Author Topic: HSA questions  (Read 2933 times)

Pizzabrewer

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HSA questions
« on: January 25, 2017, 04:07:25 PM »
So.  I've (finally) started looking into my DW's HSA account.  She has ~$5100 in her account, accumulated over several years.

The first statement you notice is:  "Money not spent rolls over from year to year and earns you interest."

Yet, one or 2 clicks reveals that NO interest whatsoever has been paid in the last 365 days.  Here's a breakdown of the funds:

Cash Balance
$5,096.75
Investment Balance
$0.00
+
Total HSA Balance
$5,096.75

Yet another example that money managers are MORE THAN HAPPY to hold your money and pay you nothing if you don't actively manage it.  Grrrrr......  Where does the "earns you interest" come into play??

Going forward, it looks like investment through a company called DEVENIR is the main option.  Never heard of it, I'll certainly do some research, but am looking for any comments about this company and its investment options from anyone with knowledge?  thanks for any input.

Grrr..........
« Last Edit: January 25, 2017, 04:09:11 PM by Pizzabrewer »

Dezrah

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Re: HSA questions
« Reply #1 on: January 25, 2017, 04:51:11 PM »
Nothing untoward is happening.

Go to the transactions section of the account.  You'll find your wife's contributions, withdrawals, applicable fees, and interest payments.  Your interest will be very miniscule, maybe a few dollars if you're lucky, but it will be there. 

Interest is not the same as investment.  Your bank wouldn't call the interest on your savings account an "investment balance", so neither does your HSA.

Investing your HSA means it's actually invested in securities like stocks or bonds.  Unless your wife specifically designates fund allocation, they will not invest them for you.

arebelspy

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Re: HSA questions
« Reply #2 on: January 26, 2017, 03:59:27 AM »
Nothing untoward is happening.

Go to the transactions section of the account.  You'll find your wife's contributions, withdrawals, applicable fees, and interest payments.  Your interest will be very miniscule, maybe a few dollars if you're lucky, but it will be there. 

Interest is not the same as investment.  Your bank wouldn't call the interest on your savings account an "investment balance", so neither does your HSA.

Investing your HSA means it's actually invested in securities like stocks or bonds.  Unless your wife specifically designates fund allocation, they will not invest them for you.

Nah, they very well could have it in "cash" inside the HSA, earning nothing.  I think the statement is basically saying if it earns interest, it stays in there.

You need to invest that in something!

Like if you put money into a Roth or 401k, that doesn't mean it's invested. It could be cash in there.

Get it into some funds, or at least a money market account or the equivalent.
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MoonLiteNite

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Re: HSA questions
« Reply #3 on: January 26, 2017, 06:38:52 AM »
I just started up my HSA a few months ago. They are trickl like that.
When you open the "investment account" and move the funds over, by default it is just in another account that does nothing.
You need to pick what the funds are invested into, right now it is just cash, sitting in your investment account.



Dezrah

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Re: HSA questions
« Reply #4 on: January 26, 2017, 07:27:24 AM »
Nothing untoward is happening.

Go to the transactions section of the account.  You'll find your wife's contributions, withdrawals, applicable fees, and interest payments.  Your interest will be very miniscule, maybe a few dollars if you're lucky, but it will be there. 

Interest is not the same as investment.  Your bank wouldn't call the interest on your savings account an "investment balance", so neither does your HSA.

Investing your HSA means it's actually invested in securities like stocks or bonds.  Unless your wife specifically designates fund allocation, they will not invest them for you.

Nah, they very well could have it in "cash" inside the HSA, earning nothing.  I think the statement is basically saying if it earns interest, it stays in there.

You need to invest that in something!

Like if you put money into a Roth or 401k, that doesn't mean it's invested. It could be cash in there.

Get it into some funds, or at least a money market account or the equivalent.

That money is absolutely in cash, no doubt. 

I just disagree that the bank's statement "Money not spent rolls over from year to year and earns you interest," is meant to trick you into letting them hold that money for you instead of investing it.  I see it as an attempt to inform the account holder that they are allowed to rollover the balance, unlike the FSA.  Not everyone knows that if they're new to HSAs.

I assumed that the OP was confused about why there was $0 under investments if they were providing interest, but I could be wrong about that.

I agree that the cash should be invested provided you can absorb your deductible and/or out-of-pocket-max with other funds.

arebelspy

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Re: HSA questions
« Reply #5 on: January 26, 2017, 07:39:35 AM »
Nothing untoward is happening.

Go to the transactions section of the account.  You'll find your wife's contributions, withdrawals, applicable fees, and interest payments.  Your interest will be very miniscule, maybe a few dollars if you're lucky, but it will be there. 

