Are Health Savings Accounts good investment vehicles?


#1

I’ve read a few posts recently on Health Savings Accounts. In the new American Health Care Act, HSA contributions could be increased to $6,750 for individuals and $13,100 for families. This could make HSAs even more attractive as an investment vehicle because of its quadruple tax advantages.

Here is my post this week discussing HSAs:

Does anyone see any downsides to HSAs other than the higher deductible you are exposed to? @ChiefMomOfficer wrote a nice article yesterday with some valid points.

https://chiefmomofficer.org/2017/05/22/when-good-financial-ideas-go-bad-hsas/


#2

Keep in mind with the current HSAs/HDHPs the family deductible is tricky and you must make sure you understand it.

This is from an article that explains it best: I bolded for emphasis:

Most HDHPs use the family deductible system in which there are no individual deductibles and nobody in the family gets benefits until the family deductible has been met. This is known as an aggregate deductible.


#3

I was hesitant the first year my employer offered an HSA, but since then I have been on board the HSA train. Worst case scenario for a calendar year is that I do not make any money (full deductible is same as employer contributions) best case I build my retirement war chest by over 6k each year and it rolls over and it is untaxed.


#4

Unfortunately, my health insurance is too amazing for me and my wife for us to qualify… :cry: rough life, huh?


#5

I have had an HSA for a number of years, but unfortunately the medical expenses were high and required us using the funds form it. But, at least I didn’t pay Fed tax on those $s. I love in CA and they don’t recognize HSAs. I would welcome the higher threshold as the current level is wiped out by just a few visits if you have to have any tests such as Ultrasounds, MRIs, etc. A single emergency room visit can wipe out a years of savings easily.

:O)


#6

We’ve had great success with using HSA’s. They are the only triple tax-preferenced vehicle out there and if you can cover your current expenses with other cash flow, the HSA can be a great long-term investment account. Plus, you can reimburse your expenses at any time in the future totally tax-free.

John


#7

Thanks for sharing my article @Groundedengineer. As I mentioned, I do like HSA’s if they make financial sense, but you need to do the math for yourself. If you have a lot of medical expenses, or if you’re going to need to pay extra for the privilege of having an HSA, you need to do the math. You might be surprised to find out that it’s not the best choice, even accounting for the triple/quadruple tax advantage.

For my employer, we have access to an HRA (Health Reimbursement Account). It works like an HSA in some ways, but it’s very different in others. You can’t invest it, you can’t contribute to it, and you can’t take it with you when you leave your employer, so it’s not as good in that way. BUT for my employer the HRA plan has a higher employer contribution (so less I need to pay) and lower deductible. So when you have a lot of medical expenses and hit the deductible every year ($3250) the math doesn’t work out in favor of the HSA.


#8

My favorite investment wrapper. [HSA)http://www.lifeplanningtoday.com/health-savings-accounts-retirement-saving-vehicle/


#9

I’ve been using HSA for past few years and it has ton lots of benefits to offer. I’ve shared my personal experience in the post here. Hope this helps


#10

As a CFP, HSA’s are my favorite: HSA Article: Why Health Savings Accounts are Fantastic for Retirement!


#11

The short answer on HSA’s is that it depends. I know people they will not work for and others that they will. The vehicle itself is less important than the place in someone’s overall portfolio.

Personally, I love my HSA. However, I am relatively young, single, and have no reoccurring medical expenses that make them otherwise a bad decision. Additionally, I have a HSA that allows for me to invest and not all of them do. My general advice to people who ask about them is to look at your medical expenses and see if a HSA makes sense.


#12

I just started using an HSA for the first time this year. Here is an article I wrote up on how decided to open an HSA and what the numbers looked like for me.


#13

Just wrote 2 posts on this.


#14

No. And the higher deductible is not a downside, since you’re also paying a lower premium.