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HSA - Continue to Invest?
Treat HSA as an IRA?When can I roll over a HSA?HSA without a HDHP [USA]What happens to an HSA when I am no longer eligible to contribute?Can a US expat have and use an HSA for the tax benefits while living abroad?Allocation of HSA assetsCan I use an HSA to pay off medical debts incurred before the HSA was funded?Should I prioritize retirement savings inside of my HSA?Should I withdraw from a HSA with no investment options?What is the difference between a Health Savings Account (HSA) and a regular savings account through a bank?
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I have an HSA that allows me to invest the money in the account in the stock market. Any money not invested is available to be used for health expenses. I currently have ~50% of the total balance of the HSA invested, with the other ~50% on hand for expenses.
I've run into a situation where the ~50% on hand for expenses does not cover all of my current expenses. To cover the remaining costs, should I sell off my the HSA investments or should I leave those as is and use money from my savings account?
I'm trying to determine if the tax advantages of the HSA combined with the returns the invested money is seeing is worth me leaving that money alone - and instead, take the money from my savings account to cover the costs.
united-states hsa healthcare
New contributor
add a comment |
I have an HSA that allows me to invest the money in the account in the stock market. Any money not invested is available to be used for health expenses. I currently have ~50% of the total balance of the HSA invested, with the other ~50% on hand for expenses.
I've run into a situation where the ~50% on hand for expenses does not cover all of my current expenses. To cover the remaining costs, should I sell off my the HSA investments or should I leave those as is and use money from my savings account?
I'm trying to determine if the tax advantages of the HSA combined with the returns the invested money is seeing is worth me leaving that money alone - and instead, take the money from my savings account to cover the costs.
united-states hsa healthcare
New contributor
add a comment |
I have an HSA that allows me to invest the money in the account in the stock market. Any money not invested is available to be used for health expenses. I currently have ~50% of the total balance of the HSA invested, with the other ~50% on hand for expenses.
I've run into a situation where the ~50% on hand for expenses does not cover all of my current expenses. To cover the remaining costs, should I sell off my the HSA investments or should I leave those as is and use money from my savings account?
I'm trying to determine if the tax advantages of the HSA combined with the returns the invested money is seeing is worth me leaving that money alone - and instead, take the money from my savings account to cover the costs.
united-states hsa healthcare
New contributor
I have an HSA that allows me to invest the money in the account in the stock market. Any money not invested is available to be used for health expenses. I currently have ~50% of the total balance of the HSA invested, with the other ~50% on hand for expenses.
I've run into a situation where the ~50% on hand for expenses does not cover all of my current expenses. To cover the remaining costs, should I sell off my the HSA investments or should I leave those as is and use money from my savings account?
I'm trying to determine if the tax advantages of the HSA combined with the returns the invested money is seeing is worth me leaving that money alone - and instead, take the money from my savings account to cover the costs.
united-states hsa healthcare
united-states hsa healthcare
New contributor
New contributor
edited May 5 at 20:41
John_Henry
New contributor
asked May 5 at 20:34
John_HenryJohn_Henry
1333
1333
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add a comment |
2 Answers
2
active
oldest
votes
In an optimal HSA tax scenario, you pay all of your medical expenses out of pocket and save all the receipts. You invest all the HSA money and get decent returns. Then years later use all your saved receipts to get reimbursements from your HSA. In this situation, the contributions, growth, and distributions are all tax free.
It might not be practical/convenient to maximize the tax benefit of an HSA because it requires having other funds on hand to pay medical expenses, saving receipts can be annoying, and you'll have to keep an eye out in case they ever change the rules that allow withdrawals years later. Some HSA programs don't offer great investment options. Additionally, exposing HSA funds to market risk means potential for losses, so the strategy might not be ideal for those who anticipate withdrawing HSA funds in the near future.
If you can afford to pay medical expenses with post-tax dollars and leave the HSA invested (and the HSA investment options aren't substantially worse than other retirement accounts) then you should do so to maximize the tax benefits.
