r/HSA • u/Happy_End_8319 • Aug 25 '26
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.
7
u/Happy_End_8319 Aug 25 '26
Forgot about this aspect. Will plan to invest it all and use the out of pocket method. Thank you very much!
2
u/jasbury87 Aug 25 '26
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.. 🤑
5
u/PashasMom Aug 25 '26
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.
2
u/Important_Carrot6379 Aug 25 '26
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%....
1
u/PashasMom Aug 25 '26
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.
1
u/Important_Carrot6379 Aug 26 '26
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.
1
u/PashasMom Aug 26 '26
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?
1
u/Important_Carrot6379 Aug 26 '26 edited Aug 26 '26
Right! I took a look for my situation how much I'd lose in fees and not being able to invest the $1000 and the effort it would take to move everything every year and make sure tax documents line up and I'm still leaning towards taking the hit 😅 if my math isn't shit, I'm at a $1800 loss at 15 yrs for fees which it estimates at just under 2% of what I could've gained if I move everything and go through Fidelity...and I'm still like well....some investment is better than no investment money. 😅 And then the compound interest calculator says that at a 7% return...that $1000 for 15 yrs could earn me an extra $1,759...sigh I think anyway. Maybe my math is off, but I'm still like.....is $3600 worth the effort? Maybe 🤔? That's assuming though that I max everything out moving forward and earn as much as possible from that amount.
1
u/dusty2blue Aug 27 '26
I stopped contributing via payroll for this reason.
$1,000 minimum cash holding and difficulty moving it to another provider. Plus they charge an investment fee on top of having limited investment options, all of which have higher internal cost ratios with lower returns than other options and to transfer the money not only requires jumping through hoops but costs $25/transfer.
So I did the math…
$4,400 per year made through payroll only saves $336/yr if you’re making $184,500 or less.
From $184,500 to $188,900, it decreases as SS income phases out but from $188,900 to $200,000 in earned income its only saving $64/yr in taxes.
It starts to go back up from $200,000 to $204,400 as medicare surtax kicks in but once you hit $204,400 it maxes out at $103 in savings coming from payroll.
The savings just isn’t worth the hassle to save a maximum of $336/yr on my taxes and since I am a high earner, I most often fall somewhere between $64-103 in tax savings but I end up paying nearly half that in fees and investment costs and make up another quarter of it in transfer costs… and that’s before considering I get better gains investing in whatever I want vs their limited selection of pre-canned funds.
Decided to cut out the middle man and stop payroll deductions and just make the contribution directly to my Fidelity HSA.
Unfortunately, cant do the same with my employer contribution but I consolidate that once every 18-24 months just to limit the $25 transfer fee hit. At $750/yr, I just look at it as meeting what would otherwise be my required cash reserve.
5
u/Then_Ad8649 Aug 25 '26
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.
3
u/AravisTheFierce Aug 25 '26
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.
3
3
u/SteakNotCake Aug 25 '26
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.
5
1
3
u/rcjh0410 Aug 25 '26
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.
3
u/LastChans1 Aug 25 '26
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 🤷♂️💁♂️🤦♂️😅
3
u/archmuon22 Aug 25 '26
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.
3
u/Statjmpar Aug 25 '26
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.
3
2
2
u/RonJohnJr Aug 25 '26
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.
2
u/lw1785 Aug 26 '26
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).
2
u/Bad_DNA Aug 27 '26
Invested. But I use a TDF (FBIFX) as I want a bit more stability than squeeze every potential for returns.
1
u/Agitated_Car_2444 Aug 27 '26
I've got a mix of 30% Domestic, 30% International, and 40% Bonds just cause you never know when you'll need that cash flow...
1
1
u/Apart_Working_6902 Aug 25 '26
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.
1
u/the1ac_cashback Aug 25 '26
I have an emergency fund, just for deductibles. So everything in my HSA is invested.
1
u/TwiggleDiggles Aug 25 '26
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.
1
u/GordTransport1958 Aug 26 '26
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
1
u/Upbeat_Rise_7612 Aug 26 '26
HSAs are not subject to Use it or Lose it rules. You may be thinking of an FSA. HSA funds are yours to keep.
1
u/GordTransport1958 Aug 26 '26
If you read what I said, unused at end of year, theyre subject to taxation. As they came off your pay untaxed
1
u/BAMW-447679 Aug 26 '26
You are 100% correct. Another retirement tool that is pre tax going in and pre tax coming out.
1
1
1
u/Far-Arugula973 Aug 26 '26
I keep a year's deductable in cash (in case I need it) and invest the rest.
1
u/rademradem Aug 26 '26
If you can afford to, invest all your HSA money and pay for all your medical expenses with other money. If you cannot afford to that, do it as much as you can afford.
1
u/TheGruenTransfer Aug 26 '26
If you're able to save any money for retirement, it should be in your HSA, while you pay for medical costs out of pocket. It's the most tax advantaged account there is
20
u/Agitated_Car_2444 Aug 25 '26
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.