Fidelity HSA

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Megamill
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Fidelity HSA

Post by Megamill »

I've been maxing out a (family) HSA for a few years (via my employer HDHP) and typically cash flow any out of pocket medical expenses. I've been too lazy to invest any of it because it seems like they've made it so complicated to do so and I don't see any decent fund choices. So I'm seriously thinking of opening a personal HSA at Fidelity and doing a transfer. I already have a Fidelity brokerage account and my DS has his Roth IRA also at Fidelity so I'm more comfortable with the fund choices through Fidelity, not to mention there are no fees, I'm told with having an HSA at Fidelity. My plan has been to let the HSA funds grow to use later in retirement for medical expenses for future me and DH. Does it make sense to dump it all into the Fidelity 500 or the zero fee total stock (FZROX) index fund after the transfer is complete? Ages: 60 and late 50s.
tonyclifton
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Re: Fidelity HSA

Post by tonyclifton »

If you are going to use your own cash to pay for current medical expenses then just consider your HSA another investment account and invest it according to your asset allocation. If you normally invest in those funds then...Go for it!

Another option to consider is keeping an amount equal to your high deductible as a safer asset like a fixed income option (money market/short term bond) so that if you need to pay your full deductible you have the funds.
nalor511
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Re: Fidelity HSA

Post by nalor511 »

Fido HSA is great, good investment choices, no fees. It won't hold your hand as much as some other HSA companies (tracking receipts, qualified expenses, etc), but as long as you are organized and track that stuff yourself, it's a great option.
aristotelian
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Re: Fidelity HSA

Post by aristotelian »

Good plan. Go for it. I have mine in FZROX along with a few CD's to cover my deductible should I ever want to withdraw some cash.
MotoTrojan
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Re: Fidelity HSA

Post by MotoTrojan »

Fidelity HSA is great. They are very helpful for transfers but here is an alternative way to handle it as well (I usually go this route because my employee HSA is a pain to transfer from).

https://thefinancebuff.com/how-to-rollo ... r-fee.html
Topic Author
Megamill
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Re: Fidelity HSA

Post by Megamill »

Also don't plan to use the Fidelity HSA for any medical expenses, in fact I'll tell them not to even send me a debit card (if that's possible).
Topic Author
Megamill
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Re: Fidelity HSA - what about filing taxes?

Post by Megamill »

So by having 2 active HSAs (one with the custodian that my employer uses where all my contributions will be made and one with Fidelity strictly for an investment account), will this complicate filing taxes each year? Anyone know?
Olemiss540
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Re: Fidelity HSA - what about filing taxes?

Post by Olemiss540 »

Megamill wrote: Fri Oct 23, 2020 2:35 pm So by having 2 active HSAs (one with the custodian that my employer uses where all my contributions will be made and one with Fidelity strictly for an investment account), will this complicate filing taxes each year? Anyone know?
No, filing is a breeze. Maybe two additional information sections but 5 minutes total extra time. No sweat and worth it IMO.
I hold index funds because I do not overestimate my ability to pick stocks OR stock pickers.
Topic Author
Megamill
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Re: Fidelity HSA

Post by Megamill »

music to my ears :happy
motiv8ed
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Re: Fidelity HSA

Post by motiv8ed »

aristotelian wrote: Fri Oct 23, 2020 1:58 pm Good plan. Go for it. I have mine in FZROX along with a few CD's to cover my deductible should I ever want to withdraw some cash.
+1

Pretty much the same story for me.

No fees at all at Fido for my HSA. 100% in FZROX (in HSA account), and cash kept closer to home for emergency fund (EF) and all other spending. I don't plan to tap my HSA funds for 20+ years, but it's good to know its there, if needed.
illumination
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Re: Fidelity HSA

Post by illumination »

Fidelity is imo the best place to go for an HSA you just want to invest and not really use the account to pay health care expenses in the present. Something like FZROX is a great idea to just set it and forget it.

