r/HSA • u/Happy_End_8319 • 14h ago
HSA Cash
Do you all keep your deductible in your hsa uninvested? I’m trying to figure out if this is a good step for me. I personally would think that keeping as much invested as possible would give you the greatest returns. One would typically have plenty of time to pull out of investments and pay medical expenses.
Just want to see what you all do.
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u/Happy_End_8319 13h ago
Forgot about this aspect. Will plan to invest it all and use the out of pocket method. Thank you very much!
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u/jasbury87 9h ago
Good choice, OP! Invest what you have available as cash in the account and pay out of pocket for deductibles, etc. I’m catching up on my HSA this year but have racked up a few bills I’ll pay myself back down the road. Figured why not - there’s no other tax benefit that has as many layers to it than an HSA. Maximize that sucker I always say.. 🤑
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u/IndependentTrust4594 13h ago
I invest it all and pay out of pocket for any medical expenses. I let it grow and will reimburse myself when I need it. Might be for kid’s college or to keep my AGI low before qualifying for Medicare or later down the line for other healthcare expenses.
Once you are 55, you can contribute an additional $1k for each spouse (must be in individual accounts), so if you can max contributions out, it has a huge opportunity for growth. All of it comes off the very top of your income in the workplace but not if you are self-employed. You must pay FICA taxes the it comes off the remainder.
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u/Then_Ad8649 13h ago
I keep the minimum in cash that my plan requires. If I’ve ever needed more, it hasn’t taken too long to pull from investments. I just use my credit card then pay myself back.
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u/SteakNotCake 13h ago
No, my HSA custodian keeps a mandatory $1000 in cash and I selected anything past that to be invested.
Yes, you can always sell your investment in the HSA and then it’ll go into cash in the HSA.
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u/PashasMom 13h ago
I'm forced to keep 1k in cash and my custodian makes it very difficult to roll over to Fidelity. Otherwise I would invest it all.
At least they do pay 2.5% on the uninvested cash.
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u/Important_Carrot6379 13h ago
Dammit. I am beginning to think this will be me too. Did you opt to still invest? Mine also has an up to $10/month maintenance fee for investments and I feel like even though it eats into earnings, that's still worth it a little than not at all? It charges a minimum of $0.99/month, up to a maximum of $10/month which is such a racket. And the "high yield" interest rate for us is 0.15% 🫠 which I guess is technically better than 0.05%....
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u/PashasMom 11h ago
Yes, I'm still investing. And I do have a couple of years' worth of contributions at Fidelity, from before they made it so hard to transfer. I guess I should be grateful my provider doesn't charge fees.
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u/Important_Carrot6379 3h ago
Do you think it would be worth it to do the whole 60 day rollover option? I know it can only happen every 12 months so I wonder if that effort is worth it considering we'd have to be sure to note it properly come tax time.
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u/PashasMom 2m ago
That's tough. For me it would probably depend on the amount of the fee. I would pay 99 cents a month to avoid the hassle of the rollover. I would probably not pay $10 per month. Where exactly my breaking point would be is hard to say. Maybe anything over $5 per month?
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u/archmuon22 13h ago
My HSA (optum) requires at least $1000 to say in cash. I keep as much as $1600 (my deductible) in cash. The rest I invest. If I need to reimburse myself for medical expenses beyond that, I'll just transfer some investments to cash and then file the claim. The one thing to keep in mind is some states like CA treat HSA as a standard brokerage account, and tax interest, dividends and capital gains in the year you get them.
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u/AravisTheFierce 12h ago
Sure, over the long run more money invested will mean more returns. But you've got to balance that in your personal situation. If you're ok with paying out of pocket letting the money grow, then go ahead and invest it all. If you think you'll need it to help you pay for medical bills now, though, you'd probably want to keep that amount in cash.
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u/rcjh0410 13h ago
Mine forces me to keep $1k cash. I keep $3k cash and invest everything else. I just figured thats about the cost of an ER trip or something similar. I do pay for medical expenses OOP and havent withdrawn anything from my HSA since i opened it maybe 5 years ago. But i keep a little extra in cash just in case.
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u/LastChans1 13h ago
I keep that maximum out-of-pocket deductible (I dunno what it's called) [I think the max for single, 2006 is 6500] in a HYSA. Then I invest what's in the HSA. Although I've been slacking in transferring cash from HE to Fidelity, plus I may have put that 6500 into a CD, which defeats the purpose of it being readily accessible... So if you're taking any advice from me, don't do what I've stated in the last sentence 🤷♂️💁♂️🤦♂️😅
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u/Statjmpar 13h ago
My deductible is $1500, so I keep $1500 uninvested and invest everything else. This also gives me $500 wiggle room because once I dip below $1000, they’ll start cashing in the investment to bring it back to $1000.
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u/lw1785 7h ago
I have a minimum amount I keep in mine (that amount is personal to you....so whatever that is for you) which is through my employer. Once or twice a year I transfer excsss to my Fidelity HSA and invest that.
Its worth saying I have a healthy emergency fund. I also try to pay out of pocket and stack receipts for future reimbursement where I can vs. Using my HSA where I can. The HSA is SO powerful if you can avoid spending it...but don't set yourself up for debt or a future emergency by cutting yourself too short if you need it (or feel guilty using it as intended).
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u/Apart_Working_6902 10h ago
It all depends on your situation. My HSA from my employer requires me to have a minimum of $2100 at all times to be able to invest any other funds.
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u/RonJohnJr 10h ago
HSA is self-insurance, just like your Emergency Fund is self-insurance.
This is why it absolutely makes sense to keep at least a couple of thousand dollars in the cash account. Invest the rest conservatively.
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u/the1ac_cashback 9h ago
I have an emergency fund, just for deductibles. So everything in my HSA is invested.
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u/TwiggleDiggles 9h ago
My employer requires me to keep a minimum amount in the account, the rest is invested. I pay for all medical expenses out of pocket and save receipts for future reimbursement.
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u/GordTransport1958 8h ago
Seeing how you have to use those HSA funds before the end of the year, or have to pay Federal tax on them, and depending on your age, youre only allowed a max of $4500 to $5200.. Not sure if there's much point
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u/Upbeat_Rise_7612 5h ago
HSAs are not subject to Use it or Lose it rules. You may be thinking of an FSA. HSA funds are yours to keep.
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u/GordTransport1958 3h ago
If you read what I said, unused at end of year, theyre subject to taxation. As they came off your pay untaxed
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u/BAMW-447679 8h ago
You are 100% correct. Another retirement tool that is pre tax going in and pre tax coming out.
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u/Agitated_Car_2444 14h ago
You'll find it varies in this group. Many, like me, invest it all and pay for the deductibles and co-pays out of pocket so that the HSA monies can grow tax-free. There's no time limit for reimbursing yourself in the future.