CFPB Highlights the Hidden Costs of Health Savings Accounts

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today released a report detailing the complex costs and fees that many consumers with health savings accounts are forced to pay. There were approximately 36 million health savings accounts in 2023 – holding more than $116 billion. 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. Today’s report is part of the CFPB’s continuing efforts to reduce the risks and costs brought by financial institutions as they increase their presence in the American healthcare system.

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

A health savings account is a tax-advantaged account that generally comes with a high deductible health plan. Typically, a health savings account is in the form of a deposit account selected by an employer or a health insurance company. An employee makes tax-deductible contributions that can then be used for certain health care expenses. Unspent contributions can earn interest, and roll over each year. The individual and family contribution limits for 2024 are $4,150 and $8,300, respectively.

Health savings accounts today hold more than $116 billion, a 500 percent increase since 2013. Additionally, the number of accounts rose more than three times from 2013 to 2023, 11.8 million to 35 million, respectively. The significant growth in the accounts has coincided with the rising use of high deductible health plans.

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. 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.

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.

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. Specifically, the CFPB’s 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.

The CFPB 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 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.

Read Statement of CFPB Director Rohit Chopra on Medical Financial Products.

Read consumer complaints about health savings accounts.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).