CFPB Reports on Costs and Consumer Experiences Associated with HSA Accounts

In a new report, the CFPB outlined the costs and fees that consumers pay on health savings accounts ("HSA") and evaluated consumer experiences in the HSA market.

In the latest Issue Spotlight, the CFPB reported the number of HSAs surged to 36 million in 2023 and that HSA accounts collectively hold over $116 billion in assets (an increase of more than 500 percent since 2013.) According to the report, the significant growth coincided with the rising prevalence of High Deductible Health Plans ("HDHPs"), as HSAs were established to provide tax benefits to individuals with HDHPs.

The CFPB found:

• Costly and Complex Fee Structures: Among the organizations that offer HSAs ("HSA trustees"), many charge various fees, including monthly maintenance fees, paper statement fees, outbound transfer fees and account closure fees. The CFPB stated that this complex fee structure may obscure the true cost of the product, and the financial impact of these fees directly reduces the funds consumers can spend on healthcare expenses.
• Substantial Switching Costs: The CFPB said that consumers who decide to switch HSAs, may face substantial "exit" fees. These fees, including outbound transfer fees and account closure fees, are costly and are typically unavoidable. The CFPB reported that many individuals encounter prolonged delays or lost funds during transfer attempts.
• Low Interest Yields: The CFPB found that most HSAs consistently offer relatively low interest rates, with annual yields of less than one percent. As a result, consumers could incur significantly more in fees than they earn in interest on their HSA funds.
• Higher Upfront Costs: The CFPB said that HDHPs typically have lower premiums but higher deductibles than other health plans, and many individuals with these plans, especially people with chronic illnesses, experience higher upfront out-of-pocket healthcare costs. The CFPB also stated that consumers often face further expenses from the fees charged by financial institutions managing their HSA.
• Pressure to Acquire: The CFPB said that consumers may face varying degrees of pressure to obtain an HDHP, HSA, or both. These situations may arise when employers exclusively offer HDHPs, tie health benefits to a specific HSA trustee, or automatically enroll eligible employees in HSAs.
• Lack of Competition: The CFPB noted that many HSA trustees’ primary customers are health insurance companies and employers, not individual consumers. The agency said that without the need to market directly to individuals, these trustees may face less competitive pressure to improve their offerings which could potentially result in consumers facing higher fees and earning lower interest compared to alternative options.

In an accompanying statement, CFPB Director Rohit Chopra highlighted the increased involvement by financial institutions in the American health care system. Citing the CFPB analysis, Mr. Chopra said that, although Americans can select their HSA, "the reality is that people do not typically choose these accounts," since "[m]ost HSAs are offered through and sold to employers and insurance companies," making them "captive consumer[s]." He said that as a result, consumers often end up with a financial product that was designed to meet the needs of employers and insurance companies instead of health care users. Mr. Chopra warned that HSA providers are competing on ways for insurance companies and employers to "steer consumers to their products, rather than competing on key terms like higher savings yields and an attractive fee structure."