Author Topic: Investing in a Health Savings Account  (Read 5327 times)

AlwaysLearningToSave

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Investing in a Health Savings Account
« on: September 23, 2015, 08:45:47 AM »
I hope to transition our family to use of a HDHP with a health savings account next year and I am mulling over options.  As of right now, neither of our employers offers a HSA so we would be setting one up on our own.  I am doing some lobbying to try to get my employer to sponsor an HSA because of the ability to avoid payroll taxes on contributions to an employer-sponsored HSA that is not possible with an individual HSA but I'm doubtful this will happen.  Thus, as of now I am looking at using Health Savings Administrators, which allows first-dollar investment of HSA funds and offers Vanguard funds, many of which are available at the low-cost Admiral shares option.  But that could change if my employer decides to offer an HSA or if my research reveals a better deal in terms of fees and investment options. 

I have several goals for my health savings account:  (1) to recapture some of the money that has been flowing out my pocket and to my insurance company as savings rather than a lost expense; (2) for the funds to be available as a medical emergency fund; (3) to use the HSA as a portion of my tax-advantaged retirement savings; and (4) to the extent we cannot simply cash-flow routine medical expenses with after-tax money, a way to increase our buying power by paying with pre-tax money rather than post-tax money. 

We are young and fairly healthy, so I do not anticipate big medical expenses in the first few years of our transition to HDHP and HSA.  But you never know what life will throw at you.  Of course my biggest fear is incurring large medical bills in the vulnerable initial year or two, before we are able to build a substantial medical emergency fund in our HSA.  I'm willing to take this risk, though, because I am frustrated by the amount of money we are spending on health insurance each month and believe that we can come out ahead in the long run if our good health stays with us (knock on wood). 

My overall broad question is: how should I philosophically approach investing in a Health Savings Account? 

My more specific questions are as follows:

  • During the vulnerable first year(s) of our use of the HDHP/HSA, should I invest at all or keep the $$$ in cash equivalents?
  • If I choose to keep the HSA moneys in cash equivalents for a period of time, at what point should I transition to investing our HSA contributions, assuming a $5,000 deductible?
  • Assuming I decide to invest the first dollar from day one, what asset allocation should I choose in the HSA to balance long-term growth potential with the potential need to use the HSA money in the short term for large medical expenses?
  • Assuming I invest the first dollar from day one and choose a relatively conservative asset allocation in the HSA, to what extent should I change the asset allocations in my other retirement accounts to maintain an appropriately aggressive overall investment portfolio (we are young and should be aggressive)?
  • What else am I not thinking about and should consider?

BarkyardBQ

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Re: Investing in a Health Savings Account
« Reply #1 on: September 23, 2015, 09:37:00 AM »
I hope to transition our family to use of a HDHP with a health savings account next year and I am mulling over options.  As of right now, neither of our employers offers a HSA so we would be setting one up on our own.  I am doing some lobbying to try to get my employer to sponsor an HSA because of the ability to avoid payroll taxes on contributions to an employer-sponsored HSA that is not possible with an individual HSA but I'm doubtful this will happen.  Thus, as of now I am looking at using Health Savings Administrators, which allows first-dollar investment of HSA funds and offers Vanguard funds, many of which are available at the low-cost Admiral shares option.  But that could change if my employer decides to offer an HSA or if my research reveals a better deal in terms of fees and investment options. 

I have several goals for my health savings account:  (1) to recapture some of the money that has been flowing out my pocket and to my insurance company as savings rather than a lost expense; (2) for the funds to be available as a medical emergency fund; (3) to use the HSA as a portion of my tax-advantaged retirement savings; and (4) to the extent we cannot simply cash-flow routine medical expenses with after-tax money, a way to increase our buying power by paying with pre-tax money rather than post-tax money. 

