Health Savings Account benefits:
-Deposits to account are pre-tax
-Funds can be invested within the account
-Growth is tax deferred
-Medical withdrawals are not taxable
-Funds carry over year to year
-Medical bills can be paid out of pocket, letting receipts accumulate (over several years), and the
claim can be made for tax free withdrawal at a later date, taking advantage of investment returns.
-Funds can accumulate, and at age 65 can be withdrawn for any reason, but non-medical is taxable
Those are the benefits I'm aware of. There may be more. The negatives:
The deposit I made to my new HSA was posted today, so I checked out my investment options. I learned that the funds offered (some are decent index funds) have expense ratios near the 1% range, with some closer to 2%. I don't like that much, since my IRA Vanguard ETFs range from 0.05% to 0.1%.
The investment amount is limited to the balance over the first $1000 dollars, so I wouldn't get potential returns from the full amount.
Another negative is that the HSA investment account gouges a $24 annual fee, regardless of the balance. I think that literally sucks.
I'm more or less just venting here, but what I think I'll do is just contribute the max for me ($4300) and leave it as cash, uninvested, and be satisfied with only the tax savings aspect. Or... contribute and invest the max over the next few years, pay my med bills with cash, and take advantage of potential "free" money from investment growth, submitting my med receipts in the future.
Damn. I'm probably overthinking this. Time for a beer.
Oh yeah, what would you do?
Now I'll get a cold one.