I plan to use mine down the road to pay for MediCare premiums, hopefully get several decades of tax free growth until that point.

I'm glad one of the "big" providers like Fidelity got in on HSA, the previous providers I had were just not ready for prime time.
KMoney
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Re: Fidelity HSA

Post by KMoney »

I made the switch to treating my Fidelity HSA as part of my larger retirement portfolio this year. I treat it like a Roth account when trying to factor tax treatment. I put it all into FSKAX and deal with international holdings elsewhere.
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1789
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Re: Fidelity HSA

Post by 1789 »

KMoney wrote: Sat Oct 24, 2020 9:02 am I made the switch to treating my Fidelity HSA as part of my larger retirement portfolio this year. I treat it like a Roth account when trying to factor tax treatment. I put it all into FSKAX and deal with international holdings elsewhere.
That is a good idea, imo
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exigent
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Re: Fidelity HSA

Post by exigent »

Megamill wrote: Fri Oct 23, 2020 1:47 pm I've been maxing out a (family) HSA for a few years (via my employer HDHP) and typically cash flow any out of pocket medical expenses. I've been too lazy to invest any of it because it seems like they've made it so complicated to do so and I don't see any decent fund choices...
This is exactly our situation, except we’re a bit younger. Maxing HSA via work, but the investment options there suck and are expensive. I periodically do indirect rollovers to a Fidelity HSA where we invest it for the long-term. You can only do an indirect rollover of this sort every 12 months, but it’s free (vs. paying a rollover fee to the current custodian for direct rollovers). Basically take a withdrawal from the work HSA and, once you receive it, send a check with the deposit form to Fidelity indicating that it’s a rollover.

The alternative would be to just fund the HSA ourselves and deduct our contributions when filing taxes, but I get a small match from work and having it withheld also avoids FICA taxes on our contributions.

We have been happy with Fidelity. Good website, customer support, and investment options.
earflop
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Re: Fidelity HSA

Post by earflop »

Megamill wrote: Fri Oct 23, 2020 2:06 pm Also don't plan to use the Fidelity HSA for any medical expenses, in fact I'll tell them not to even send me a debit card (if that's possible).
They won't send you a debit card unless you specifically request it. I never did.
Scuttlebutt
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Re: Fidelity HSA

Post by Scuttlebutt »

Megamill wrote: Fri Oct 23, 2020 1:47 pm I've been maxing out a (family) HSA for a few years (via my employer HDHP)
Megamill wrote: Fri Oct 23, 2020 2:35 pm So by having 2 active HSAs (one with the custodian that my employer uses where all my contributions will be made and one with Fidelity strictly for an investment account), will this complicate filing taxes each year? Anyone know?
Just to clarify; you're still only allowed to contribute the allowable amount total for the year into both accounts. So you can't put the max into both accounts. $7k/$100 or $3550/$3550 or whatever; but not $7100/$7100.
and the external HSA account that comes out post tax only saves you from income taxes not SS/ medicare. Which is a good thing for people who make less because it keeps the amount counted for SS higher. Or at least that was the way I understood it.
livesoft
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Re: Fidelity HSA

Post by livesoft »

OP and spouse are over age 55, so they can each contribute an additional $1,000 to their own HSAs (each spouse can have an HSA). So the limits are
$7100 for the family plan
$1000 for one spouse
$1000 for the other spouse

So that's that a total of $9,100 for 2020.

I prefer to not use 100% equity in our HSAs, but just use a balanced index or freedom index fund that has equities and fixed income. I am using FFEDX in my Fidelity HSA.