We are young and fairly healthy, so I do not anticipate big medical expenses in the first few years of our transition to HDHP and HSA.  But you never know what life will throw at you.  Of course my biggest fear is incurring large medical bills in the vulnerable initial year or two, before we are able to build a substantial medical emergency fund in our HSA.  I'm willing to take this risk, though, because I am frustrated by the amount of money we are spending on health insurance each month and believe that we can come out ahead in the long run if our good health stays with us (knock on wood). 

My overall broad question is: how should I philosophically approach investing in a Health Savings Account? 

My more specific questions are as follows:

  • During the vulnerable first year(s) of our use of the HDHP/HSA, should I invest at all or keep the $$$ in cash equivalents?
  • If I choose to keep the HSA moneys in cash equivalents for a period of time, at what point should I transition to investing our HSA contributions, assuming a $5,000 deductible?
  • Assuming I decide to invest the first dollar from day one, what asset allocation should I choose in the HSA to balance long-term growth potential with the potential need to use the HSA money in the short term for large medical expenses?
  • Assuming I invest the first dollar from day one and choose a relatively conservative asset allocation in the HSA, to what extent should I change the asset allocations in my other retirement accounts to maintain an appropriately aggressive overall investment portfolio (we are young and should be aggressive)?
  • What else am I not thinking about and should consider?

1) If you have the extra cash flow, keep a deductible equivalent in cash, and invest the first dollar you can in the HSA. Keeping your HSA invested and never using it until you're older and using current cash for health expenses will really help it grow for future use, old age, and serious medical treatments.
2) see #1
3) 1) Try to match your current AA with the available funds; 2) try to pick the lowest cost fund that matches your AA; We duplicate our allocation with vanguard investor shares because we don't ever plan to touch it, so it will probably always match our overall AA for life. 60% VFINX 8% VIMSX 8% NAESX 24% VGTSX. We can only invest the 2001-th dollar, which sucks, but all new contributions get invested.
4) Again, we use our HSA for way-down-the-road expenses or reimbursement; but use the tax benefit now and keeping funds available for later. Note, you can keep your receipts for expenses you pay out of pocket and reimburse yourself in the future, inflation adjusted.
5) Fees, provider, health plan, and whether the insurance plan you get gives you the HSA provider you want to go with. I helped my parents get an HSA recently when my dad retired, I gave them the choice of Optimum or HSA Bank, Health Savings Administrators, they chose the later for Vanguard options.

My $.02

Read:
http://www.madfientist.com/hsa/
http://www.madfientist.com/ultimate-retirement-account/
http://www.madfientist.com/retire-even-earlier/

seattlecyclone

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Re: Investing in a Health Savings Account
« Reply #2 on: September 23, 2015, 11:01:09 AM »
There are two basic strategies to use with the HSA:

1) If you can afford to max out all of your tax-advantaged savings options and also do a bit of taxable investing beyond that, invest the HSA funds. Don't withdraw anything from there until you retire. Pay your medical expenses from post-tax funds and save the receipts. After you retire, you can withdraw tax-free funds from your HSA up to your total medical spending since you opened the account.

2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash. Pay any medical bills out of the HSA. If your HSA grows larger than you think you'll need for medical treatment in a year, invest the remainder.

As for asset allocation, consider the HSA part of your overall portfolio. Pick a low-fee fund that fills some niche in your overall asset allocation. Which one doesn't really matter all that much, but you could use https://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement as a guide if you feel like it.

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #3 on: September 23, 2015, 11:52:20 AM »
Thanks for the replies.  A few more questions:

1) If you have the extra cash flow, keep a deductible equivalent in cash, and invest the first dollar you can in the HSA.

By that do you mean, keep a deductible equivalent in cash outside the HSA?  Or inside?  I have a relatively small emergency fund in cash that would cover the deductible.  I would have an uncomfortably small emergency fund if I had to pay the deductible and would need to shift gears to rebuilding the emergency fund.  I lean toward investing the first dollar in the HSA because of this after-tax cash emergency fund.

Note, you can keep your receipts for expenses you pay out of pocket and reimburse yourself in the future, inflation adjusted.

