Author Topic: Should I invest excess HSA funds?  (Read 4330 times)

caffeine

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Should I invest excess HSA funds?
« on: October 28, 2017, 10:41:33 AM »
I logged into my HSA account for the first time in awhile to see how it's build. I get very little interest so I wasn't expecting much; however, on the account information it had a link/ad for HSA investment.

Does anyone invest their excess HSA funds? What would be considered excess? More than a single year's deductible?

Also, I currently have one HSA that my employer direct deposits my contribution into. If I don't like the investment options, could I open up another HSA that offers Vanguard funds?
« Last Edit: October 28, 2017, 10:48:20 AM by caffeine »

Cezil

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Re: Should I invest excess HSA funds?
« Reply #1 on: October 28, 2017, 11:01:19 AM »
I'm required to hold a minimum cash position of $1,000.  Anything more than that, I can invest in chunks of $100.00 or more.  Since I maxed mine out this year, every paycheck has some $123.07 (I get a $200 match once per year from my employer) that goes in to my HSA then gets auto-transferred to my HSA investment account since each one is over $100.00.  We're getting a new provider as of 1/1/18 with new (hopefully better) funds, so I'll just pick the best out of that instead of worrying about opening an HSA elsewhere outside my employer provided one.

MDM

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Re: Should I invest excess HSA funds?
« Reply #2 on: October 28, 2017, 02:21:33 PM »
Does anyone invest their excess HSA funds? Yes.
What would be considered excess? More than a single year's deductible? Unless prescribed by the HSA supplier, that amount is up to you.  Ours is "the entire HSA balance" - YMMV.
Also, I currently have one HSA that my employer direct deposits my contribution into. If I don't like the investment options, could I open up another HSA that offers Vanguard funds? Yes.
E.g., see How To Rollover an HSA On Your Own and Avoid Trustee Transfer Fee.

sherr

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Re: Should I invest excess HSA funds?
« Reply #3 on: October 28, 2017, 04:01:15 PM »
Does anyone invest their excess HSA funds? What would be considered excess? More than a single year's deductible?

That's exactly what I do, anything more than a single year's deductible gets invested. If you have a regular emergency fund or a lot of unspoken-for cash coming in each month you can safely do more. You're not required to pay medical bills out of your HSA right away, you can reimburse yourself for them later as long has you have the receipts. So if you had a big medical expense while the market was down and you didn't want to have to sell stock to pay for it you can pay out of your emergency fund, and then in a couple years when the stocks recover repay yourself out of your HSA.

rubybeth

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Re: Should I invest excess HSA funds?
« Reply #4 on: October 29, 2017, 09:26:37 AM »
Absolutely, you should invest your HSA funds! Currently, I have an HSA, my husband has an HSA from a previous employer, plus an HSA with his new employer. We invest everything we can. I hope we get the point that we don't need to touch the HSA funds to be reimbursed for health stuff, but right now, we do take funds out regularly. Mostly our contributions cover the current costs, though, so we aren't touching the invested funds, only the newly deposited cash.

HSAs are quite literally the best retirement fund out there due to the tax advantages, and if you have good investment options within them, go for it.

BTDretire

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Re: Should I invest excess HSA funds?
« Reply #5 on: October 29, 2017, 11:42:54 AM »
I don't spend* any of my HSA funds, I have an HSA with an associated Schwab account.
 I have about $47k in the account and wish I would have started my HSA the day HSA's became available.

 *I did spend some when I first started, then found it was a good long term investment.

harvestbook

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Re: Should I invest excess HSA funds?
« Reply #6 on: October 29, 2017, 01:30:14 PM »
We keep two HSAs. One with our local credit union earning 1.5 percent that we use for current medical expenses where we maintain relatively low balances. The second account is fully invested for the long term. Keeps things simple for us.

h82goslw

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Re: Should I invest excess HSA funds?
« Reply #7 on: October 29, 2017, 04:52:23 PM »
You can open an HSA account with Bank of America  and invest the funds in vanguard etfs from your work HSA. 

