How I Failed At Investing My HSA Funds (2024)

FAQs

Why can't i invest my HSA? ›

You are eligible to use the investment feature of your HSA once your cash account balance has reached the investment threshold¹ you establish. You may choose between automatic or manual investment options, however you must first enroll in the investment feature to get started. How do I get started investing my HSA?

Account holders who don't invest their HSA contributions could be missing an opportunity to earn tax-free returns. We generally suggest keeping two to three years' worth of routine medical expenses in cash, cash investments, or similar low-volatility investments within your HSA.

You're getting close to age 65 or you're no longer eligible

Once you hit 65, you can withdraw your HSA funds for non-medical expenses without penalty and pay only income taxes. But you may want to stop contributing then, too, since you may be eligible for Medicare.

If you keep a relatively small balance in your HSA or you plan to regularly tap the account, it could make sense to go with low-risk, low-return options such as money market funds. That way you'll be sure that your money will be there when you need it to pay bills.

While you can use your HSA to pay or be reimbursed for qualified medical expenses, if you receive distributions for other reasons, the amount you withdraw will be subject to income tax and may be subject to an additional 20% federal tax.

Contribute as much as you can afford to an HSA. The tax advantages of a health savings account (HSA) are unique, even better than any IRA or 401(k) plan. As a result, an HSA is like a “super IRA,” and you should contribute as much as you can afford, subject to IRS limits on HSA contributions.

The main downside of an HSA is that you must have a high-deductible health insurance plan to get one.

Think of your HSA as a home for your medical money. Just like a brokerage account or an IRA, you'll need to put money into the account before you buy investments. Then, after you fund the account, you can start investing.

How much should I contribute to my health savings account (HSA) each month? The short answer: As much as you're able to (within IRS contribution limits), if that's financially viable.

If you are age 65 or older and enrolled in the HDHP with an HSA, plan to stop HSA contributions six months before enrolling in Medicare. Be mindful that enrolling in Social Security results in automatic enrollment in Medicare Part A.

What happens to my HSA when I turn 65? ›

If you have money in your HSA when you turn 65, you can spend it on anything you want — but if you aren't spending it for a qualified medical expense, it will be taxed as income at your then current tax rate. You must stop contributing to your HSA when you enroll in any part of Medicare.

The minimum amount that can be transferred at one time is $100. Therefore, you will typically need to have a balance of $2,100 in your HSA before you are eligible to invest (assuming a $2,000 investment threshold). 3. To make things easier, you can choose to set up recurring transfers/sweeps.

Try to invest as much of your HSA money as possible while ensuring that you keep enough cash to cover your qualified medical expenses. Consider where your other retirement plans are invested as well to make sure that your HSA investments provide diversification. Avoid taking out funds from your HSA as much as possible.

Contribute enough to cover your expected medical expenses—and then some. Aim to build the account to completely cover one or more years of maximum out-of-pocket costs. Only draw on the account for large or unusual medical expenses, not the routine ones.

HSA Bank does not provide investment services; investment services are provided by Devenir. HSA Bank and Devenir are separate unaffiliated companies and are not responsible for each other's services or policies. Self-directed investment options are the sole responsibility of the account owner.

Your investments may consist of stocks (including fractional shares), bonds, ETFs, mutual funds, and more. Or select from a list of professionally chosen mutual funds for HSA investing. For help selecting between our self-directed options, use our HSA Investment Review Tool .

You lose eligibility as of the first day of the month you turn 65 and enroll in Medicare. Example. Sally turns 65 on July 21 and enrolls in Medicare. She is no longer eligible to contribute to her HSA as of July 1.

Yes! HSA CDs are available to Health Savings Account holders with a $1,000 minimum deposit.