Right now I have my health savings account in my federal credit union making about .01% . I contacted my Schwab adviser about moving it there, and surprisingly to me, Shcwab doesn't hold HSA money. In fact I'm finding no brokerage has that option. I'd like to be able to be able to invest that money in a conservative balanced mutual fund so it has some growth. Any thoughts by others on this?
I believe the health savings account is the most important savings tool you can make. What better than to put money in tax free and then pull it out tax free for those inevitable health care payments in retirement. I am using it for a retirement savings vehicle, so I'd like it to earn more than a low yielding savings account.
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https://www.hsasearch.com/hsa-providers/hsa-provider-lists/
Some pay 1 - 2 % depending on your account balance.
http://www.mutualfundobserver.com/discuss/discussion/6824/health-savings-accounts-hsa-and-mutual-funds
HSAs tend not to be sizeable accounts and they have paperwork requirements. As a result, they tend to be offered by banks/CUs offering little yield. If they have investment options, they typically require you to keep a certain cash balance in the bank/CU or pay a monthly fee (or both).
The investment options can be a list of around a dozen fair to middling funds or a full brokerage account. The latter in turn may or may not have its own maintenance fee.
One exception (as noted in the linked-to thread) is Bruce Fund. There your HSA is directly with the fund. Downside? Only one investment option, BRUFX.
Schwab does hold HSA money, but not directly (at least at the retail level). It works with some HSA providers to give you an HSA brokerage account. For example, SelectAccount will give you a Schwab account once you've got at least $10K in the HSA. I didn't reread the site now, so I don't know how current the info I posted in the old thread is.
Edit: Here's SelectAccount's fee schedule, dated 1/16 (thank you google, I didn't find it via navigation). Seems to be about what I described before: $10K balance cash requirement, with excess going to Schwab account, plus $18/year brokerage fee. Keeping that much cash in a low interest account is onerous. Also, most of the cash account options are not FDIC-insured bank accounts, but general liabilities of the insurance company doing business as Select Account (MII Life, Inc., rated just bbb+ by A.M. Best)
This is more an existence proof that Schwab accounts exist than a suggestion you go with them. There seem to be more (and cheaper) places that use TDAmeritrade.
Editted:
Thanks @msf for the MFO discussion link...pretty nice.
Also, @msf mentioned, this account grows slowly, but if investors can discipline themselves to fully fund their Health Savings Account every year until age 65 it should serve as a decent source of tax free income for healthcare related expenses in retirement.
Bee, I totally agree in using this fund as a retirement vehicle, helping pay health care costs in retirement. That is my goal. It is my understanding you can use the money to pay Medicare part B and part D premiums, but not pay for a supplemental policy. Plus of course medical costs along the way.
No tax in, no tax out. Better than an IRA, traditional or Roth. But as mentioned, hard to accumulate a lot of money. I hope to have it in the $20k range before I'm eligible in 3 years for medicare. It would be nice to have some growth to move that amount along.