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Health Savings Accounts Charge Hidden Fees

Many providers charge complex and costly maintenance and exit fees

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  • Written by  Banking Exchange staff
 
 
Health Savings Accounts Charge Hidden Fees

Health savings accounts providers have charged complex costs and fees that “obscure the true cost of the product”,  according to the Consumer Financial Protection Bureau (CFPB).

The report found that many organizations that offer health savings accounts charge various costly and complex fees, including monthly maintenance fees and paper statements fees.

The CFPB said this fee structure can quickly erode a consumer’s ability to pay medical bills because it reduces the funds consumers can spend on healthcare expenses.

Many companies also impose unavoidable exit fees, such as outbound transfer fees and account closure fees, when consumers decide to switch their account.

Consumers also reported encountering prolonged delays or lost funds during transfer attempts.

According to the CFPB, these exit fees and delays hold consumers, who may not have selected their accounts, captive to their current health savings account provider.

Even though interest rates have recently increased across the United States, most health savings account providers continue to offer consistently low interest rates.

The report found that these rates are typically less than 1% and sometimes even as low as 0%. As a result, consumers could incur significantly more in fees than they earn in interest.

The CFPB also revealed there were approximately 36 million health savings accounts in 2023 holding more than $116 billion in assets, which represents an increase of more than 500% since 2013.

The rise of health saving account holders has been driven by consumers seeking to take advantage of tax benefits, which help offset the costs of high deductible health plans.

However, the fees and unattractive interest rates often render consumers incapable of covering their healthcare costs, which can defeat the purpose of the account altogether.

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

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