• Marie

HSAs Part 2: How to Invest in Your Health Savings Account | Ep. 10 | Winenance Wednesday


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What you’ll learn in this episode:


Need a refresher on HSAs? Watch episode 6 to determine if an HSA with an HDHP (high deductible health plan) is right for you!


1. How HSAs work as Investment Accounts (8:51)

  • Many employers who offer a HDHP also offer an HSA which they sponsor similar to a 401K.

  • Employers setup the accounts with an HSA bank and the contribution options.

  • Some employers only allow cash balances (no investing), while others offer an investment option which allows your money to grow tax free.

  • HSAs are triple-tax advantaged, so it is more advantageous to contribute to an HSA through your employer because of the additional 7.65% FICA tax savings that you do not get when you contribute directly.

2. How to Invest in your Health Savings Account (11:51; 14:40; 18:00)

  • Your HSA is your money, so it stays in your account year after year and you can take it with you when you leave your employer, including any employer contributions, just like a 401K.

  • You are allowed unlimited “trustee to trustee” transfers between HSAs each year (which means the money goes directly from one HSA to another), so once a month I initiate a transfer of my employer HSA balance to my personal HSA.

A couple things to note for anyone who may want to do this for themselves:

  • If your employer offers a contribution and/or takes your contributions out of your paycheck, you'll still want to maintain your employer's HSA plan so that you can get their contribution and/or the 7.65% FICA tax savings.

  • Confirm that your employer's HSA allows in-service transfers with no fees for transferring the money out.

  • If there are no fees, then open a no fee HSA, such as with Fidelity or Lively. You can do it online in less than 20 minutes.

  • Initiate a "trustee to trustee transfer" (HSA to HSA direct transfer) via your new HSA’s website as many times throughout the year as you would like without taxes or penalties. *NOT A ROLLOVER


3. What happens in your HSA investment savings exceed your medical expenses (23:15)


4. Choosing Investments for your HSA (27:41)



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