account with an investment account option after a minimum balance is met. A majority of U.S. employers only OFFER an HSA option but don't contribute a penny, so you're lucky you get anything.

The easy solution is just keep the money that is sent to your HSA checking account in your checking account, and once a year roll it over into a different bank's HSA. The vast majority of banks offer HSAs that have no ties to a particular broker (i.e. Citibank, PNC, Chase). I have all my HSA funds in HSA Bank which is online but services lots of employers.

• Not true that most payroll deductions or employer contributions go to a single HSA custodian (bank). They might offer a single bank that either contracts with an investment provider or lets you invest anywhere. But most employers making contributions are large or mid-market employers offering multiple banks, and that trend is growing fast because of defined contribution, private exchanges and vendor product redesigns. Basically, nobody likes having a second bank account for their HSA when their home bank offers one.

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