WASHINGTON–Many of the benefits of health savings accounts are offset by complex costs and fees, according to a new report from the CFPB.
“There were approximately 36 million health savings accounts in 2023 – holding more than $116 billion,” the Bureau said in releasing its report. “These accounts provide tax benefits to help offset the costs of high deductible health plans. However, these benefits are being offset by charges like monthly maintenance fees, paper statement fees, outbound transfer fees, and account closure fees.”
The CFPB said the report is part of its continuing efforts to reduce the risks and costs brought by financial institutions as they increase their presence in the American healthcare system.
500% Increase
The CFPB said the funds in HSAs represent a 500% increase since 2013. “The significant growth in the accounts has coincided with the rising use of high deductible health plans,” the CFPB added.
“Consumers have reported a range of concerns with health savings accounts. For some consumers, these accounts come with high costs. Employers often decide on the financial service provider that will manage employees’ health savings accounts,” according to the CFPB. “The factors that motivate employers can differ from those of employees. Providers design health savings accounts to compete for employers. The result is that health savings accounts can often present challenges and costs for consumers, such as surprise fees, lack of fund portability, and low-yield interest rates.”
‘Eroding’ Ability
The Bureau noted that when a consumer ends up with a health savings account with high fees and inferior terms, it directly reduces the funds they can allocate to their health care needs.
“High deductible health plans have higher deductibles than other health plans, so many individuals with these plans, such as people with chronic illnesses, experience higher upfront out-of-pocket health care costs,” the CFPB said. “High costs and fees can quickly erode a consumer’s ability to pay medical bills. In the case of health savings accounts such fees and costs can also erode tax savings.”
The Specifics
Specifically, the CFPB said the report found:
- Costly, complex, and captive junk fee structures. “Many providers that offer health savings accounts charge various fees, including monthly maintenance fees and paper statement fees. Expensive exit fees, like outbound transfer fees and account closure fees, can hold consumers, who may not have selected their accounts, captive to their current providers. The fees are costly and typically unavoidable.”
- Low interest yields. “Despite the recent increase in interest rates across the United States most providers offer consistently low interest rates. Typically, these rates are less than 1%, and, sometimes, even 0%. As a result, consumers could incur significantly more in fees than they earn in interest.”
Reducing Consequences
The CFPB said it has been working to reduce the financial consequences of medical debts as well as to ensure consumers are treated fairly by providers participating in the health care sphere. In September 2023, the CFPB noted it initiated a rulemaking to remove medical bills from many credit reports. In July 2023, the CFPB, along with other federal agencies, launched an inquiry into costly credit cards and loans pushed on patients to pay for health care costs.
Read the CFPB’s report, Health Savings Account Issue Spotlight.
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