Indexer

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Re: Should I invest excess HSA funds?
« Reply #8 on: October 29, 2017, 08:44:58 PM »
My HSA is invested.

First $500 is in cash, just in case I need to swipe the HSA debit card at the doctor's office.
The maximum out of pocket = high quality bonds.
The rest = invested like my retirement savings.


While there are many providers, I only know of one with access to Vanguard institutional index funds.

HealthEquity:  https://www.healthequity.com/learn/hsa/

iTellStories

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Re: Should I invest excess HSA funds?
« Reply #9 on: October 30, 2017, 04:54:13 PM »
OptumRx (part of UnitedHealthcare) also has access to Vanguard index funds.

EngineeringFI

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Re: Should I invest excess HSA funds?
« Reply #10 on: October 30, 2017, 07:24:58 PM »
My HSA is with fidelity, and I have it setup as others have mentioned: maximum out-of-pocket for a year in cash ($3k) and the rest invested in a total stock market etf (ITOT) and a bond etf (VCLT). However, after reading this thread I'm wondering if I should invest more of the portion that is currently cash.

JMoney777

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Re: Should I invest excess HSA funds?
« Reply #11 on: October 30, 2017, 09:46:11 PM »

That's exactly what I do, anything more than a single year's deductible gets invested. If you have a regular emergency fund or a lot of unspoken-for cash coming in each month you can safely do more. You're not required to pay medical bills out of your HSA right away, you can reimburse yourself for them later as long has you have the receipts. So if you had a big medical expense while the market was down and you didn't want to have to sell stock to pay for it you can pay out of your emergency fund, and then in a couple years when the stocks recover repay yourself out of your HSA.

This is one of my favorite parts of HSAs.  I haven't withdrawn any money from mine yet and don't plan on it for decades, but have been documenting all eligible expenses so I can pull the funds when needed.

topshot

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Re: Should I invest excess HSA funds?
« Reply #12 on: October 31, 2017, 08:46:57 AM »
While there are many providers, I only know of one with access to Vanguard institutional index funds.

HealthEquity:  https://www.healthequity.com/learn/hsa/

The HSA Authority also does. We're 100% VTSAX. It seems they use a Schwab account.

Indexer

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Re: Should I invest excess HSA funds?
« Reply #13 on: November 01, 2017, 06:26:02 PM »
While there are many providers, I only know of one with access to Vanguard institutional index funds.

HealthEquity:  https://www.healthequity.com/learn/hsa/

The HSA Authority also does. We're 100% VTSAX. It seems they use a Schwab account.

I think you missed a word. ;-)

I said Vanguard Institutional Index funds. Those are even lower cost than the regular admiral shares. Institutional shares are normally reserved for big 401k plans.

VTSAX at 0.04% VS VIIIX at 0.02%.

Total bond(0.03%), Total international stock(0.07%), and extended market(0.05%) are also institutional shares. The admiral shares would be 0.05%, 0.11%, and 0.08%.

letired

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Re: Should I invest excess HSA funds?
« Reply #14 on: November 01, 2017, 06:37:27 PM »
I can afford to forgo reimbursing myself for my very minimal medical expenses and I have enough of a cash cushion in general to afford my full deductible if it came to that. I have 100% of my HSA invested in VTI. I'm not planning on pulling money anytime soon. I'm saving my receipts, for future reimbursement/withdrawal.

caffeine

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Re: Should I invest excess HSA funds?
« Reply #15 on: November 02, 2017, 10:19:47 AM »
I can afford to forgo reimbursing myself for my very minimal medical expenses and I have enough of a cash cushion in general to afford my full deductible if it came to that. I have 100% of my HSA invested in VTI. I'm not planning on pulling money anytime soon. I'm saving my receipts, for future reimbursement/withdrawal.

