How much cash do you keep in your HSA?

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cdu7
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How much cash do you keep in your HSA?

Post by cdu7 » Sat Sep 28, 2019 6:30 am

I'm just wondering if anyone keeps some cash in their HSA for yearly reimbursement in addition to their investing portion and if so how much? I typically keep about $1500 in cash since I feel like this covers me for most reimbursement in any given year. Do some people just keep the bare minimum in cash and never bother with reimbursements? I feel like it is better to get some benefit of the tax free withdrawals each year, rather than try and keep buckets of receipts forever.

dcabler
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Re: How much cash do you keep in your HSA?

Post by dcabler » Sat Sep 28, 2019 6:37 am

When I joined my current company, $1500 was the minimum, but they lowered it to $1000 about a year later. I started off reimbursing everything up to the deductible and invested the rest each year. I've now changed my plan and invest everything but the minimum $1K cash they required and pay out-of-pocket for all medical expenses not paid by insurance. My current employer is the first I've ever had with an HDHP + HSA plan, but since I'm 58 and hope to retire in a few 1's of years, I don't expect the HSA to ever grow to gigantic proportions.

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Re: How much cash do you keep in your HSA?

Post by abuss368 » Sat Sep 28, 2019 6:40 am

I like your theory and we used to follow the same. We held enough cash to cover the expected forthcoming expenses.
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Re: How much cash do you keep in your HSA?

Post by Wyodoc » Sat Sep 28, 2019 6:41 am

I keep the minimum that HealthEquity requires which unfortunately is 2000. If I could, would invest it all. To me, makes more sense to let this compound and grow and not spend now. There will always be health expenses in the future. I’m not worried about this money going to waste. I’m mid 30s though so depending on age this may vary.

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Re: How much cash do you keep in your HSA?

Post by nps » Sat Sep 28, 2019 6:49 am

I invest it all. Zero cash.

willyd123
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Re: How much cash do you keep in your HSA?

Post by willyd123 » Sat Sep 28, 2019 7:30 am

I am 100% invested, no cash. Some HSA administrators require a minimum cash balance be held but LivelyHSA does not which is who administers my HSA. Utilizing an HSA like a retirement asset rather than a spending asset at least until you enroll in Medicare can be financially very beneficial.

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Re: How much cash do you keep in your HSA?

Post by Chrono Triggered » Sat Sep 28, 2019 8:22 am

I keep mine at the minimal amount required by my plan. The rest is invested in equities.

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Re: How much cash do you keep in your HSA?

Post by bgf » Sat Sep 28, 2019 8:48 am

Wyodoc wrote:
Sat Sep 28, 2019 6:41 am
I keep the minimum that HealthEquity requires which unfortunately is 2000. If I could, would invest it all. To me, makes more sense to let this compound and grow and not spend now. There will always be health expenses in the future. I’m not worried about this money going to waste. I’m mid 30s though so depending on age this may vary.
ditto
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Re: How much cash do you keep in your HSA?

Post by Dottie57 » Sat Sep 28, 2019 8:52 am

I keep enough to cover max out of pocket.

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Re: How much cash do you keep in your HSA?

Post by investingdad » Sat Sep 28, 2019 9:12 am

nps wrote:
Sat Sep 28, 2019 6:49 am
I invest it all. Zero cash.
Same.

It's an investment tax shelter that we'll tap later in life.

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Re: How much cash do you keep in your HSA?

Post by SpaghettiMonster » Sat Sep 28, 2019 9:15 am

$6, just to cover the minimum fee. Everything else is invested.

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Re: How much cash do you keep in your HSA?

Post by sergio » Sat Sep 28, 2019 9:15 am

One year of OOP expenses plus the $2k minimum required. So if in a year I hit the OOP max I don't need to sell investments. I just redirect my future contributions to cash until I have enough for the OOP max again. Then back to investing.

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Re: How much cash do you keep in your HSA?

Post by Bir48die » Sat Sep 28, 2019 9:32 am

I have been unable to take advantage of an HSA until a couple years ago when I came off Cobra. I have maxed out plus catch up. Only have nine months till I go on Medicare and will drain it down. If I had the opportunity to build this up earlier I would have. As you age, you'll need it.

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Re: How much cash do you keep in your HSA?

Post by WannabeBogleHead01 » Sat Sep 28, 2019 9:38 am

100% invested as well...

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Re: How much cash do you keep in your HSA?

