Elfcu HSA Adds Monthly Fee, Slipping Away From The Best

First and Second Place Winners of the Air Force Classic Elite Women's Cycling Race June 8, 2013 in Clarendon (VA)

After adding a $24 wire transfer fee to its HSA (see previous post Elfcu HSA Still The Best Despite New Wire Transfer Fee), Eli Lilly Federal Credit Union (Elfcu) decided to add a $3 monthly fee effective in July 2014 if the average daily balance on the savings account side is below $2,500.

I received this out-reach e-mail from Elfcu via my contact form on the blog:

Dear Finance Buff:

Elfcu has been somewhat surprised by the strong social media response to our Health Savings Account offer.  There have been many individuals, like yourself, who have opened HSA accounts with us.  With no other product engagement, it is cost prohibitive for us to offer the HSA as originally priced for these one-off relationships.

Elfcu is a Select Employee Group (SEG) Credit Union.  Most of our member relationships begin through their place of work…ie the SEG.  As healthcare and insurance plans have changed, many of those SEGs are now challenged with providing their employees – our members –  a good HSA process and account structure.  We developed our program and initial pricing model to meet these needs of our SEG partners.  In addition to the HSA accounts, many of these SEG employees/members conduct other business with Elfcu, thus offsetting the costs of the HSA process.

The $24 wire fee on our Health Savings Account falls within our account disclosures and fee schedule, and it aligns with industry pricing for wire fees. While previously Elfcu was waiving this fee for our HSA accountholders, we’ve recently reviewed the product and its pricing structure and have elected to implement this change and charge the existing fee. We opt for a wire transfer versus an ACH transfer for efficiency in proper tax reporting procedures.

We’d also like to provide you with advance notice of a $3 monthly account maintenance fee we will implement July 1, 2014 on accounts that fall below a $2,500 average daily balance in the savings portion– not the investments portion – of the Elfcu HSA.

We do appreciate your referrals. Please note that we offer a range of best of industry products including mortgages and auto loans, and we hope you will explore these options further. Please let us know what we can do to earn more of your business, and thank you for choosing Elfcu.

Elfcu

I’m sympathetic to their position. I feel sorry for bringing them too much business they weren’t prepared for. In the future I will send gems like this only to e-mail subscribers.

I’m not against a monthly fee for low balance in the savings account. However, the choice of using wire transfers to move money to the investment side is still quite odd to me. Other banks and credit unions also have an investment program for their HSA through a third party. I don’t think they are all doing a wire every time someone wants to move $200 to investments.

Somehow those other banks and credit unions figured out how to deal with “efficiency in proper tax reporting procedures.” I challenge Elfcu to work out the efficiency without resorting to costly wire transfers.

I will keep my HSA with Elfcu but move $2,500 back to the savings account. It’s still better than HSA Bank unless you are transferring to the investing side more frequently than once a year. If you do only one trade per year, also consider Saturna Brokerage HSA.

[Photo credit: Flickr user Ron Cogswell]

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Comments

  1. Jon says

    Thank you for the update. I agree that using wire vs. ACH seems odd. ELFCU’s “efficiency in proper tax reporting procedures” comes at the cost of inefficiency in transaction costs to the customer. That can’t be the right trade-off for a credit union, and I trust they will reconsider after hearing more customer feedback. Separately, the $3/mo maintenance fee for low-balance savings accounts is quite reasonable, and I’m happy to pay it.

  2. NewGuy says

    I recently started my first real job less than a year ago, and have a high-deductible health plan that allows for an HSA. I’m contributing my max allowable to the HSA, but with a minimum amount that you have to keep in your savings, it’ll take me several years before I can truly invest in this vehicle. My employer uses Wells Fargo, and they have a $5k minimum requirement. I’m still deciding whether to use HSA Bank or ELFCU, but fortunately, I still have at least a year before I can actually make any transfers.

  3. Dave says

    I love the podium photo from the women’s bike race. Wasn’t there a third place finisher also on the podium?

