Author Topic: Question - New to HSA  (Read 1678 times)

homerj

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Question - New to HSA
« on: January 05, 2016, 04:00:14 PM »
I signed up for an HSA health plan through my employer this year for the first time ever.  I can contribute anytime up to the IRS limits.  I can pay for medical expenses using my HSA debit card or out of my own pocket and then I can reimburse myself.  My question is, does it make sense to contribute to my HSA right off the bat and have the money just sitting there?  Or should I instead save the money in a savings account, earn interest on it, and only contribute to my HSA when I need to reimburse myself for a medical expense?  Thank you in advance.

Allen

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Re: Question - New to HSA
« Reply #1 on: January 05, 2016, 04:26:24 PM »
Your HSA provider should have some better options.  Typically, you put the money into the HSA and then from there you can invest a portion of it like it was an IRA. They often require you to maintain some cash balance (mine is $2,000 for example) before you can invest the additional money.

If you have good investment options in the HSA, then you should deposit it in as early as possible and let it grow, NOT using the HSA to pay for medical expenses if you can afford to pay it out of pocket outside of the HSA. Keep your receipts.

You can use those receipts to reimburse yourself at any point in the future when you need that money.

Also, if you can make your contributions come from a payroll deduction, you also get to avoid paying FICA on the contributions.

MDM

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homerj

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Re: Question - New to HSA
« Reply #3 on: January 05, 2016, 08:19:55 PM »
Your HSA provider should have some better options.  Typically, you put the money into the HSA and then from there you can invest a portion of it like it was an IRA. They often require you to maintain some cash balance (mine is $2,000 for example) before you can invest the additional money.

If you have good investment options in the HSA, then you should deposit it in as early as possible and let it grow, NOT using the HSA to pay for medical expenses if you can afford to pay it out of pocket outside of the HSA. Keep your receipts.

You can use those receipts to reimburse yourself at any point in the future when you need that money.

Also, if you can make your contributions come from a payroll deduction, you also get to avoid paying FICA on the contributions.

Allen, thank you for the information.  I will definitely look into other, hopefully better, options.  I was not aware that investment options were even a possibility.  I can see now the benefit of the HSA.  Although to me it makes sense to have a balance of perhaps a core/simple fund along with some investment options where my money can hopefully grow.  Thanks again for the info!

homerj

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Re: Question - New to HSA
« Reply #4 on: January 05, 2016, 08:25:33 PM »
See also  http://forum.mrmoneymustache.com/taxes/good-hsa-providers/ and
http://thefinancebuff.com/how-to-rollover-an-hsa-on-your-own-and-avoid-trustee-transfer-fee.html for some options.

MDM, thanks for the info.  My HSA is through Fidelity and I can see now that I have several investment options.  Looking at the first link you posted, it looks like Fidelity is not a bad option.  Thanks again!