HSA Provider Does Not Offer Investment Options

[hoosierstache]

My HSA provider does not offer investment options.  When I contacted them to inquire about options, they said to periodically transfer money somewhere else, like Fidelity (their example).  However, they are making the transfer process difficult (no return communication to Fidelity).  That being said, is it still worth it to max the HSA with this current bank for the tax benefits? Or should I build up enough to cover our deductible and then invest elsewhere?  We currently have close to 20k and our family (5 people total) out of pocket maximum is 8k/yr.  I am leaning toward diverting those funds elsewhere. My employer only offers pre-tax HSA contributions to this provider. Any and all input is appreciated!  Please let me know if you need more information. 

[roomtempmayo]

It might be a pain to set up on the front end, but once you get past that hurtle hopefully you can automate the rollover to make it simple.

As of today, my HSA account is up 23% this year.  For your situation, the opportunity cost of foregoing investment of your balance is >$4k already this year.

[secondcor521]

I would lobby my employer to change their HSA custodian to Fidelity if possible.

I would either roll over from your current HSA to Fidelity periodically, or, if you find that process too tedious, I would stop using the employer's HSA and just make contributions directly to a Fidelity HSA.  Direct contributions mean you will not get the benefit of avoiding FICA taxation on those HSA contribution amounts, but that may be a price worth paying for simplicity and peace of mind.  As the previous poster notes, the lack of investment options and time out of the market may actually be more costly than paying FICA on the contributions.  You'll still get the income tax benefit of the HSA contributions by filling out Form 8889 with your tax return.

[Tass]

Contributing directly to a Fidelity HSA, like @secondcor521 suggests, is basically giving yourself extra Roth room, since HSAs can be treated as Roths after a certain age.

I have a non-Fidelity HSA through my employer that charges stupid fees, so I periodically roll over to a Fidelity HSA as you describe. I would keep pushing them on it, especially since they recommended this exact solution.

[hoosierstache]

Thank you all!  I will definitely ask my employer about adding Fidelity as a pre-tax provider.  I am stuck with the current one to a degree because we get a deposit in our HSA at the beginning of the calendar year from my employer, so I want to try to make the rollover method work if possible. Regarding HSA to HSA transfers, do I have to go through the process of "rolling over" periodically and waiting on checks to be sent, etc. or is there a way to contribute from one to the other electronically myself?

[Tass]

I go through the "transfer of assets" process at Fidelity. It's entirely electronic for me, but it does take about 6 weeks.

[njmoney]

I'm in the process of moving some of my HSA to Fidelity right now too. As the last poster said, do the "transfer of assets." It takes probably 5 minutes of electronic documentation. Estimated date was about 5 weeks after I filled out the document. Fidelity is a great choice for housing your HSA because some of the others I checked out still make you print, fill out, mail in documents and who knows how long that can take. Fidelity provides you electronic updates on how the transfer is going and estimated completion dates which is helpful. 

[Tass]

I'm sure this varies based on your provider, but I am always careful never to transfer the full amount out of my non-Fidelity HSA. Doing so once caused them to start automatically closing the account and charge me a bunch of fees, all without asking if I wanted it closed. I got that reversed, but it was annoying.

[DJStrong]

I had the same issue and called Fidelity directly, they handled everything and I got my money rolled into my account without ever talking to to the HSA provider myself. 

[Scandium]

I'm sure this varies based on your provider, but I am always careful never to transfer the full amount out of my non-Fidelity HSA. Doing so once caused them to start automatically closing the account and charge me a bunch of fees, all without asking if I wanted it closed. I got that reversed, but it was annoying.

I've had this happen too.
I agree with everyone else. I had a "bank only" HSA for years. All I did was 1-2 times per year fill out a form and send in, either paper or electronic. If it's a pdf that just meant copy, changing the date/amount from last time.. Takes 10 min tops. Saves you $7750 * (income tax rate + FICA rate) = about $2675 per year?

[secondcor521]

Saves you $7750 * (income tax rate + FICA rate) = about $2675 per year?

No, it saves you $contribution * FICA rate, which still can be significant.  You can get the income tax deduction either way.  See Form 8889 - somewhere on there you can report direct (ie non-employer) contributions to an HSA.

[terran]

The best HSA provider is Fidelity. The second best HSA option is the one that tells you transfer the money to Fidelity.

If the trustee to trustee transfer is too much work you could do an indirect transfer by withdrawing from your workplace HSA in the same way you would to reimburse yourself for medical expenses and then making a rollover contribution to Fidelity (need to fill out a form and mail it in with a check, at least as of the last time I did it). Make sure you only do this once every 12 months (not per calendar year) to make sure it's a qualified rollover.

[hoosierstache]

This has finally been resolved and I wanted to share an update.  After a quick call to both my HSA provider and Fidelity, we got on the same page and the trustee to trustee transfer worked!  Thanks for the help and encouragement!