  4. bn says

    I am glad your social media presence and referral business garnered a response from Eli Lilly. I had gone through the process to open an account but I don’t think I will go through with transferring my balance of 15k with all of these new fees involved. Better stashes at my credit union with no monthly fees earning 2% interest. I really wish Eli Lilly could have kept the initial fee structure.

    • Samir says

      bn,
      You should consider the actual numbers before deciding what to do. Moving your money to ELFU will allow you to invest in a well-diversified portfolio of indexed ETF’s, which will, on average, return 10% on an annualized basis. This beats the 2% you’ve mentioned that you’re getting right now.

  5. Erik says

    It looks like I’ll be sticking with HSA Bank for now. I don’t think it’s worth moving at this point. I’ll wait to see what else comes along or which banks or credit unions make their terms more enticing.

    • OB says

      One problem with moving an HSA is that once you move your funds to a new HSA, that new HSA can just change the terms of what made them look great in the first place. They can advertise having a great rate, or no monthly fees, or low minimum balances or this and that, but once you are in, they can always change the terms. The nature of HSAs make it a bit harder to just keep on transferring accounts like you could do with regular Savings/Checking accounts during the Rate-Chasing days of the High Interest rate era of a few years back. (Not saying ELFCU is doing a bait and switch as their ‘surprise’ to the influx of accounts is believable.

      ELFC did say the cost was because of the “With no other product engagement…”, does that mean if they had “More product engagement” they will reconsider the fees?

  6. Samir says

    Harry,
    Leaving $2,500 in the investment account (and not investing it) will only make sense if you expect the investment return to be less than 36/2500 = 1.44%. What are you investing in that you expect the return to be less than that?

    For me, the major issue is the lack of choice in selecting the method of transferring funds from the savings account to TD Ameritrade. I contribute twice a month through payroll deduction and would prefer to have the money invested right away, instead of once a year, but $24 per transfer is outrageously expensive ($24 * 12 months * 2 transfers / month = $576/year; on an annual contribution of $6,550, that’s 8.79% in transfer fees).

    I plan to leave all of my contributions going forward in the savings account, and leave the invested money as-is. Next Feb, I’ll reevaluate the situation and options, and decide whether to stay or move. I’m hopeful though that, by then, ELFCU will figure out how to offer lower cost transfer options; heck, I’d be okay with them mailing a check to TD Ameritrade because expediency of transfer wouldn’t be a concern.

    • Harry Sit says

      The savings account also earns 1%. So you are out $61 if you invest $2,500. Would I invest in something with a 2.44% expense ratio? No. If I want to invest more in stocks I can just raise the percentage invested in stocks in my other accounts.

      If you are not 100% in stocks in your other accounts, you can do the same. Raise the amount invested in stocks in those accounts. Let the money accumulate in the savings account earning 1%. Treat it like short-term bonds. Then transfer over once a year.

  7. Drain says

    What about Sterling HSA? Seems like it now has the lowest fees, yet they might be high enough to be sustainable. And in theory, at least, you can link an account at any brokerage you wish.

    • Harry Sit says

      I don’t see much advantage there. There’s a minimum $2.50 monthly fee that can’t be waived, plus a $16 annual fee for having a brokerage account. It’s a little lower than HSA Bank but not by much.

  8. bn says

    Samir,

    responding to your post above.

    It’s no guarantee that the indexed ETF’s will return 10%. I can leave my HSA at my credit union earning 2% and increase my equity allocation in taxable accounts.

    Which begs the question, would you rather have a higher return in HSA accounts or taxable accounts?

  9. Drain says

    Sterling might not be worth switching to if you already have an established account at HSA Bank…or Elfcu, for that matter…but it might be the best choice for someone starting out. It also might be the best choice for me, since I’m already a Schwab customer, and I’d probably prefer to be able to manage my HSA from the same dashboard I use to manage my other brokerage accounts.

    Sterling HSA–on paper, at least–seems the best choice for anyone, except that there may not be enough of an advantage to warrant a switch from another provider, especially if you want a TD Ameritrade account anyway.