My spouse contributes $8,100 to here HSA via payroll deduction to get max FICA and medicare tax savings and I contribute $1,000 to my HSA.
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DIYtrixie
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Re: Fidelity HSA

Post by DIYtrixie »

livesoft said:
OP and spouse are over age 55, so they can each contribute an additional $1,000 to their own HSAs (each spouse can have an HSA). So the limits are
$7100 for the family plan
$1000 for one spouse
$1000 for the other spouse
Thanks for pointing out that the additional $1k HSA contribution at 55+ applies to both spouses, for a total of +$2k! We’re not there yet, so only using my HSA through work, but I’ve made a note to start one for my spouse at 55.
InMyDreams
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Re: Fidelity HSA

Post by InMyDreams »

exigent wrote: Sat Oct 24, 2020 10:11 am having it withheld also avoids FICA taxes on our contributions.
That's why many people put it into the company HSA first, and move it to their choice of HSA thereafter.
exigent
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Re: Fidelity HSA

Post by exigent »

InMyDreams wrote: Sun Oct 25, 2020 9:00 pm
exigent wrote: Sat Oct 24, 2020 10:11 am having it withheld also avoids FICA taxes on our contributions.
That's why many people put it into the company HSA first, and move it to their choice of HSA thereafter.
Indeed.
carmonkie
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Re: Fidelity HSA

Post by carmonkie »

Scuttlebutt wrote: Sun Oct 25, 2020 6:45 am
Megamill wrote: Fri Oct 23, 2020 1:47 pm I've been maxing out a (family) HSA for a few years (via my employer HDHP)
Megamill wrote: Fri Oct 23, 2020 2:35 pm So by having 2 active HSAs (one with the custodian that my employer uses where all my contributions will be made and one with Fidelity strictly for an investment account), will this complicate filing taxes each year? Anyone know?
Just to clarify; you're still only allowed to contribute the allowable amount total for the year into both accounts. So you can't put the max into both accounts. $7k/$100 or $3550/$3550 or whatever; but not $7100/$7100.
and the external HSA account that comes out post tax only saves you from income taxes not SS/ medicare. Which is a good thing for people who make less because it keeps the amount counted for SS higher. Or at least that was the way I understood it.
it will not. That is what I do. I have my employer HSA where they make bi-weekly contributions and then the Fidelity HSA. I am lucky that my employer pays all the fees so I get to make monthly transfers to the Fidelity HSA and there is no cost to me to make such transactions.
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Megamill
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Re: Fidelity HSA

Post by Megamill »

So I opened the HSA with Fidelity and requested the transfer from my employer's HSA provider. Estimated time that the funds will be deposited @ Fidelity is 2 weeks. I notice that some posters have mentioned doing a rollover to get the $ into the Fidelity HSA, but I initiated a transfer. I hope that I did this correctly--requested a transfer and not a rollover. It was super easy on Fidelity's website-took about 10 minutes. So this new (Fidelity) HSA is in my name and the comment from livesoft about being able to contribute an extra $1k per year (due to over 55 catch-up of DH) really caught my attention. Would this be true in my situation which is: Still maxing HSA through employer with bi-weekly contributions + employer match. New HSA @ Fidelity (sole purpose to grow funds for future healthcare costs)

So can we really contribute an additional $1k per year to the new Fidelity HSA because DH is over 55 (but does not have his own HSA) which for 2020 would bring total HSA contributions to $9,100??
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Kintora
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Re: Fidelity HSA

Post by Kintora »

InMyDreams wrote: Sun Oct 25, 2020 9:00 pm
exigent wrote: Sat Oct 24, 2020 10:11 am having it withheld also avoids FICA taxes on our contributions.
That's why many people put it into the company HSA first, and move it to their choice of HSA thereafter.
I contribute with after tax dollars to a Fidelity HSA. Do the FICA taxes I pay on that money at least bump up my SS in the future?