Pay your medical expenses from post-tax funds and save the receipts. After you retire, you can withdraw tax-free funds from your HSA up to your total medical spending since you opened the account.

I imagine this is true because you both said it, but I would like to see a citation so I can read for myself.  IRS guidance documents, regulations, or the revenue code would be appreciated.  This strikes me as stupid policy, but I will happily take advantage of it. 

2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash. Pay any medical bills out of the HSA. If your HSA grows larger than you think you'll need for medical treatment in a year, invest the remainder.

Same question:  are you advocating keeping cash in the HSA or in a post-tax account? 

Why do you use maximization of all retirement accounts as the determining factor?  This strikes me as overly conservative.

As more background, I will likely not be able to max out tax advantaged retirement accounts due to repayment of student loans and some unexpectedly high expenses that my one year old daughter requires.  I will contribute 4% of my salary to take advantage of employer's 401(k) match.  In the next two years we will place a high priority on paying down about $24,000 in student loan debt, currently at 6.8% but we may refinance.  Maxing the HSA would be my next priority, and I may prioritize maxing the HSA above paying down the student loan debt, especially in the vulnerable first year and especially if we refinance to a lower rate.  Only after killing student loan debt would I turn to IRA / 401(k).  This would be consistent with the general consensus expressed in the Case Study spreadsheet regarding priority of savings vehicles:

Quote
WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
. . .

My shorter-term goal would be to get to the point of having at least a couple years' worth of deductibles invested in the HSA.  This would make up the conservative portion of my retirement portfolio.  I would not touch it unless there were big expenses we could not cash flow with after-tax dollars.  But there is a chance it will need to be the medical emergency fund.



« Last Edit: September 23, 2015, 11:55:48 AM by AlwaysLearningToSave »

celticmyst08

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Re: Investing in a Health Savings Account
« Reply #4 on: September 23, 2015, 12:05:20 PM »
Note, you can keep your receipts for expenses you pay out of pocket and reimburse yourself in the future, inflation adjusted.

Pay your medical expenses from post-tax funds and save the receipts. After you retire, you can withdraw tax-free funds from your HSA up to your total medical spending since you opened the account.

I imagine this is true because you both said it, but I would like to see a citation so I can read for myself.  IRS guidance documents, regulations, or the revenue code would be appreciated.  This strikes me as stupid policy, but I will happily take advantage of it. 

Here you go: http://www.irs.gov/irb/2004-33_IRB/ar08.html#d0e1935

The relevant part:
Quote
An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur.

BarkyardBQ

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Re: Investing in a Health Savings Account
« Reply #5 on: September 23, 2015, 12:05:38 PM »
Our HSA requires a cash component, every dollar over 2000 can be invested. If we used the cash part of the HSA balance to pay the deductible, an equal amount of the equity balance would be sold to refill the cash bucket. In the short term this is terrible, I don't want to make a contribution for this year, and need it this year or next and have it sell at a loss. I'd rather use current cashflow/earned income to pay the deductible, and reimburse ourselves in the future after there is growth.

1) Yes, we have a 2k deductible, if we had a medical expense we would pay up to the deductible from our cash reserve fund (basically a 1-2 month float) in a savings account to cover it. Then we would use the next couple months after tax savings to refill the emergency fund before continuing taxable investments. This prevents selling in the short term.

Quote
2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash

Because you don't want to sell in a down market/short term. If you're investing conservatively in your HSA, you should hope it will keep up with inflation if you don't end up using it.

Much of this comes down to handling expenses with current cash flow, and not relying on the HSA or other retirement savings until FIRE. By using the same strategy with your HSA as your other investments, you will win the long game. You don't invest in your retirement accounts with the intention of using those funds to fix your car in the short term, you plan ahead, have an emergency fund if it feels right, or stop contributions to cover the expense and then continue them as soon as possible.

BarkyardBQ

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Re: Investing in a Health Savings Account
« Reply #6 on: September 23, 2015, 12:14:34 PM »
One more thing to add, I don't think HSA's save you money on health care expenses. The HDHP is exactly opposite of a low premium/low copay plan (usually subsidized by an employer). An HSA helps you save (on taxes and reimbursements) if you're currently healthy and have low medical expenses.