    • Harry Sit says

      They want you to open a brokerage account yourself in the name of “Sterling HSA Administrator FBO your name.” I don’t know how you convince Schwab to do that when you are not Sterling HSA Administrator. The $16 annual fee for having a brokerage account covers two transfers. Additional transfers will cost $10 each.

      If I don’t have an account anywhere I would pick either Elfcu or Saturna.

    • Lily says

      I was rejected from ELFCU after my application was processed and they sent me a PIN and debit card anyway. Very strange. I am going to try Saturna next, but does anyone know about their funds? Or would you recommend using the outside brokerage option? Any chance there will be a step-by-step guide for Saturna?

  10. Nancy says

    Apologies as I’m sure this has been covered in prior posts. Why are people talking about one transfer per year? My HSA contribution is sent by my employer every pay period to my HSA account in a local bank. From there I moved a few thousand dollars to elfcu and then to td ameritrade. Can’t I just move another chunk of money to elfcu when it starts to build up again in my local HSA account? Is there any limit on the # or frequency of transfers or is there a minimum amount per transfer? Thanks.

    • Harry Sit says

      Every transfer from Elfcu to TD Ameritrade costs $24. That’s why you want to minimize the number of transfers. Depending on you do it from your local bank to Elfcu, it can be a trustee-to-trustee transfer or a rollover. If you do it as a rollover, then the law limits you to one rollover every rolling 12 months (your next rollover must be at least one year from your previous rollover). There’s no limit on trustee-to-trustee transfers but the outgoing trustee also often charges a fee to the tune of $20-30. Your local bank may or may not charge.

  11. Drain says

    I’m going to ask Schwab about it. Another problem that occurred to me this morning is that if the account isn’t in my name, I can’t see it using my Schwab login. I’d need POA, I guess. So that’s two hurdles. Schwab has to agree to open the account, and Sterling has to agree to grant me at least limited POA. Otherwise…well, there is still a cost advantage. The advantage is small, but it’s there. So Sterling is less expensive than Elfcu unless you want to keep $2500 in cash, and you can have the same investment account at TD Ameritrade, at least. Seems like if you want to keep $2500 in cash, Elfcu is better, but if not, then Sterling is cheaper. I don’t know who has the better web site and service. (I’ve mostly been happy with Elfcu in those respects, except for the extra “layer” you have to go through to move money to your TD Ameritrade account.)

  12. Drain says

    Following up…

    The first Schwab rep I spoke with just couldn’t understand the question about opening an account titled, “Sterling HSA Adminstrators FBO “. I called again, and the second rep said yes, this could be done. Furthermore, I would be listed as an “agent” on the account, meaning that my SSN would be associated with it and that I’d be able to view and manage the account via my regular Schwab login.

    So let’s say there’s about a 60 percent chance that what the rep said is correct. :-) If he is, then for me, Sterling becomes the best choice for HSA provider because (1) it lets me use my preferred brokerage for self-directed investment, which more or less serves as consolidation from my perspective, and (2) it is the least expensive HSA provider.

    • Harry Sit says

      Good, if you prefer Schwab. Sterling says “Remember, there is a minimum balance requirement for your HSA account.” I don’t see what the minimum is. Be sure to ask.

  13. Drain says

    In the account application, the minimum balance is stated as $20. Practically speaking, you’d probably maintain somewhat more than that, unless you want to be transferring cash all the time between the investment account and the HSA. But even if you keep a few hundred bucks there…no big deal.

    On the down side, I’m leery of the communication and customer support. Sterling seems to want to do a lot by mail, both e- and snail. When I called to inquire about how the account setup would work (how I’d open an account on their behalf), I got a recording saying that all their agents were busy and that I should leave voicemail, which is something I usually hate to do with a business. And as you’ve noticed, the web site is not as informative as it could be.

  14. The Wallet Doctor says

    Unintended consequence. You would have thought the new business would be a good thing, but I guess there is too much of a good thing. It seems they have made a reasonable plan to deal with the situation. I think I would still keep them even with the additions.