Many people put maximizing HSA contributions above all retirement investing except for employer 401k match, due to the tax advantages.
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
add a comment |
Adding to Hart CO's answer, another option would be to scale back your investments to fit your medical situation. That may be 60/40 or 70/30. Whatever fits best. Settle into your new situation, then work to balance it back out, through increased pay or medical improvement.
While this doesn't maximize your long term tax benefits as Hart CO explained, you would still benefit from spending pre-tax dollars.
New contributor
add a comment |
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2 Answers
2
active
oldest
votes
2 Answers
2
active
oldest
votes
active
oldest
votes
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oldest
votes
In an optimal HSA tax scenario, you pay all of your medical expenses out of pocket and save all the receipts. You invest all the HSA money and get decent returns. Then years later use all your saved receipts to get reimbursements from your HSA. In this situation, the contributions, growth, and distributions are all tax free.
It might not be practical/convenient to maximize the tax benefit of an HSA because it requires having other funds on hand to pay medical expenses, saving receipts can be annoying, and you'll have to keep an eye out in case they ever change the rules that allow withdrawals years later. Some HSA programs don't offer great investment options. Additionally, exposing HSA funds to market risk means potential for losses, so the strategy might not be ideal for those who anticipate withdrawing HSA funds in the near future.
If you can afford to pay medical expenses with post-tax dollars and leave the HSA invested (and the HSA investment options aren't substantially worse than other retirement accounts) then you should do so to maximize the tax benefits.
Many people put maximizing HSA contributions above all retirement investing except for employer 401k match, due to the tax advantages.
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
add a comment |
In an optimal HSA tax scenario, you pay all of your medical expenses out of pocket and save all the receipts. You invest all the HSA money and get decent returns. Then years later use all your saved receipts to get reimbursements from your HSA. In this situation, the contributions, growth, and distributions are all tax free.
It might not be practical/convenient to maximize the tax benefit of an HSA because it requires having other funds on hand to pay medical expenses, saving receipts can be annoying, and you'll have to keep an eye out in case they ever change the rules that allow withdrawals years later. Some HSA programs don't offer great investment options. Additionally, exposing HSA funds to market risk means potential for losses, so the strategy might not be ideal for those who anticipate withdrawing HSA funds in the near future.
If you can afford to pay medical expenses with post-tax dollars and leave the HSA invested (and the HSA investment options aren't substantially worse than other retirement accounts) then you should do so to maximize the tax benefits.
Many people put maximizing HSA contributions above all retirement investing except for employer 401k match, due to the tax advantages.
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
add a comment |
In an optimal HSA tax scenario, you pay all of your medical expenses out of pocket and save all the receipts. You invest all the HSA money and get decent returns. Then years later use all your saved receipts to get reimbursements from your HSA. In this situation, the contributions, growth, and distributions are all tax free.
It might not be practical/convenient to maximize the tax benefit of an HSA because it requires having other funds on hand to pay medical expenses, saving receipts can be annoying, and you'll have to keep an eye out in case they ever change the rules that allow withdrawals years later. Some HSA programs don't offer great investment options. Additionally, exposing HSA funds to market risk means potential for losses, so the strategy might not be ideal for those who anticipate withdrawing HSA funds in the near future.
If you can afford to pay medical expenses with post-tax dollars and leave the HSA invested (and the HSA investment options aren't substantially worse than other retirement accounts) then you should do so to maximize the tax benefits.
Many people put maximizing HSA contributions above all retirement investing except for employer 401k match, due to the tax advantages.
In an optimal HSA tax scenario, you pay all of your medical expenses out of pocket and save all the receipts. You invest all the HSA money and get decent returns. Then years later use all your saved receipts to get reimbursements from your HSA. In this situation, the contributions, growth, and distributions are all tax free.
