HSAs and Open/less restricted Fund Platform

[Guest Marauder]

I am a Benefits Manager at a large employer. My background is nearly 100% retirement with a heavy slant toward Defined Contribution Plans.

I am exploring the HSA portion of our 1/1/2007 H&W Plans Design. The strawman I'm working today includes us supporting pre-tax payroll deductions with some extra "match" or employer contributions on a monthly basis. Given this we'll be selecting the pre-tax provider for the Savings portion of the design. I find this to be an overwhelming task given the accounts are individual accounts. If we ever want to change providers we will leave our employees in the lurch. This means getting this right is so very important. We need someone with flexibility and strength in order to meet our needs - now and in the future. I don't believe our current health providers nor their "partner" banks get it. Or, maybe I don't get it.

I believe the majority of utilization of our HSA will be highly paid, healthy individuals. This will result in money flowing in but rarely flowing out. I've seen studies that state we should expect 20% to use this like a Flex account but the rest will not tap it for years to come. Given this theory I believe we must deliver a product which allows much more investment flexibility than what I've seen thus far.

I find the delivery and design of the current HSA environment troubling to say the least.

1. Banks - The heavy fee environment and lack of vision many players have displayed concern me.

2. TPA - would love to find a TPA with a shell bank to run cash in/out of same or similiar instituational funds (or other low cost Mutual Funds) our K Plan offers. I would really like to find a mutual fund window option given the demographic of this goup.

3. I realize this is a start up plan with no assets so I will not be able to delivery the same level of low cost fund options I can in our jumbo K plan today, but I'd like to think we can keep the total fees south of 100 basis pts for our employees in year one.

Any tips, hints or otherwise?

[jmor99]

Not sure I understand the terminology. Could you further clarify "we'll be selecting the pre-tax provider for the savings portion of the design" ?Do you mean you'll be looking for a TPA to provide 125 services for the plan and say offer an HSA partner? Have you checked First Horizon and Exante (via United Health Care or UHC). Exante's offering seems to me to be very well thought out, not only as to funds offered but as to data entry approaches.