  15. Nancy says

    What happens if you have less than $3 in your elfcu HSA savings account? Do they deduct the monthly $3 fee as of July 1 from the investment side (the td ameritrade account)?

    • Jon says

      I just called customer service to ask this exact question. They haven’t fully figured this out yet. They are exploring possible solutions (e.g., letting fees accumulate until funds hit the savings account, drawing funds from linked non-HSA savings account, allowing customer to pay fee via check, etc.) and promised to report back to me. I will post another comment when they do.

  16. Frank Rumsi says

    Quote:
    “I will keep my HSA with Elfcu but move $2,500 back to the savings account. It’s still better than HSA Bank unless you are investing more frequently than once a year. If you do only one trade per year, also consider Saturna Brokerage HSA.”

    I think it would be more accurate if you would say “transfer money once a year” rather than “investing” or “trading”. Trading inside the TDAmeritrade account is not affected by any of the fees at ELFCU unless you actually “transfer” funds in the process.
    Thanks for this blog, btw. Great information!

  17. drjabberwocky says

    Harry ends this article as well as the previous “Elfcu HSA Still The Best Despite New Wire Transfer Fee” article by stating “If you do only one trade per year, also consider Saturna Brokerage HSA” but for me, Saturna makes more sense than ELFCU if you plan to execute 4 or less trades per year – not just one.

    I rather pay the $36 per year in fees than keep $2,500 in my ELFCU HSA checking account as I expect to earn over 1.44% per year ($36/$2500) through my TD account investments. $36+$24 for one wire trade per year to TD = $60 total to invest through ELFCU/TD on an annual basis. The only fee with Saturna is $15 per trade (no transfer fee & no maintenance fee), so as long as you make 4 or less trades per year ($60/$15) you save money by going with Saturna over ELFCU/TD.

    If you don’t want to wait until your HSA is topped up each year before moving your contributions into your investment account, you could use Saturna and move it over quarterly and invest it. With this approach, you’d be putting your money to work sooner for the same cost of investing your new contributions only once per year through ELFCU/TD.

    Sterling also sounds like an interesting option for those who plan on making three or more trades per year (otherwise Saturna makes more sense). Sterling is $14 cheaper than ELFCU per year (both charge a $5 account set up fee if you, like most people, have to pay the $5 Tru Direction membership fee to join ELFCU) and offers the same access to TD (or the brokerage of your choice). Plus, Sterling’s investment fee includes 2 “free” transfers per year and charges only $10 per transfer after that as opposed to ELFCU’s $24 wire transfer fee.

    FYI – If you want to transfer new funds into your brokerage account 6 or more times per year (although I’m not sure why you would), Sterling is cheaper than Saturna due to their low $10 per transfer fee.

    Here is one person’s experience using Saturna: http://www.bogleheads.org/forum/viewtopic.php?f=10&t=135513

    I originally signed up for ELFCU based on the excellent advice I found on this blog, but now that ELFCU has changed their fee structure (which I totally understand), I will be moving my funds to Saturna and likely make 1 or 2 trades per year and use my IRA and 401k to balance my overall asset allocation throughout the year.

    • drjabberwocky says

      Correction: second paragraph – “$36+$24 for one wire trade per year” should read “$36+$24 for one wire transfer per year”. The difference between “transfer” and “trade” is important to this conversation.

      Speaking of which, I should have re-emphasized that with ELFCU/TD, once your contributions are transferred to TD, you can make unlimited commission free trades with select ETFs. This is not the case with Saturna where each trade incurs the $15 (actually $14.95) fee unless it is one of Saturna’s affiliated no-load mutual funds (none of which are all that appealing to me, but to each their own).

      Of course, with ELFCU and Sterling, you can’t trade until your transfer so as long as you’re a long term investor who doesn’t plan on purchasing/holding multiple different securities in your HSA, using your HSA to rebalance your asset allocation, or plan on making frequent trades in your HSA investment account…then Saturna should be your best choice whether the individual fund/stock/ETF you plan on purchasing charges a commission or not. Just don’t make more than 3 trades per year…and if you think you will, use Sterling instead.