Post by bogglizer » Sat Sep 28, 2019 10:25 am

Since I max contributions and don't want to faff with it too often, I wait until it hits $5K and then transfer $3K to investment. I like to keep a few $K in there just in case. I actually use my HSA for medical costs, rather than keeping records for later reimbursement.

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Re: How much cash do you keep in your HSA?

Post by whodidntante » Sat Sep 28, 2019 10:37 am

My HSA is not that large at 16k, but once money gets in the account I'm treating it like a "medical Roth" and have every dollar invested in equities. I pay medical costs from cash flow and keep receipts so I can withdraw past expenses at any time, tax free.

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jeffyscott
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Re: How much cash do you keep in your HSA?

Post by jeffyscott » Sat Sep 28, 2019 12:52 pm

I'm conservative with HSA, while it is like a Roth if used for medical expenses, if you end up not being able to use it for that then it is like a TIRA. By the time we both reach Medicare age, with no growth, we may have about $70-85K in there and I am not convinced that post age 65 medical expenses will necessarily exceed that.

Currently HSA only accounts for 2% of invested assets, so it is a pretty minor decision what we do with it. No pure cash, but about 50% in ultra short term bond fund and 50% in CDs currently. I'd have more in CDs, but after transferring from my former employer's HSA, the brokered CD rates became unattractive before I got as much in them as I would like.

Perhaps I might think differently if we didn't have any actual Roth assets, but we have about 1/3 of total assets in Roths and that is increasing each year due to conversions.
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Re: How much cash do you keep in your HSA?

Post by grabiner » Sat Sep 28, 2019 5:35 pm

My HSA is about 4% of my portfolio. I don't use it for current expenses, since I max out my retirement accounts and prefer to leave the money in the HSA growing tax-free. Therefore, I keep the entire HSA in stock. (I don't keep every dollar invested, because I can't invest automatically; when I have enough cash to buy a decent quantity of an ETF, I buy as many shares of the ETF as possible.)
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Re: How much cash do you keep in your HSA?

Post by ChowYunPhat » Sat Sep 28, 2019 5:56 pm

whodidntante wrote:
Sat Sep 28, 2019 10:37 am
My HSA is not that large at 16k, but once money gets in the account I'm treating it like a "medical Roth" and have every dollar invested in equities. I pay medical costs from cash flow and keep receipts so I can withdraw past expenses at any time, tax free.
This. Hoping to not tap the HSA until in 50s pending an early retirement.
A wise man and his money are friends forever...

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Re: How much cash do you keep in your HSA?

Post by MotoTrojan » Sat Sep 28, 2019 6:09 pm

I don’t intend to withdraw unless I’m retired or literally out of catch, best to let it grow.

I have a $1000 minimum that must remain in cash. It has to be $3000 min to be eligible for automatic transfer to investments... oh well.

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Re: How much cash do you keep in your HSA?

Post by JediMisty » Sat Sep 28, 2019 6:20 pm

I transfer it over from my employer plan at Health Equity to my Fidelity HSA once a year. At Fidelity I'm conservatively invested in a government bond fund since NJ taxes the earnings. Health Equity plan at my megacorp only requires a $25 balance. I'm not worried about the receipts. I'm not wracking up much in medical bills lately. At 61, no illness, no meds, no aches and pains. YMMV. TBT, it's a tiny portion of my portfolio as I just got an HDHP last year.

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Re: How much cash do you keep in your HSA?

Post by yogesh » Sat Sep 28, 2019 6:26 pm

Max out of pocket is kept in cash and rest invest.
My HSA does auto investments but does not auto sell investments when HSA cash runs out. So one way and not two way so I have to keep cash equivalents to out of pocket max and avoid bouncing checks
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

wyoming82240
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Re: How much cash do you keep in your HSA?

Post by wyoming82240 » Sat Sep 28, 2019 6:29 pm

Zero cash, view it as a retirement investment. I have a folder dedicated in google drive to save all my receipts electronically for reimbursement when I retire. Until then, let it grow. In fact, I maxout HSA before I begin IRA contribution.

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Re: How much cash do you keep in your HSA?

Post by willthrill81 » Sat Sep 28, 2019 7:52 pm

nps wrote:
Sat Sep 28, 2019 6:49 am
I invest it all. Zero cash.
Same.

If the investments in our HSA are doing poorly, we'll just pay for the expenses with cash flow (0% intro credit card if needed) and get reimbursed from our HSA later. Truth be told, we're trying to do that anyway (i.e. save receipts and get reimbursed later).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How much cash do you keep in your HSA?

Post by JonnyDVM » Sat Sep 28, 2019 9:10 pm

$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
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Big Dog
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Re: How much cash do you keep in your HSA?

