There's a ton here, but I'll take a crack at it. Standard disclaimer... I'm some anon jerkoff from the internet, not a financial professional. If anything I say turns out to be inaccurate and costs you money, that's on you...
I'm assuming I cannot use it to make my monthly premium payment but can use it for pretty much everything else related to medical, vision, and dental.
Correct.
I read I can also use this money for investing and was curious how this worked.
You stuff money into the HSA and don't spend it. Cover your routine medical bills with your normal cash flow. At some advanced age (55? Not really sure and can't be bothered to look it up at the moment) you can withdraw from the HSA for non-medical reasons without getting hit with a penalty. However, these withdrawals would be subject to income taxes, just as they would if they were coming from a traditional IRA or a 401k.
But here's the real trick... HSA withdrawals are completely tax free at any time for medical expenses, and there's nothing saying that the expense needs to be incurred in the same year as the withdrawal. So save all of the receipts from those medical bills you're cash-flowing while you were contributing to the HSA and a couple decades down the line you will be sitting on a tidy sum that can be pulled out of the HSA for any reason, completely tax free. This is obviously a handy tool to have in the toolbox if you're FIRE years before you can pull 401k or tIRA money out without a penalty.
I'd imagine the types of investments I could choose from would vary from bank to bank. This makes me think though if my money is tied up in an index fund or some other investment how can I use it for medical expenses. Do I need a certain ratio of available cash to what's being invested?
Yes. Some plans are certainly better than others when it comes to fund selection, fees, etc. Every plan I've heard of requires some minimum sum in a cash account earning essentially zero interest. Mine happens to be $2,500. This ends up not being too complicated. Every payroll deduction goes into the cash account, and in my case I have a setting available to automatically invest anything in excess of $2,500 so I never really have to think about it other than taking a peek once a quarter or so and patting myself on the back as I watch the balance grow.
It's just as easy in reverse. When you make a withdrawl, it will come out of the cash account first, then if necessary investments will be sold to fund the rest of the withdrawl and/or top up the cash account to the required minimum. This is all a mouse click or two in this day and age at just about any custodian.
How much is the company I work for involved? Is it more in my hands just to set everything up with a bank and then give that information to my employer or does my employer have to offer some type of HSA option? Any information would be appreciated. Thanks in advance!
If you want to use automated payroll deductions, then you are limited to your employer's plan and the investment options therein, just like a 401k. If your employer's plan well and truly sucks, then it may be worthwhile have them handle the payroll deductions and periodically roll the balance out to a plan of your choosing. I think you can do one rollover a year. The employer plan would have to suck super duper hard and/or you would need an enormous balance to make this worthwhile. I'm paying like 0.9% to hold a domestic stock index fund in my HSA, which is obviously awful, but when I do the math and look at the actual savings I'd get by rolling the money out it's simply not worth my time until I get the balance up into the $50k plus range, and at a yearly max contribution of $6,750 it takes a while to build up that kind of balance.