Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Show Bank of America, N.A. makes available The HSA for Life® Health Savings Account as a custodian only. The HSA for Life is intended to qualify as a Health Savings Account (HSA) as set forth in Internal Revenue Code section 223. However, the account beneficiary establishing the HSA is solely responsible for ensuring satisfaction of eligibility requirements set forth in IRC sec 223. If an individual/employee establishes a HSA and s/he is not otherwise eligible, s/he will be subject to adverse tax consequences. In addition, an employer making contributions to the HSA of an ineligible individual may also be subject to tax consequences. We recommend that applicants and employers contact qualified tax or legal counsel before establishing a HSA. Bank of America does not sponsor or maintain the Flexible Spending Accounts (FSA) / Health Reimbursement Accounts (HRA) that you establish. The programs are sponsored and maintained solely by the employer offering the plan, or by an individual establishing an independent plan. Bank of America acts solely as claims administrator performing administrative tasks pursuant to an agreement with, and at the direction of, the sponsoring employer or individual under an independent plan. The sponsoring employer or individual under an independent plan is solely responsible for ensuring such arrangements comply with all applicable laws. The planning tools and information calculators are illustrative only, and accuracy is not guaranteed. They are intended to provide a comparative tool for various consumer health care options and potential costs and savings of those options. Bank of America and its affiliates are not tax or legal advisors. The calculators are not intended to offer any tax, legal or financial advice and do not assure the availability of or your eligibility for any specific product offered by Bank of America or its affiliates. Please consult with qualified professionals to discuss your situation. This site may contain links to third-party content, which may be articles, videos, or calculators, regarding health plans only as a convenience. Some articles, videos and calculators may have been written and produced by third parties not affiliated with Bank of America or any of its affiliates. Neither Bank of America nor any of its affiliates or employees provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions. This material should be regarded as general information on health care considerations and is not intended to provide specific health care advice. If you have questions regarding your particular health care situation, please contact your health care, legal or tax advisor. Please consult with your own attorney or tax advisor to understand the tax and legal consequences of establishing and maintaining a HSA, FSA, Dependent Care FSA, and/or HRA plan. All trademarks and service marks belong to Bank of America Corporation unless otherwise noted. Bank of America, N.A., Member FDIC. Mutual Fund investment offerings for the Bank of America HSA are made available by Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”), a registered broker-dealer, registered investment adviser, Member SIPC, and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). Investments in mutual funds are held in an omnibus account at MLPF&S in the name of Bank of America, N.A., for the benefit of all HSA account owners. Recommendations as to HSA investment menu options are provided to Bank of America, N.A. by the Chief Investment Office (“CIO”), Global Wealth & Investment Management (“GWIM”), a division of BofA Corp. The CIO, which provides investment strategies, due diligence, portfolio construction guidance and wealth management solutions for GWIM clients, is part of the Investment Solutions Group (ISG) of GWIM. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value © Bank of America Corporation. All rights reserved. 4717989 Exp-04/28/2024(global footer) 4882679 08/02/2023 If you have a health savings account (HSA), investing that money can help you maximize the tax benefits the account offers. But depending on your situation, investing your HSA funds could leave you with more risk than you're willing to take on. Now, we're not investment professionals, so always be sure to speak with one before making financial decisions. But from our experience, before you choose to invest your HSA funds, consider these benefits and drawbacks. First, the pros of investing HSA funds...One of the main benefits of using an HSA is that your contributions are tax-deductible and you can withdraw money tax-free as long as it's for eligible medical expenses. If you choose to invest that money instead, here are a few other benefits you'll get: Tax-free growth: The only other investment account that offers tax-free growth on your investments is a Roth IRA, which earmarks your money for retirement. With an HSA, you can invest your funds now and use them whenever you need to. You can save for retirement: If your primary goal is to save for retirement, you can use both a Roth IRA and an HSA to achieve your goal. That's because once you reach age 65, you can use HSA funds to pay for some health insurance premiums, including for Medicare Part B and long-term care insurance. It's better than earning nothing: If you generally don't get sick often and don't need your HSA funds now, it's usually better to invest that money instead of letting it sit there and earning nothing at all. But there are always some cons...While there are some killer benefits of putting your HSA funds in the market, there are a few things to consider before you pull the trigger: Fees: HSA administrators typically charge a fee to allow you to invest your funds. What's more, you may also have to pay fees based on the mutual funds and other investments you choose. Depending on what rate of return you want, fees could reduce what you end up with. Volatility: If you plan on using your HSA funds within the next few years, it's generally best to keep the money as safe as possible. That way, if the stock market crashes, you don't watch your HSA balance decrease right before you need it. You may not have the option: Many HSA administrators require that you have a minimum balance in your account before you can invest your money. If you reach that amount and start investing, you'll have to be careful not to go below the threshold again. Otherwise, you won't be able to continue investing until you've brought the balance back up. The bottom line? That's up to you...Investing your HSA funds can be a great way to save for the future. But it's generally only a good option if you're not consistently dipping into the account to cover current medical expenses. If you're using your HSA mostly for short-term needs, it may be better to keep the balance safe rather than risking it in the market. So, if you're considering it, take a look at your past account activity. Then look ahead to planned expenses where you may be taking a withdrawal from the account. Depending on how you've used the account in the past and what your plans are for it in the future, you'll have a better idea of whether it's worth it to invest the money. -- Note: The information provided on or through this website does not constitute legal or tax advice and no attorney-client relationship is created. If you are seeking or need legal or tax advice, please contact an attorney or tax professional directly. Compound It!is your weekly update of achievable, effective, no-nonsense HSA saving, buying and investment advice, delivered by people who make it work in their own lives. For the latest info about your health and financial wellness, be sure to check out the HSA Learning Center, and follow us on Facebook and Twitter. How should I invest my HSA growth?HSA Investment Strategies. Treat your HSA like an investment account; don't spend the funds unless needed for medical expenses.. Max out your investment by making the full annual contribution each year (including the extra $1,000 catch-up after age 55). Take full advantage of any employer matching contributions.. Should I have my HSA invested?Try to invest as much of your HSA money as possible while ensuring that you keep enough cash to cover your qualified medical expenses. Consider where your other retirement plans are invested as well to make sure that your HSA investments provide diversification. Avoid taking out funds from your HSA as much as possible.
How much cash should you keep in your HSA?Here's where the guesswork comes in: Think about your medical history and your family's history of longevity. Use that information to choose an HSA savings goal. The number should be between $150,000 and $1 million if estimating for you and a spouse. Adjust down if you're estimating for yourself only.
When should I invest in HSA?Regardless, you will still enjoy tax-free contributions and tax-free distributions for eligible expenses. If you do not have recurring healthcare expenses, or the expenses you have are significantly less than your available HSA balance, then the time is right to invest.
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