Interest is not the same as investment.  Your bank wouldn't call the interest on your savings account an "investment balance", so neither does your HSA.

Investing your HSA means it's actually invested in securities like stocks or bonds.  Unless your wife specifically designates fund allocation, they will not invest them for you.

Nah, they very well could have it in "cash" inside the HSA, earning nothing.  I think the statement is basically saying if it earns interest, it stays in there.

You need to invest that in something!

Like if you put money into a Roth or 401k, that doesn't mean it's invested. It could be cash in there.

Get it into some funds, or at least a money market account or the equivalent.

That money is absolutely in cash, no doubt. 

Okay... so why did you say this:
Quote
Go to the transactions section of the account.  You'll find your wife's contributions, withdrawals, applicable fees, and interest payments.  Your interest will be very miniscule, maybe a few dollars if you're lucky, but it will be there. 

You think the cash is earning interest?

Quote
I just disagree that the bank's statement "Money not spent rolls over from year to year and earns you interest," is meant to trick you into letting them hold that money for you instead of investing it.  I see it as an attempt to inform the account holder that they are allowed to rollover the balance, unlike the FSA.  Not everyone knows that if they're new to HSAs.

Definitely.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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Dezrah

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Re: HSA questions
« Reply #6 on: January 26, 2017, 08:03:21 AM »

*snip

You think the cash is earning interest?


Mine does.  I keep the minimum balance required to avoid maintenance fees and earn 0.20% interest.  Like I said, it's not that much, but it's there.  Even Vanguard will pay checking account level interest if you are slow to allocate your funds.  Maybe there are still some custodian holdouts that don't provide interest on the cash balance but I would assume that bank's statement "... and earns you interest" implies there is interest.



Not all HSA providers offer a true investment option; the one I use does not. Not the end of the world because we are spending the money pretty rapidly... and we just consider the HSA cash as a fractional, conservative portion of a large aggressive investment portfolio.  Think of this cash like a replacement for some bonds. 


Once your employer contributes the HSA funds to your account, you're free to move them to a different custodian if you choose.  If you're comfortable with it, you can transfer your funds to an investing house, including Vanguard.  Just watch out for low balance fees at your current bank.  https://personal.vanguard.com/us/whatweoffer/overview/healthsavings

NeonPegasus

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Re: HSA questions
« Reply #7 on: January 26, 2017, 08:24:08 AM »
An HSA is like any other investment account - it is simply a basket and it is up to you to figure out what to put in there. You've got money in there but as others have pointed out, you have to invest it or it'll sit in cash.

If you are actively using the HSA to reimburse for medical expenses, you should leave some portion in cash. That way you don't have to sell every time you want to reimburse yourself. While that's not the end of the world and there would be no tax consequences for having it all invested and selling investments every time you want to withdraw, I find it to be an annoyance to deal with the time it takes to have the funds settle and then to transfer to my bank.

Remember, if you do not need to reimburse yourself for medical expenses, you are under no obligation to do so. Keep track of your medical expenses and keep your receipts. You can reimburse yourself for your medical expenses at any time, even if it's in 20 years. And in the meantime, your money can go in pre-tax and grow tax-free. And then when you want to withdraw, you can do so tax-free up to the amount you've spent on medical care.

To put some numbers to it, let's say you contribute $3400/yr ($283.33/mo) for the next 20 years. That's $68k. Let's say that in that 20 year period, you also had medical expenses of $100k but you never reimbursed yourself from your HSA. Over the 20 year period, and assuming a 7% return, your contributions will grow to approximately $143k. At the end of 20 years, you can withdraw $100k to reimburse yourself for medical expenses and every penny would be tax free. And you'd still have $43k left.

Pizzabrewer

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Re: HSA questions
« Reply #8 on: January 26, 2017, 10:32:45 AM »
Thanks for all the responses.

I will admit to being a HSA newbie.  Until recently all healthcare related activities were through my wife's work.  My new employer marks the first time I've worked somewhere that even offers healthcare, which I switched to during the last enrollment period.  Wow, what a savings that was!  (sidenote:  new employer offers 2 healthcare options, neither of which seem to be HDHP so no HSA for me).  Since I rarely/never go to the doctor I didn't pay any attention to the details of her healthcare benefits.  Blissful ignorance I suppose.

Anyway back to her HSA.  Yes, I now realize that without having set up alternate investments it will be held in cash.  The concept of investing an HSA is brand-new to us.  I also realize that any interest would be a pittance, but she's not even getting that.  She just got the log-in info to the website (another big peeve, none of the HSA info - other than the amounts deducted from her pay - appears on the main portal website that shows all her other payroll and benefit info, so she had to contact HR to find out how to access her HSA info) and it was a (pleasant) surprise to both of us to see the size of the account.  But when I look at the transaction history, and set the maximum timeframe (365 days) and select the transaction type (interest paid), the website returns "No transactions found".