How long do you have to reimburse yourself? Can I reimburse myself for expenses years ago with evidence of a receipt?

My HSA is invested.

First $500 is in cash, just in case I need to swipe the HSA debit card at the doctor's office.
The maximum out of pocket = high quality bonds.
The rest = invested like my retirement savings.


While there are many providers, I only know of one with access to Vanguard institutional index funds.

HealthEquity:  https://www.healthequity.com/learn/hsa/


Thanks! So my plan is to wait 1 more year to build my HSA further, then I'm going to roll over my excess into a new HSA account with Health Equity following the instructions MDM mentioned.


windypig

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Re: Should I invest excess HSA funds?
« Reply #16 on: November 02, 2017, 10:24:13 AM »
Sorry for a possibly Noob HSA question, but my employer only offers an HSA if you are on the high-deductible health plan. Is that normal, is everyone here on a high-deductible health plan to take advantage of the HSA? My employer offers an HMO, PPO, and the high deductible health plan.

MDM

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Re: Should I invest excess HSA funds?
« Reply #17 on: November 02, 2017, 11:26:44 AM »
Sorry for a possibly Noob HSA question, but my employer only offers an HSA if you are on the high-deductible health plan. Is that normal, is everyone here on a high-deductible health plan to take advantage of the HSA? My employer offers an HMO, PPO, and the high deductible health plan.
Good question.

Being on an HDHP is indeed a requirement for contributing to an HSA.  See the HSA portion of 2016 Publication 969 - p969.pdf.

SeattleStache

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Re: Should I invest excess HSA funds?
« Reply #18 on: November 02, 2017, 12:00:45 PM »
I keep my annual deductible in my HSA cash account and invest all other contributions - maxing it out every year.

VoteCthulu

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Re: Should I invest excess HSA funds?
« Reply #19 on: November 02, 2017, 05:38:54 PM »
I said Vanguard Institutional Index funds. Those are even lower cost than the regular admiral shares. Institutional shares are normally reserved for big 401k plans.

VTSAX at 0.04% VS VIIIX at 0.02%.

Total bond(0.03%), Total international stock(0.07%), and extended market(0.05%) are also institutional shares. The admiral shares would be 0.05%, 0.11%, and 0.08%.
Sure, but HealthEquity charges an additional 0.24% fee on any investments on top of their monthly fee, which makes it far more expensive than an admiral fund at other providers.

JLee

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Re: Should I invest excess HSA funds?
« Reply #20 on: November 02, 2017, 06:29:59 PM »
I invest as much of my HSA as possible (I am required to keep $500 in cash) and I don't use it for medical expenses. I'd much rather take advantage of the tax-free contribution/growth and take reimbursement later (potentially as part of the 5 year bridge for the Roth ladder).

letired

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Re: Should I invest excess HSA funds?
« Reply #21 on: November 02, 2017, 08:46:04 PM »
I can afford to forgo reimbursing myself for my very minimal medical expenses and I have enough of a cash cushion in general to afford my full deductible if it came to that. I have 100% of my HSA invested in VTI. I'm not planning on pulling money anytime soon. I'm saving my receipts, for future reimbursement/withdrawal.

How long do you have to reimburse yourself? Can I reimburse myself for expenses years ago with evidence of a receipt?

As far as I understand it, there is no time limit (currently) on how long you have to reimburse yourself from an HSA (as opposed to an FSA where you have to spend and get the reimbursements within ~1yr). I figure even if there are rule changes, there is a 100% chance I will have medical expenses in the future, and if I make it to retirement age, it turns into a regular IRA.  (http://www.madfientist.com/ultimate-retirement-account/)

talltexan

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Re: Should I invest excess HSA funds?
« Reply #22 on: November 07, 2017, 12:51:34 PM »
Big Health Savings Account fan here. I had a pretty healthy last two years, so my investment gains have been greater than my health care expenses.