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #7 on: September 23, 2015, 12:17:02 PM »
Quote
2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash

Because you don't want to sell in a down market/short term. If you're investing conservatively in your HSA, you should hope it will keep up with inflation if you don't end up using it.

Much of this comes down to handling expenses with current cash flow, and not relying on the HSA or other retirement savings until FIRE. By using the same strategy with your HSA as your other investments, you will win the long game. You don't invest in your retirement accounts with the intention of using those funds to fix your car in the short term, you plan ahead, have an emergency fund if it feels right, or stop contributions to cover the expense and then continue them as soon as possible.

I think I agree with this.  But it seems contradictory to this:

2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash. Pay any medical bills out of the HSA. If your HSA grows larger than you think you'll need for medical treatment in a year, invest the remainder.

It seems Seattlecyclone is advocating a different strategy.  Or maybe I am being dense.  If a different strategy, why?  If I'm being dense, how so?

BarkyardBQ

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Re: Investing in a Health Savings Account
« Reply #8 on: September 23, 2015, 12:20:58 PM »
If you are not able to max out all retirement accounts, an HSA, and have after tax savings... the HSA now (and using it for current medical) will still save you in paying TAXES on that income this year. Therefore it is not the best (long term, don't touch) strategy, but it is better than taking that deductible home (not deferring income) and paying taxes on it this year... and keep the HSA in bonds or cash/money market.

If you make your contributions and you keep the deductible in cash/bonds in the HSA and you don't use it this year and you have a solid balance when making contributions next year... keep the cash bonds for the deductible, and invest your new contributions in something within your AA.
« Last Edit: September 23, 2015, 12:24:23 PM by BackyarBQ »

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #9 on: September 23, 2015, 12:24:21 PM »
One more thing to add, I don't think HSA's save you money on health care expenses. The HDHP is exactly opposite of a low premium/low copay plan (usually subsidized by an employer). An HSA helps you save (on taxes and reimbursements) if you're currently healthy and have low medical expenses.

I agree, but with one caveat:  Paying medical expenses with money filtered through an HSA can increase the buying power of your money for medical expenses.  Obviously it is better to max the HSA and pay for medical expenses with after-tax cash, but assuming you cannot do both max the HSA and pay the expense with after-tax money, you might as well filter the money through the HSA to take advantage of the tax savings.  You will come out ahead as compared to paying the expense with after-tax cash and not maxing the HSA. 

BarkyardBQ

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Re: Investing in a Health Savings Account
« Reply #10 on: September 23, 2015, 12:26:15 PM »
One more thing to add, I don't think HSA's save you money on health care expenses. The HDHP is exactly opposite of a low premium/low copay plan (usually subsidized by an employer). An HSA helps you save (on taxes and reimbursements) if you're currently healthy and have low medical expenses.

I agree, but with one caveat:  Paying medical expenses with money filtered through an HSA can increase the buying power of your money for medical expenses.  Obviously it is better to max the HSA and pay for medical expenses with after-tax cash, but assuming you cannot do both max the HSA and pay the expense with after-tax money, you might as well filter the money through the HSA to take advantage of the tax savings.  You will come out ahead as compared to paying the expense with after-tax cash and not maxing the HSA.

True, revisit this thinking when your debts are paid and your maxing your 401k, IRA and HSA... it immediately becomes better to use your monthly take home cash to cover medical expenses.

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #11 on: September 23, 2015, 12:29:13 PM »
If you are not able to max out all retirement accounts, an HSA, and have after tax savings... the HSA now (and using it for current medical) will still save you in paying TAXES on that income this year. Therefore it is not the best (long term, don't touch) strategy, but it is better than taking that deductible home (not deferring income) and paying taxes on it this year... and keep the HSA in bonds or cash/money market.

