Should You Spend or Invest Your HSA Funds?

Should You Spend or Invest Your HSA Funds?

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[jayahkaisamba]

I love my HSA, I’ve maxed out the last few years now and invest 80% and keep 20% in cash as needed for medical expenses as needed.

[johnhenderson]

I have opened a Fidelity HSA and move my funds from my employer's HSA which is Health Equity each pay period.

[TheHolymadrix]

Loved HSA until I moved to California where they tax the gains on HSA. Which was a pain to do on my taxes, because it's not common.

[blexaarron]

Max out your HSA! Have your detectible in cash but invest the rest! You’re going to need healthcare when you’re older and it is only getting expensive. MAX OUT YOUR HSA!!!

[LukeofAllTrades]

I've never heard of the two options of insurance being like he said. The Cadillac plans always seem to cost a lot more per month. The point of a HDHP is to be cheaper premiums with more expensive costs when you use it.

[lavs]

I max my HSA and then when a medical expense comes through I pay out of pocket and then withdraw the money from my HSA and send that amount to our Roth IRAs as additional controbutions. I don't make enough to max out two Roth IRAs, a HSA AND do the 401k match. So I put some into our Roth IRA and then add additional as I withdraw from the HSA.

[MrNickAch]

No brainer here. Definitely max out and invest all. Triple tax benefits is enough said. You could easily have $300-$500k by retirement which would fund all your healthcare costs for the rest of your life (barring extreme healthcare cost increases, but the HSA done the right way would still be a majority of costs.)

[ImEddy]

I use to fund and invest 100% of the hsa, and fund 100% of roth ira but I've realized that until I am fully funding my 401k it is better to use the hsa for medical expenses and free up that extra cash to get further tax deductions in the 401k. Once I can max out all 3 I will go back to investing all the hsa and saving receipts for the future

[tulpa]

I would like to see a comparison of healthcare costs on expenditures through a regular/great plan vs a high deductible plan vs HSA growth over time if you're able to save and invest that money while covering healthcare costs out of pocket. Hope that makes sense because some of these deep dive time exercises your team does are incredibly impressive and helpful. I'm thinking something similar to what the team did w/ the comparison of paying off mortgage early vs investing.

[angieharris]

Well, the second best is an FSA. I have traditional/ Cadillac insurance. No one talks about FSA’s….they are a great product too.

[djpuplex]

1. So can I claim medical expenses on my taxes and have a HSA that I don't draw on and pay out of pocket?
2. If I do above, can I still get the tax free withdrawals let's say 20 years down the line? Is that even possible I know I head BO say he saves his receipts on a spreadsheet?

[chrishayes]

It feels like benefit plans don't do a great job of accentuating the potential value of the HSA. For years I opted for the high deductible plan bc the math I ran on the premium plus max deductible relative to my general health/life status said to do so. But I still only used the HSA as a pass through tax deduction generator for current year costs (mostly used for vision/contacts and random visits). Then the lightbulb moment hit me where I realized HSA's are Roth IRA's, with current year tax deductions, that you can access penalty free as a "medical emergency fund".

If your benefit plan has a decent high deductible insurance plan (low pay check premium, reasonable out of pocket max) then depending on your stage of life it's almost like a hidden treasure chest investment vehicle when you discover it.

[angieharris]

FSA…FSA…FSA for Cadillac insurance holders (like myself.)

[austinmiller]

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