HSA low balance options - $15 yearly fee vs yearly 6% Excise Tax ($9) vs?

Question

I have just under 3k in my HSA. I don't have a HDHP anymore, so I can't contribute anything. My bank wants $10/month if the balance is under 3k.

In 2015, I contributed $150 at the beginning of the year and then withdrew it as an excess contribution at the end of the year. There was no fee for this from my bank and no penalty. But now my bank is charging $15 for processing excess contributions.

If I do contribute about $150 and leave it there, there is a yearly 6% excise tax on that and on any earnings it makes. That's $9/year.

I haven't found a no-fee HSA account that would offset the costs of closing and transferring money.

Are there any consequences I'm not aware of or any other options?

Edit to answer questions:

It would take 2 years to incur 3k in expenses.

HDHP coverage ended in 2015.

I don't use the HSA debit card, I use my own credit card for points and then reimburse later.

I have a FSA now, so the HSA is an emergency backup. I have not made any withdrawals since 2015. I didn't find out about the fee changes until I had already opted in for 2017 FSA. So for this year, I am looking for options to avoid the bank's monthly HSA fees.

Answer 1

Contributing the $150 to put you over the $3k mark is somewhat pointless. The reason is that, although you won't be accumulating any fees, you won't be able to use the money, either, because as soon as you take a distribution, you'll be back under $3k.

Instead, I would look at two things:

First, are you considering all the ways you can spend this money? Doctor visits, dentist, prescriptions, eyeglasses, chiropractic, and more: there are lots of ways to spend this money, and if you can spend it all in a relatively short amount of time, your problem is solved. The full list of things you can spend it on is in IRS Publication 502.

Second, have you talked to a local credit union? Credit unions often offer an HSA account with only a small setup fee and no ongoing monthly fee or minimum balance. If you roll your current HSA money over into your new account, you can then take your time spending the money until it is gone.

If you are having trouble locating a good HSA, there is a large list at hsarates.com. Look for one that is available in your state (or nationwide) and has low/no fees.