If you make your contributions and you keep the deductible in cash/bonds in the HSA and you don't use it this year and you have a solid balance when making contributions next year... keep the cash bonds for the deductible, and invest your new contributions in something within your AA.

Bingo, this how I intend to approach it.  My goal of course is to not touch it, but I do not have the cash flow to be certain I will not need to touch it. 

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #12 on: September 23, 2015, 12:34:43 PM »
One more thing to add, I don't think HSA's save you money on health care expenses. The HDHP is exactly opposite of a low premium/low copay plan (usually subsidized by an employer). An HSA helps you save (on taxes and reimbursements) if you're currently healthy and have low medical expenses.

I agree, but with one caveat:  Paying medical expenses with money filtered through an HSA can increase the buying power of your money for medical expenses.  Obviously it is better to max the HSA and pay for medical expenses with after-tax cash, but assuming you cannot do both max the HSA and pay the expense with after-tax money, you might as well filter the money through the HSA to take advantage of the tax savings.  You will come out ahead as compared to paying the expense with after-tax cash and not maxing the HSA.

True, revisit this thinking when your debts are paid and your maxing your 401k, IRA and HSA... it immediately becomes better to use your monthly take home cash to cover medical expenses.

I do see the difference, and I think I understand what Seattlecyclone was trying to tell me regarding a different HSA strategy depending upon whether or not all of your tax-advantaged accounts are maximized.

seattlecyclone

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Re: Investing in a Health Savings Account
« Reply #13 on: September 23, 2015, 12:46:07 PM »
2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash. Pay any medical bills out of the HSA. If your HSA grows larger than you think you'll need for medical treatment in a year, invest the remainder.

Same question:  are you advocating keeping cash in the HSA or in a post-tax account? 

Why do you use maximization of all retirement accounts as the determining factor?  This strikes me as overly conservative.

Keep cash in the HSA, withdrawing as necessary to pay medical bills. Most people don't think it's wise to keep money in the stock market if you're likely to need to spend it this year. Cash or short-term bonds are a safer investment for this time horizon.

Maximization of retirement accounts as a factor isn't a matter of being "conservative" or not. It determines how you will be using the HSA. If you max out your retirement accounts, you can treat the HSA as just another retirement account: invest the whole sum for the long term and don't plan to touch it until you retire. In this scenario you have after-tax income to do something with anyway, so you should prefer to use it for medical expenses rather than investing in a taxable account and raiding your HSA to pay the medical bills.

If you don't max out your retirement accounts, the HSA is not a retirement account, at least not at first. It's a short-term vehicle that lets you avoid income tax on your medical bills. This tax savings will allow you to put more money toward debt repayment or your retirement savings. Until you've built up a balance large enough for at least a year's worth of medical expenses, you're just using it as temporary savings and have no reason to put the money in long-term investments.

Quote
As more background, I will likely not be able to max out tax advantaged retirement accounts due to repayment of student loans and some unexpectedly high expenses that my one year old daughter requires.  I will contribute 4% of my salary to take advantage of employer's 401(k) match.  In the next two years we will place a high priority on paying down about $24,000 in student loan debt, currently at 6.8% but we may refinance.  Maxing the HSA would be my next priority, and I may prioritize maxing the HSA above paying down the student loan debt, especially in the vulnerable first year and especially if we refinance to a lower rate.  Only after killing student loan debt would I turn to IRA / 401(k).  This would be consistent with the general consensus expressed in the Case Study spreadsheet regarding priority of savings vehicles:

This seems like a good plan. Max out the HSA to pay your medical bills and save tax that you can then put toward accelerating your debt repayment. Once the debt is gone you can work on maxing out your retirement accounts. Once you do that, you can switch your mindset on the HSA from temporary savings mode to long-term retirement account mode.

crazy30

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Re: Investing in a Health Savings Account
« Reply #14 on: September 23, 2015, 12:53:11 PM »
Note, you can keep your receipts for expenses you pay out of pocket and reimburse yourself in the future, inflation adjusted.