Post by Big Dog » Sat Sep 28, 2019 9:22 pm

willyd123 wrote:
Sat Sep 28, 2019 7:30 am
I am 100% invested, no cash.
Same here. Pay for medical expenses out of pocket to enable the HSA to compound tax-free. (will use it to pay medicare premiums some day.)

stocknoob4111
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Re: How much cash do you keep in your HSA?

Post by stocknoob4111 » Sat Sep 28, 2019 9:25 pm

I' I'm required to keep $500 minimum

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Re: How much cash do you keep in your HSA?

Post by willthrill81 » Sat Sep 28, 2019 9:34 pm

JonnyDVM wrote:
Sat Sep 28, 2019 9:10 pm
$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
You don't have to. Scan them and save them on the cloud and a flash drive.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How much cash do you keep in your HSA?

Post by marcopolo » Sat Sep 28, 2019 9:50 pm

willthrill81 wrote:
Sat Sep 28, 2019 9:34 pm
JonnyDVM wrote:
Sat Sep 28, 2019 9:10 pm
$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
You don't have to. Scan them and save them on the cloud and a flash drive.
Never saw the need to stash receipts. I suspect we will have plenty of healthcare expenses later in life use it up.

100% invested for now.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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willthrill81
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Re: How much cash do you keep in your HSA?

Post by willthrill81 » Sat Sep 28, 2019 9:54 pm

marcopolo wrote:
Sat Sep 28, 2019 9:50 pm
willthrill81 wrote:
Sat Sep 28, 2019 9:34 pm
JonnyDVM wrote:
Sat Sep 28, 2019 9:10 pm
$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
You don't have to. Scan them and save them on the cloud and a flash drive.
Never saw the need to stash receipts. I suspect we will have plenty of healthcare expenses later in life use it up.

100% invested for now.
Sadly, you're probably right. I doubt that we'll ever have more than $250k in real dollars in our HSA, and we likely won't have any problems spending it on qualified medical expenses.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How much cash do you keep in your HSA?

Post by mpsz » Sat Sep 28, 2019 10:05 pm

Between $0 and ~$4,000. I contribute to my employer's crap HSA plan and rollover once every 13-14 months to my main HSA, currently at Fidelity. That Fidelity HSA is 100% invested.

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Re: How much cash do you keep in your HSA?

Post by JonnyDVM » Sat Sep 28, 2019 10:06 pm

marcopolo wrote:
Sat Sep 28, 2019 9:50 pm
willthrill81 wrote:
Sat Sep 28, 2019 9:34 pm
JonnyDVM wrote:
Sat Sep 28, 2019 9:10 pm
$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
You don't have to. Scan them and save them on the cloud and a flash drive.
Never saw the need to stash receipts. I suspect we will have plenty of healthcare expenses later in life use it up.

100% invested for now.
I respect that argument. If you’re well organized and can keep perfect records of your spending then great. I don’t trust myself to do that. I’ve also argued that trying to explain to my wife why we shouldn’t use our health saving account for current healthcare costs doesn’t make sense. It doesn’t make sense because it’s really not logical. The idea behind HSAs was that they could be used to pay for ever increasing US health care expenses with a tax break. They were not designed for stashing receipts for 20 years to reap the gains of investment growth. Fortunately, our yearly expenditure from them is relatively small so the balance is still ballooning and of course I put the max in every year. To be honest, I’m quite skeptical that the structure of HSAs will look the same in 20 years as has been discussed at length on this forum, something has to give sooner or later in regards to the US healthcare industry.
Sometimes the questions are complicated and the answers are simple. -Dr. Seuss

marcopolo
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Re: How much cash do you keep in your HSA?

Post by marcopolo » Sat Sep 28, 2019 10:17 pm

JonnyDVM wrote:
Sat Sep 28, 2019 10:06 pm
marcopolo wrote:
Sat Sep 28, 2019 9:50 pm
willthrill81 wrote:
Sat Sep 28, 2019 9:34 pm
JonnyDVM wrote:
Sat Sep 28, 2019 9:10 pm
$1000. We use it to pay for expenses. I’m not into stashing receipts for decades.
You don't have to. Scan them and save them on the cloud and a flash drive.
Never saw the need to stash receipts. I suspect we will have plenty of healthcare expenses later in life use it up.

