The credit union has been offering Health Savings Accounts since 2013 and my wife has had one that whole time because she qualified through her school district’s high deductible health plan (TRS ActiveCare 1-HD). In those years she’s contributed steadily to the account and built up a nice balance. I noticed the balance kept growing in part because she wasn’t spending any of the money. My wife is pretty savvy about money and saving so I asked her why she wasn’t spending the account funds.
Her answer was right on the mark – The HSA funds are growing tax free whereas our regular funds don’t. Her plan is to save the funds so that if we need them for big medical expenses, she’ll have them available because unlike the more common Flexible Spending Account, there is no use it or lose it component and the funds continue to roll over year to year.
New Investment Options
When the credit union offered the ability to invest a part or all of the funds from her HSA through the credit union’s partnership with myHSAinvestments.com, she was literally the first person to sign up. She sees it as putting her money to work for her and increasing the rate of savings. She now has the majority of her HSA funds in several mutual funds offered through the partnership.
Health Savings Account or Health Spending Account
So her answer got me thinking about the biggest question someone should ask themselves when considering use the investment option for their HSA. Do you typically use it as a savings account or as a spending account? If you use it as a spending account, you may not want to invest the funds because you may not have the ability to time withdrawals from the investments at the most favorable time. If you use the account for monthly medical payments, prescriptions, or other frequent medical transactions, you most like want to know exactly what your balance is at any give time. For those that typically use it as a savings account, you now have the option to grow that savings at a greater rate. For example, my wife’s balance has already grown almost 3.5% in just one month.
Tolerance for Risk
Another major consideration is your tolerance for risk. Once you invest the funds in the market, they are no longer guaranteed. In theory, my wife could lose all of her HSA funds but that is a risk we are comfortable with like most of us who have 401(k) or 403(b) investments.
If you are considering investing your HSA funds, I encourage you to do your research. If you don’t feel comfortable with choosing a mutual fund, ask for professional help or use the self guided tools available to you.
Post author: Jamieson Mackay, CCUFC
The opinions expressed on this page are for informational purposes only and is not intended to provide legal or financial advice. The views expressed are those of the author of the article and may not reflect the views of the credit union.
Neither Gulf Coast Educators Federal Credit Union, nor Devenir Group, LLC, the third party, can provide investment advice to you on this program. Once you transfer funds from your HSA to myHSAinvestments, these dollars are no longer covered by applicable FDIC or NCUA insurance. We recommend you speak with a licensed investment advisor or consult the prospectus should you have questions about any investment. Carefully weigh the advantages and disadvantages of investing your HSA funds before doing so. Investment products are not federally-insured; may lose value and are not a deposit account. Investment accounts are not obligations of the credit union and are not guaranteed.
Funds should not be considered a deposit of or guaranteed by Gulf Coast Educators FCU, may lose value, and are not NCUA/NCUSIF Insured.