    • Harry Sit says

      As I mentioned in the reply to Samir’s comment (#6 above), the $2,500 in cash also earns 1%. You have to earn more than 2.4% in investments to beat keeping $2,500 in the savings account. There’s no way to earn 2.4% risk-free. You might as well treat the $2,500 as bonds and increase your investments in stocks elsewhere. Now the hurdle becomes only $24, therefore my one trade per year comment about Saturna.

  18. Brian says

    Harry, in previous posts, you said there was confusion about whether TD Ameritrade was charging the quarterly fee or waiving for ELFCU customers. Then, you don’t mention it again.

    Since you’re apparently an ELFCU customer using TD Ameritrade for more than a quarter, can you confirm that they are NOT charging you a quarterly (or any other) fee?

    • Harry Sit says

      Confusion was caused by TD Ameritrade showing a wrong fee schedule document (applicable to a different program, not Elfcu’s). The program was set up correctly with no quarterly fee. They only linked the wrong document. TD Ameritrade has since corrected the link. No fee was charged to my TD Ameritrade account.

    • msf says

      We currently have an HSA account with Sterling, and are in the process of switching it over to Lilly. I can say with great confidence that TDAmeritrade charges $12.50/quarter for the HSA account with Sterling (in addition to the charges that Sterling imposes on its side).

      Here is the TDAmeritrade fee schedule for the Sterling HSA account:
      http://www.tdameritraderetirement.com/forms/ACS1019.pdf

      In contrast, here is the TDAmeritrade fee schedule (with no quarterly maintenance fee) for the Lilly HSA account (according to TDAmeritrade, who emailed me this fee schedule in response to my question about it):
      http://www.tdameritraderetirement.com/forms/ACS1009.pdf

      Simply moving _cash_ from TDAmeritrade back to the Sterling account took over a week, and required us to send a signed form to Sterling. (That week was the time between TDAmeritrade cutting a check and debiting the brokerage account until Sterling credited us with the balance – not including overhead of processing the signed form.)

      On the plus side, Sterling does let you pay expenses with outside money, and that’s easy to do – you just submit “outside” money electronically and Sterling keeps a running balance for you. (Though Sterling lets you pay fees with money outside the HSA, it seems TDAmeritrade just deducts their fee from the brokerage account directly.) Sterling’s very good with some things, awful with others.

      Sterling turns out not to be such a great bargain if you’re working with them and TDAmeritrade. The fees run at least $96/year ($2.50/mo for the HSA, $16/year for the brokerage access, $12.50/quarter fee to TDA). Plus $10/transfer (either direction – to or from the brokerage) once you exceed 2/year. A lot more than Lilly’s $36/year plus $24/transfer, unless you’re doing many transfers into the brokerage account.

      A word about Sterling’s account opening fees. They used to show a $5 fee to open online (with the “eSavings plan”), but that no longer appears on their website. Regardless, it costs $10 more (for any Sterling plan) to open an account by paper application. We were told that they could not open an account for us electronically because we were funding directly from an existing HSA. So that added another $10 (one time fee) to the process.

      The only fee we felt was an unacceptable deal breaker was the $12.50/month TDA fee. We were willing to pay the monthly HSA fee (since we wouldn’t be keeping money in the bank and they have to cover their paperwork costs), we were willing to pay a brokerage access fee. But we felt that paying two brokerage maintenance fees – one on the HSA administrator side, and one on the brokerage side, was excessive.

  19. Joe says

    Harry,

    Can you elaborate on why you write that Elfcu (or maybe Saturna) is “still better than HSA Bank unless you are transferring to the investing side more frequently than once a year”? The only thing that I know of that seems to keep HSA Bank from being considered the “best” on this blog is the fact that they charge $66 in annual maintenance fees UNLESS you keep about $5,000 in cash. But is this really a worse deal than what the other HSA providers currently offer?