My employer offers no contribution and uses BenefitWallet for HSA, so I go direct to Fidelity for simplicity.
jcerickson
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Re: Fidelity HSA

Post by jcerickson »

Some employers allow you to select your own HSA instead of requiring you to use the one through the company's health insurance provider. This allows you to still get the pre-tax deduction benefits and operates like direct deposit. Something to look into!
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grabiner
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Re: Fidelity HSA

Post by grabiner »

Kintora wrote: Sun Nov 01, 2020 1:11 pm
InMyDreams wrote: Sun Oct 25, 2020 9:00 pm
exigent wrote: Sat Oct 24, 2020 10:11 am having it withheld also avoids FICA taxes on our contributions.
That's why many people put it into the company HSA first, and move it to their choice of HSA thereafter.
I contribute with after tax dollars to a Fidelity HSA. Do the FICA taxes I pay on that money at least bump up my SS in the future?
They do (as long as you are under the SS max), and this is usually close to break-even; see Payroll deduction on the wiki for details.

If you are over the SS max, the 1.45% Medicare tax is a complete loss, so it might be worth using payroll deduction to contribute to the employer's HSA and then transferring the money to your preferred provider.
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Kintora
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Re: Fidelity HSA

Post by Kintora »

grabiner wrote: Sun Nov 01, 2020 2:20 pm
Kintora wrote: Sun Nov 01, 2020 1:11 pm
InMyDreams wrote: Sun Oct 25, 2020 9:00 pm
exigent wrote: Sat Oct 24, 2020 10:11 am having it withheld also avoids FICA taxes on our contributions.
That's why many people put it into the company HSA first, and move it to their choice of HSA thereafter.
I contribute with after tax dollars to a Fidelity HSA. Do the FICA taxes I pay on that money at least bump up my SS in the future?
They do (as long as you are under the SS max), and this is usually close to break-even; see Payroll deduction on the wiki for details.

If you are over the SS max, the 1.45% Medicare tax is a complete loss, so it might be worth using payroll deduction to contribute to the employer's HSA and then transferring the money to your preferred provider.
Thanks, that was very helpful.
Barcelonasteve
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Re: Fidelity HSA

Post by Barcelonasteve »

Megamill wrote: Sun Nov 01, 2020 10:58 am So I opened the HSA with Fidelity and requested the transfer from my employer's HSA provider. Estimated time that the funds will be deposited @ Fidelity is 2 weeks. I notice that some posters have mentioned doing a rollover to get the $ into the Fidelity HSA, but I initiated a transfer. I hope that I did this correctly--requested a transfer and not a rollover. It was super easy on Fidelity's website-took about 10 minutes. So this new (Fidelity) HSA is in my name and the comment from livesoft about being able to contribute an extra $1k per year (due to over 55 catch-up of DH) really caught my attention. Would this be true in my situation which is: Still maxing HSA through employer with bi-weekly contributions + employer match. New HSA @ Fidelity (sole purpose to grow funds for future healthcare costs)

So can we really contribute an additional $1k per year to the new Fidelity HSA because DH is over 55 (but does not have his own HSA) which for 2020 would bring total HSA contributions to $9,100??

Someone correct me if I’m wrong, but according to what I’ve read, the spouse who is on a family high deductible plan is eligible for a $1,000 catch up, but it has to go into a HSA in the spouse’s name. Livesoft’s description of his/her contributions is consistent with this. If the fidelity HSA is in your name, your spouse will have to open a separate HSA in his name and deposit his catch up into that. Here’s a Kiplinger article from a few years ago where this is mentioned. If

https://www.kiplinger.com/article/retir ... vings.html
Dude2
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Re: Fidelity HSA

Post by Dude2 »

Hmm. To the posters that recommend putting it all in FZROX...I didn't see that as an option for the "no fee" funds you can use.
Fidelity HSA® Funds to Consider

Professionally selected for HSA investing, all of the Funds to Consider feature waived investment minimums and no transaction fees.https://digital.fidelity.com/prgw/digital/ftoc
Then ’tis like the breath of an unfee’d lawyer.
cas
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Re: Fidelity HSA

Post by cas »

Dude2 wrote: Tue Nov 03, 2020 2:40 pm Hmm. To the posters that recommend putting it all in FZROX...I didn't see that as an option for the "no fee" funds you can use.
Fidelity HSA® Funds to Consider

Professionally selected for HSA investing, all of the Funds to Consider feature waived investment minimums and no transaction fees.https://digital.fidelity.com/prgw/digital/ftoc
Those funds are just "to Consider" for people who are overwhelmed by trying to choose from Fidelity's entire brokerage investment lineup. You aren't limited to just those options. You are free to choose anything from Fidelity's brokerage lineup. From the FAQ (emphasis added by me):
What can I invest my HSA in?