It might not be practical/convenient to maximize the tax benefit of an HSA because it requires having other funds on hand to pay medical expenses, saving receipts can be annoying, and you'll have to keep an eye out in case they ever change the rules that allow withdrawals years later. Some HSA programs don't offer great investment options. Additionally, exposing HSA funds to market risk means potential for losses, so the strategy might not be ideal for those who anticipate withdrawing HSA funds in the near future.
If you can afford to pay medical expenses with post-tax dollars and leave the HSA invested (and the HSA investment options aren't substantially worse than other retirement accounts) then you should do so to maximize the tax benefits.
Many people put maximizing HSA contributions above all retirement investing except for employer 401k match, due to the tax advantages.
edited 2 days ago
answered May 5 at 20:46
Hart COHart CO
37.2k689105
37.2k689105
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
add a comment |
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
1
1
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
in other words, by postponing the reimbursements, you can use your HSA as (tax-free invested) 'Emergency Funds'.
– Aganju
2 days ago
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
You mention "years later use all your saved receipts to get reimbursements from your HSA." Currently in the USA, what are the limits for how long you can claim reimbursement from an HSA for medical expenses?
– John_Henry
yesterday
1
1
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
@John_Henry There is no limit, as long as the expense was incurred after your HSA was opened and is a qualifying medical expense then you can delay reimbursement as long as you desire. That's why I mention keeping an eye out for rule changes, because they could change that at some point. Most likely in such a scenario you'd have a window to claim all expenses older than whatever limit they set.
– Hart CO
yesterday
1
1
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
Do note, though, that there might be a nightmare scenario where they change the laws on the reimbursements.... (or change the laws on HSAs in other ways.... Haven't heard about any current politician mentioning what they want to do to the system if medicare for all passes)
– xyious
yesterday
1
1
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
@xyious Yeah, typically such a change would come with a window of time for people to get the old expenses reimbursed, but it might be overlooked as it could be pretty edge-case. The nice thing is that, at worst, the HSA behaves as a traditional IRA in retirement, still nicely tax-advantaged.
– Hart CO
yesterday
add a comment |
Adding to Hart CO's answer, another option would be to scale back your investments to fit your medical situation. That may be 60/40 or 70/30. Whatever fits best. Settle into your new situation, then work to balance it back out, through increased pay or medical improvement.
While this doesn't maximize your long term tax benefits as Hart CO explained, you would still benefit from spending pre-tax dollars.
New contributor
add a comment |
Adding to Hart CO's answer, another option would be to scale back your investments to fit your medical situation. That may be 60/40 or 70/30. Whatever fits best. Settle into your new situation, then work to balance it back out, through increased pay or medical improvement.
While this doesn't maximize your long term tax benefits as Hart CO explained, you would still benefit from spending pre-tax dollars.
New contributor
add a comment |
Adding to Hart CO's answer, another option would be to scale back your investments to fit your medical situation. That may be 60/40 or 70/30. Whatever fits best. Settle into your new situation, then work to balance it back out, through increased pay or medical improvement.
While this doesn't maximize your long term tax benefits as Hart CO explained, you would still benefit from spending pre-tax dollars.
New contributor
Adding to Hart CO's answer, another option would be to scale back your investments to fit your medical situation. That may be 60/40 or 70/30. Whatever fits best. Settle into your new situation, then work to balance it back out, through increased pay or medical improvement.
While this doesn't maximize your long term tax benefits as Hart CO explained, you would still benefit from spending pre-tax dollars.
New contributor
New contributor
answered 2 days ago
Better BudgetBetter Budget
41613
41613
New contributor
New contributor
add a comment |
add a comment |
John_Henry is a new contributor. Be nice, and check out our Code of Conduct.
John_Henry is a new contributor. Be nice, and check out our Code of Conduct.
John_Henry is a new contributor. Be nice, and check out our Code of Conduct.
John_Henry is a new contributor. Be nice, and check out our Code of Conduct.
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