Pay your medical expenses from post-tax funds and save the receipts. After you retire, you can withdraw tax-free funds from your HSA up to your total medical spending since you opened the account.

I imagine this is true because you both said it, but I would like to see a citation so I can read for myself.  IRS guidance documents, regulations, or the revenue code would be appreciated.  This strikes me as stupid policy, but I will happily take advantage of it. 

Here you go: http://www.irs.gov/irb/2004-33_IRB/ar08.html#d0e1935

The relevant part:
Quote
An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur.

Whoa! I did not know this at all!

AlwaysLearningToSave

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Re: Investing in a Health Savings Account
« Reply #15 on: September 23, 2015, 12:55:42 PM »
2) If you can't afford to max out all of your tax-advantaged savings options, keep some amount (the deductible is a reasonable amount) in cash. Pay any medical bills out of the HSA. If your HSA grows larger than you think you'll need for medical treatment in a year, invest the remainder.

Same question:  are you advocating keeping cash in the HSA or in a post-tax account? 

Why do you use maximization of all retirement accounts as the determining factor?  This strikes me as overly conservative.

Keep cash in the HSA, withdrawing as necessary to pay medical bills. Most people don't think it's wise to keep money in the stock market if you're likely to need to spend it this year. Cash or short-term bonds are a safer investment for this time horizon.

Maximization of retirement accounts as a factor isn't a matter of being "conservative" or not. It determines how you will be using the HSA. If you max out your retirement accounts, you can treat the HSA as just another retirement account: invest the whole sum for the long term and don't plan to touch it until you retire. In this scenario you have after-tax income to do something with anyway, so you should prefer to use it for medical expenses rather than investing in a taxable account and raiding your HSA to pay the medical bills.

If you don't max out your retirement accounts, the HSA is not a retirement account, at least not at first. It's a short-term vehicle that lets you avoid income tax on your medical bills. This tax savings will allow you to put more money toward debt repayment or your retirement savings. Until you've built up a balance large enough for at least a year's worth of medical expenses, you're just using it as temporary savings and have no reason to put the money in long-term investments.

Quote
As more background, I will likely not be able to max out tax advantaged retirement accounts due to repayment of student loans and some unexpectedly high expenses that my one year old daughter requires.  I will contribute 4% of my salary to take advantage of employer's 401(k) match.  In the next two years we will place a high priority on paying down about $24,000 in student loan debt, currently at 6.8% but we may refinance.  Maxing the HSA would be my next priority, and I may prioritize maxing the HSA above paying down the student loan debt, especially in the vulnerable first year and especially if we refinance to a lower rate.  Only after killing student loan debt would I turn to IRA / 401(k).  This would be consistent with the general consensus expressed in the Case Study spreadsheet regarding priority of savings vehicles:

This seems like a good plan. Max out the HSA to pay your medical bills and save tax that you can then put toward accelerating your debt repayment. Once the debt is gone you can work on maxing out your retirement accounts. Once you do that, you can switch your mindset on the HSA from temporary savings mode to long-term retirement account mode.

Thanks for the clarification. 

You mustachians give great advice!  I'm not aware of anyone in my real life with whom I would be able to have this conversation and learn anything.  So grateful for the forum...

talltexan

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Re: Investing in a Health Savings Account
« Reply #16 on: May 08, 2017, 12:48:24 PM »
I, too, am part of the Health Savings Account fraternity (I should add that I am not maxing out other pre-tax retirement accounts).

I benefit from being young, male, and healthy, so my health care expenses last year were about $400. I have probably $1,500 in investment gains in my HSA.

My big concern was that I'd be paying expenses out of there soon, so I've opted for a permanent-porfolio-allocation, which looks like:

$12,000 distributed as
50% Vanguard Wellington
25% VTSAX/SP500
25% Commodity-oriented funds

plus, I'm keeping $4,000 in cash; along with the $6,750 I expect to transfer to the account over the next year, this gets us to our family's out-of-pocket max. My wife has a 100% cash HSA from which she's been paying medical expenses for herself and the kids.