Fidelity gives you broad investing options, including our Fidelity HSA Funds to Consider. These are professionally selected funds for HSA investing, all with waived investment minimums and no transaction fees. Other HSA investing options include single-fund options, such as our target date funds and target allocation funds, ***as well as our entire brokerage lineup***, which includes mutual funds, ETFs, stocks, bonds, US Treasuries, FDIC-insured CDs, and options.
If you got to that page from the overview on HSA investing page ... don't let your eye stop on the first, most obvious choice (the "Funds to Consider" one on the left side of the page). Let your eye continue traveling towards the right, through the "Investment Help" option, to the "Do It Yourself" option.
Dude2
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Re: Fidelity HSA

Post by Dude2 »

^^^ I get that, thanks, but I took it that this lower number of choices were the specific funds you could use with zero fees for them handling your HSA. Otherwise, do whatever you want, but we can charge you like HSA bank or their linked investment companies do (or require minimum balances). All the "do it yourself" link gives me is a marketing campaign about everything Fidelity offers. In other words, we've left the specific HSA portion of the website and now are in the larger site.

However, the reason I brought it up was that there must be some people here doing just what you suggest. If there are no fees period, I'd love to hear it.
Then ’tis like the breath of an unfee’d lawyer.
mervinj7
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Re: Fidelity HSA

Post by mervinj7 »

Dude2 wrote: Tue Nov 03, 2020 6:35 pm ^^^ I get that, thanks, but I took it that this lower number of choices were the specific funds you could use with zero fees for them handling your HSA. Otherwise, do whatever you want, but we can charge you like HSA bank or their linked investment companies do (or require minimum balances). All the "do it yourself" link gives me is a marketing campaign about everything Fidelity offers. In other words, we've left the specific HSA portion of the website and now are in the larger site.

However, the reason I brought it up was that there must be some people here doing just what you suggest. If there are no fees period, I'd love to hear it.
The reason it brings you to the larger site is that nearly everything is available in your Fidelity HSA with no fees. What exactly are you looking for? ETFs? Treasury Bills? Index funds? Target date funds? Many of us use various combinations of the above.
Dude2
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Re: Fidelity HSA

Post by Dude2 »

Thanks. That's excellent to hear. I had not understood you could invest in anything and not have fees tacked on for them to manage your HSA. Although it might seem far fetched, it is exactly what HSA bank and the like are doing. Bravo to Fidelity for sticking up for us.

"Professionally selected for HSA investing, all of the Funds to Consider feature waived investment minimums and no transaction fees."

That above statement implies to me that if you are outside the set of the "Funds to Consider", fees are not waved and have transaction fees. That was the confusion. I'm glad to know I can do anything I want.
Then ’tis like the breath of an unfee’d lawyer.
Trust_In_TylerDurden
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Re: Fidelity HSA

Post by Trust_In_TylerDurden »

its me and my wife in my family .

i put $7100 for the family plan under a SINGLE HSA account in my name.

is that okay from an IRS/long term compliance perspective or do we need two different accounts under each of our names?
Random Poster
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Re: Fidelity HSA

Post by Random Poster »

Trust_In_TylerDurden wrote: Wed Nov 04, 2020 1:14 pm its me and my wife in my family .

i put $7100 for the family plan under a SINGLE HSA account in my name.

is that okay from an IRS/long term compliance perspective or do we need two different accounts under each of our names?
This thread might answer your question:

viewtopic.php?f=2&t=329086
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