The other question I had for you folks is the investment options available.  Does anyone have experience with the investment company DEVENIR?  A quick look at their offerings shows a range of stock and bond funds, all with about 1% annual fees.  Plus there is a $24/year account maintenance charge.  Seems kind of steep.

Sorry for being so grumpy about all this but it seems deliberately obtuse.  The HSA information is segregated from all the other pay/benefits info on a separate website, the promised "interest" is not being paid (I imagine we need to specify a money market account to get it?), and the investment options look sub-optimal.

But not to fear, I am getting up to speed with this stuff as fast as I can.  DW is a bit leery of me making waves with her HR department so I do have to use some caution.

« Last Edit: January 26, 2017, 10:47:53 AM by Pizzabrewer »

spicykissa

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Re: HSA questions
« Reply #9 on: January 26, 2017, 11:02:36 AM »
It is odd if you truly have no interest transactions on the $5000 cash. You might be able to use https://www.hsasearch.com/compare/ (from Devenir, actually) to see what the interest rate on your HSA is. Mine is a whopping 0.10%!

I have no experience with investments yet.

yachi

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Re: HSA questions
« Reply #10 on: January 26, 2017, 11:08:44 AM »

The HSA information is segregated from all the other pay/benefits info on a separate website



The HSA account belongs to your wife, not to her company, so the HR department won't know things like your balance, what it's invested in, or whether withdrawals are being made from it.

But when I look at the transaction history, and set the maximum timeframe (365 days) and select the transaction type (interest paid), the website returns "No transactions found".

Maybe they mischaracterized it in their program, or they call it 'dividends'.  My HSA has a clunky website.

Pizzabrewer

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Re: HSA questions
« Reply #11 on: January 26, 2017, 11:15:44 AM »

The HSA account belongs to your wife, not to her company, so the HR department won't know things like your balance, what it's invested in, or whether withdrawals are being made from it.


All her 401k information is there (balances, investment mix, etc.), wouldn't the same theory apply to the HSA??

SweetTPi

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Re: HSA questions
« Reply #12 on: January 26, 2017, 11:29:46 AM »
Going forward, it looks like investment through a company called DEVENIR is the main option.  Never heard of it, I'll certainly do some research, but am looking for any comments about this company and its investment options from anyone with knowledge? 

One of the first things I would suggest when looking at investments is to look around the account docs and see if there are minimum balances required to avoid various fees.  Some places require a cash balance for no monthly fees on investment accounts, etc.  That being said, those fees are sometimes waived if part of an employer's plan, but it's something to remember in case situations change.

Don't know what custodian you have, but Devenir is one of the options on my HSA through Cigna (HSA Bank).  However, i was also able to open a self-directed investment account where I can access no-fee Vanguard ETFs.  I would suggest digging deeper into the site to see if that's a possibility.  The Devenir mutual funds available seemed to have fairly high fees- a few at ~0.40 but most at the 1+ range.

Mgmny

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Re: HSA questions
« Reply #13 on: January 26, 2017, 01:24:38 PM »
As others have mentioned, you should let us know who your HSA is administered by, and we might be able to guide you to exactly where you need to go on the website.

wtrfre

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Re: HSA questions
« Reply #14 on: January 26, 2017, 08:45:18 PM »

The HSA account belongs to your wife, not to her company, so the HR department won't know things like your balance, what it's invested in, or whether withdrawals are being made from it.


All her 401k information is there (balances, investment mix, etc.), wouldn't the same theory apply to the HSA??

No it does not.  The 401k is managed by the employer.  HSA's are not the same.  The only involvement the employer has is sending contributions. They do not have access to the accounts other than that. The account belongs entirely to the employee. The employee can also make additional contributions themselves, up to the annual max.

aspiringnomad

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Re: HSA questions
« Reply #15 on: January 26, 2017, 09:54:16 PM »
Thanks for all the responses.

The other question I had for you folks is the investment options available.  Does anyone have experience with the investment company DEVENIR?  A quick look at their offerings shows a range of stock and bond funds, all with about 1% annual fees.  Plus there is a $24/year account maintenance charge.  Seems kind of steep.


Unfortunately, I think $2/month maintenance fees are pretty common in the HSA realm (at least that's been the case for me across at least 2 administrators). Mine also has mostly expensive funds, but luckily offers a couple Vanguard funds which I use exclusively.