100% invested for now.
I respect that argument. If you’re well organized and can keep perfect records of your spending then great. I don’t trust myself to do that. I’ve also argued that trying to explain to my wife why we shouldn’t use our health saving account for current healthcare costs doesn’t make sense. It doesn’t make sense because it’s really not logical. The idea behind HSAs was that they could be used to pay for ever increasing US health care expenses with a tax break. They were not designed for stashing receipts for 20 years to reap the gains of investment growth. Fortunately, our yearly expenditure from them is relatively small so the balance is still ballooning and of course I put the max in every year. To be honest, I’m quite skeptical that the structure of HSAs will look the same in 20 years as has been discussed at length on this forum, something has to give sooner or later in regards to the US healthcare industry.

Surely your wife would understand "tax free growth".

I am not sure why it is not logical to save that money for later, rather than spend it today, after all, it is called a health savings account, not a health spending account. :beer

We don't currently spend any of it for the same reason we don't use money from our Roth IRA to pay our grocery bills: There is VERY limited tax-free space available to us (most people?), we like to utilize the most we can.
Once in a while you get shown the light, in the strangest of places if you look at it right.

illumination
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Re: How much cash do you keep in your HSA?

Post by illumination » Sun Sep 29, 2019 12:14 am

Zero.

I look at it as another Roth IRA that I plan to tap into at retirement.

I used to keep a cash balance in the HSA, but the more I looked at it, dollars in the HSA are "worth" more, so long term I want that in maximum growth at all times. Regret not figuring this out a while ago.

I keep enough in my emergency account (taxable) to comfortably cover my high deductible and just pay out of pocket for everything, keeping my tax-free dollars untouched and growing.

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Re: How much cash do you keep in your HSA?

Post by stimulacra » Sun Sep 29, 2019 12:21 am

I keep a years worth of max out-of-pocket in my HSA.

The rest is invested. You can make various arguments that this method is less optimal than being 100% invested, for me it's one less thing to worry about and I can go about my life.

wootwoot
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Re: How much cash do you keep in your HSA?

Post by wootwoot » Sun Sep 29, 2019 12:23 am

All of it.

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beyou
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Re: How much cash do you keep in your HSA?

Post by beyou » Sun Sep 29, 2019 12:26 am

100% cash. Started too late in life, preferring low deductible plan with no HSA. Started HSA in my 50s, knowing I cant add much. Just wanted to lower my premiums, keeping cash for the now higher oop expenses. So far so good, accumulating more than qualified withdrawals, so wish I had started long ago. Would have kept $5k cash for qualified expenses and invested the rest, but not likely to get there before retiring and losing my HSA eligible plan.

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Re: How much cash do you keep in your HSA?

Post by HawkeyePierce » Sun Sep 29, 2019 12:27 am

$100 in cash. Everything over that is auto-swept from HSA Bank to TD Ameritrade and I'm too lazy to manually sweep the rest.

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Re: How much cash do you keep in your HSA?

Post by marcopolo » Sun Sep 29, 2019 12:29 am

stimulacra wrote:
Sun Sep 29, 2019 12:21 am
I keep a years worth of max out-of-pocket in my HSA.

The rest is invested. You can make various arguments that this method is less optimal than being 100% invested, for me it's one less thing to worry about and I can go about my life.
Seems like it is one MORE things to worry about, managing the two pieces of the HSA.

Money is fungible, health care out of pocket expenses are no different than any other expenses. I just pay for them like any other expenses, and use the tax free saving vehicle for savings. Seems simpler, and results in better tax efficiency.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: How much cash do you keep in your HSA?

Post by dogagility » Sun Sep 29, 2019 5:11 am

We treat our HSA as a retirement account. Our budget allows us to max HSA contributions and cash flow all yearly medical expenses. The HSA is invested 100% in a total international equity index fund.
We do this with the expectation of maximal returns and maximal tax savings at withdrawal, all within the context of our entire retirement portfolio.
"The stock market is a device for transferring money from the impatient to the patient" -- Warren Buffett

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Re: How much cash do you keep in your HSA?

Post by CurledMoss » Sun Sep 29, 2019 5:44 am

The absolute minimum to open hsa investments. Which is $1000. 15k in my hsa investment. I plan on maxing it out for the next 30 years. If i don't need it for health premiums in retirement then can roll into a traditional ira.

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Re: How much cash do you keep in your HSA?

Post by motorcyclesarecool » Sun Sep 29, 2019 6:25 am

We don’t currently max our tax advantaged savings opportunities.

The last two years I haven’t been able to max out my TSP but have been maxing my HSA and managed to max our IRAs. Therefore, I’ve been using our HSA to pay current medical expenses in order to free up cash flow for packing my TSP.