    My understanding is that HSA Bank’s investment options are competitive with Elfcu/Saturna’s (if not, please correct me). From what I’ve read on this blog and the Bogleheads forum, it may be easier to set up an HSA account with them than with Elfcu, which seems to reject some HSA applicants for unknown reasons based on others’ comments to this blog, and than with Saturna, which seems to require a lot of mailed-in application forms and other clunky processes involving postage costs and risk of losing important documents in the mail (though I admit I don’t know if HSA Bank’s application process is in fact smoother). So those might be two points in HSA Bank’s favor, or at least making them competitive with Elfcu and Saturna.

    As far as the minimum cash balance to waive HSA Bank’s maintenance fee being an issue: I think the discussion here is missing a key point about HSAs. Calculations of how you can possibly squeeze a few more dollars out of the HSA from Saturna by not having a minimum cash balance (and to a lesser extent from Elfcu if you opt to keep $2500 minimum balance for their account maintenance fee waiver (but not from their wire transfer fee)) from investing seems to ignore the fact that an HSA can (and arguably should be) viewed as at least partly serving as an emergency cash account for medical expenses. Unless you’re counting on the HSA to be your primary investment vehicle, i.e., have zero IRAs, 401(k)s, other investment accounts of any nature, it seems to make sense to use the HSA at least partly to hold cash for emergency medical expenses (which is what you’re supposed to use it for, at least when you’re no longer accumulating assets, right?).

    So, putting that all together, it seems that if you can keep enough cash in an HSA Bank cash account to get their fee waiver and view it as part of your emergency medical expense funds, HSA Bank seems to be the best option. You completely avoid all regular transaction or account fees and have the emergency cash available on a tax-advantaged basis. So unless you already have an account with Elfcu or Saturna and don’t want the hassle or possible costs of a transfer, or like them better for non-financial reasons, If you’re trying to decide between HSA Bank, Elfcu and Saturna, it seems to me that HSA Bank can be the best choice, at least given their current offerings and terms.

    Any thoughts would be appreciated, thanks.

    • Harry Sit says

      The savings account at Elfcu pays 1%. Assuming one transfer per year, if you keep $0 in cash it’s $60 fee at Elfcu vs. $66 fee at HSA Bank. If you keep $2,500 in cash, it’s $1 net interest at Elfcu (1% interest minus $24 wire transfer fee) vs. $62 fee at HSA Bank. If you keep $5,000 in cash, it’s $26 net interest at Elfcu vs. $12.50 interest at HSA Bank. Elfcu is better than HSA Bank in all three cases.

  20. Douglas Fisher says

    There are plenty of $0 fee credit union HSAs out there if you are not interested in investing. And if you are interested in investing, there are plenty with lower sweep account minimums (among other fees) than what HSA Bank is charging. http://www.hsasearch.com/hsa-providers/all-hsa-providers/

    ELCU is definitely not the best any more. The only reason to use them now is if you already have an account there. Moving your money will cost you more than opening a new account somewhere else. It appears to me that the best HSA out there now is https://choicefinancialgroup.com/personal-hsa, followed by Saturna. Anyone have experience with Choice Financial? Investment options are available through Devenir (same as HSA Bank) but aren’t listed.

  21. Tom says

    An option I’m looking at is Bank of Cashton.
    They are similar price as Saturna – $25/year annual fee and $14.95/trade (through their investment affiliate Cetera)
    They include 25 checks and a debit card, which I think Saturna doesn’t do.
    BoC has a $25 account closing/outgoing transfer fee, while Saturna’s is $75 for transfers (and maybe 0 for closing?).

    Since I’m looking to buy and just hold for 15 years (and re-invest dividends) I *think* that Bank of Cashton is my best option.
    $39.95 for the first year, and $25/year after that. With only a minimal amount ($50?) that has to stay in the checking account.
    From discussion with the Cetera person on the phone, dividend reinvestment would be free for where it’s dividend reinvestment (and not a separate trade)
    At Saturna that’s a $1 fee according to the Bogleheads thread.

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