I have most of my HSA invested. I try to keep my cash balance roughly equal to our remaining family deductible. In the final quarter of the year, I’ll build up the cash balance with my contributions to meet next year’s deductible.

If I were maxing my tax advantaged space, I would pay medical expenses from cash flow.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: How much cash do you keep in your HSA?

Post by ENT Doc » Sun Sep 29, 2019 7:12 am

Zero. Out of pocket coming from would be taxable. So invest everything in the HSA. Fidelity.

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ClevrChico
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Re: How much cash do you keep in your HSA?

Post by ClevrChico » Sun Sep 29, 2019 7:54 am

My HSA automatically maintains a balance of $1k in cash. I've seen no way to change this, and it seems to work well.

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Re: How much cash do you keep in your HSA?

Post by MikeG62 » Sun Sep 29, 2019 8:04 am

investingdad wrote:
Sat Sep 28, 2019 9:12 am
nps wrote:
Sat Sep 28, 2019 6:49 am
I invest it all. Zero cash.
Same.

It's an investment tax shelter that we'll tap later in life.
Me too.
Real Knowledge Comes Only From Experience

aristotelian
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Re: How much cash do you keep in your HSA?

Post by aristotelian » Sun Sep 29, 2019 9:23 am

Mine is fully invested but I do keep a portion in bonds.

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willthrill81
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Re: How much cash do you keep in your HSA?

Post by willthrill81 » Sun Sep 29, 2019 9:37 am

ClevrChico wrote:
Sun Sep 29, 2019 7:54 am
My HSA automatically maintains a balance of $1k in cash. I've seen no way to change this, and it seems to work well.
Some custodians require that a minimum cash threshold be met before remaining funds can be invested. My HSA through Health Equity (selected by my employer) requires a $2k threshold for this purpose. But you can transfer your HSA balance to another custodian that doesn't have this restriction, such as Fidelity, which is what we've done this year.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

pyld76
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Re: How much cash do you keep in your HSA?

Post by pyld76 » Sun Sep 29, 2019 10:01 am

I don’t believe I have the organizational capability to save receipts for a 30 year (or greater) time horizon, and as a result pay for current medical expenses out of the HSA. I also treat the HSA as a “medical only” bucket and not a part of my overall AA.

As such, I target a cash allocation equal to one year’s worth of my “in network” deductible or $1700. I keep enough bonds/fixed income to get me to one year out of network out of pocket max ($8k). The remainder is in equities. Whole thing is at Fido.

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Re: How much cash do you keep in your HSA?

Post by danaht » Sun Sep 29, 2019 10:26 am

I keep $550 in cash in my Optum Bank HSA account. The rest is transferred to Fidelity HSA account every year to be invested in 100% stocks/stock index funds. Optum Bank requires members of my company to keep at least $500 in the account to avoid a monthly maintenance fee. Fidelity doesn't have any fees - and so far there have not been any fees to do partial transfers to Fidelity (when initiated through Fidelity). Although, Optum clearly states that they do charge a fee for partial transfers - I have been fortunate so far. If I had a choice - I would keep $0 cash in my HSA - but I need to keep my Optum account open while I work and the company is contributing a little to my HSA every year. Optum Bank doesn't provide interest on the $550 - so it's not a great account to store money.

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Re: How much cash do you keep in your HSA?

Post by illumination » Sun Sep 29, 2019 10:33 am

JonnyDVM wrote:
Sat Sep 28, 2019 10:06 pm
To be honest, I’m quite skeptical that the structure of HSAs will look the same in 20 years as has been discussed at length on this forum, something has to give sooner or later in regards to the US healthcare industry.
I wouldn't let that fear keep you from using them as investment vehicle for later in life healthcare costs.

I plan on using my account for ... MediCare premiums. And other out pf pocket costs while I'm on MediCare. The supposed ideal universal model that can still cost a user quite a bit of money.

Even in other countries where health care is considered free or universal, there can be a lot of out of pocket costs. Or to have the money for the option of private health care providers. In Canada, something like 1 out of 3 have private health insurance. I would want to be the 1 out of 3. Or the ability to travel abroad for care.

I don't believe there will ever be a truly "cost free" healthcare for consumers across the board, and even if the US did go heavily in that direction, I think the likelihood they would "raid" these accounts is the same odds as them raiding any other tax deferred account like a Roth, 401k, IRA, 403b, etc.

HSA accounts have the same tax consequences as a traditional IRA if not used for medical costs after age 59.5, still a heck of a deal and a good reason to keep contributing even if you think there may be no more medical costs for users in the future (which I think is ludicrous)

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