Maximizing Your Hsa Investments With Fidelity Options

Investing your Health Savings Account (HSA) with Fidelity can help your savings grow over time, with any growth being free from federal income taxes. It's a great way to help cover the costs of health care through retirement. You can invest your HSA money in a broad range of individual stocks, mutual funds, and other securities. There is no minimum required to open an account, and you can invest any amount. You can choose to manage your investments yourself with a self-directed Fidelity HSA or choose the Fidelity Go® HSA, which is an easy, affordable way to enjoy the benefits of professional money management.

No minimum balance or fees

When it comes to investing your HSA funds with Fidelity, you'll be pleased to know that there is no minimum balance requirement or any additional fees associated with opening an HSA account. This means you can start investing and growing your money for healthcare expenses right away, regardless of the initial amount you have available.

With the Fidelity HSA, you have the flexibility to choose from a wide range of investment options, including mutual funds, exchange-traded funds (ETFs), and individual stocks and bonds. This allows you to tailor your investment strategy to your specific needs and financial goals. You can also take advantage of Fidelity's comprehensive research tools and insights to make informed investment decisions.

One of the key benefits of investing your HSA funds is the potential for tax savings. Contributions to your HSA account are often tax-deductible, and any interest or earnings your investments generate are tax-free as long as they are used for qualified medical expenses. This provides a significant advantage over traditional investment accounts, where you would typically pay taxes on investment gains.

Additionally, with the Fidelity HSA, you are not restricted by any minimum balance requirements or fees when it comes to investing. This means you can start investing with any amount and have the freedom to adjust your investment strategy over time. Whether you prefer an active or passive approach, Fidelity provides the necessary tools and resources to help you effectively manage your investments.

By investing your HSA funds with Fidelity, you can maximize the benefits of your health savings account. Remember to consider your investment goals, risk tolerance, and time horizon when deciding how to allocate your HSA funds. With no minimum balance or fees, you can invest with confidence and take control of your healthcare savings.

Tax advantages

Health Savings Accounts (HSAs) are tax-advantaged accounts that allow you to pay for current medical bills, save for future medical expenses, and invest in a variety of stocks, bonds, and mutual funds. Here are some of the tax advantages of investing in an HSA with Fidelity:

Tax-Free Contributions:

Fidelity HSAs offer a triple tax advantage. First, contributions to your HSA are not subject to federal income tax. This means that the money you put into your HSA is tax-deductible, lowering your taxable income. If your HSA is through your employer, you can make pre-tax payroll contributions, further reducing your tax burden. Additionally, anyone can make after-tax contributions to your HSA, and these contributions are generally not tax-deductible for the contributor.

Tax-Free Investment Growth:

The second advantage is that any investment gains or earnings in your HSA are not taxed. This means that your investments can grow tax-free over time, potentially increasing your balance significantly. This advantage applies to both federal and state taxes, although there may be some state-specific variations.

Tax-Free Withdrawals for Qualified Medical Expenses:

The third tax advantage of HSAs is that withdrawals from your HSA are not subject to federal income tax when used for qualified medical expenses (QMEs). QMEs include a wide range of costs, such as doctor's visits, hospital services, medications, and over-the-counter medications. This allows you to pay for medical expenses with pre-tax dollars, effectively reducing the cost of healthcare.

Rollover and Flexibility:

HSA funds roll over from year to year, and you retain control of the account even if you change employers or move to another state. This flexibility ensures that you can save and invest for the long term without worrying about losing your tax advantages. Additionally, you can have multiple HSAs, although the annual contribution limits apply to the total amount contributed to all your HSAs combined.

Retirement Savings:

HSAs can also be a powerful tool for retirement savings. Any unspent HSA money can be used tax-free for qualified medical expenses in retirement. Unlike IRAs and 401(k)s, there is no requirement to begin taking distributions at a certain age. After age 65, you can even withdraw HSA funds for non-medical expenses without a penalty, although you will owe income tax on the withdrawal.

Investment options

There are two main options for investing your HSA with Fidelity:

• Fidelity Go® HSA: This is a managed account with a team of professionals who will invest your money to help you meet your goals. There is no minimum amount required to open a Fidelity Go account, but your account balance must be at least $10 for Fidelity to invest your money according to the chosen strategy. There is no advisory fee for balances under $25,000, but there is a 0.35% advisory fee per year for balances of $25,000 and above. This includes unlimited 1-on-1 coaching calls.
• Fidelity HSA®: This is a self-directed account where you can choose and manage your own investments. There is no minimum amount required to open an account or to start investing. You can invest in stocks (including fractional shares), bonds, ETFs, mutual funds, and more. There are no account fees, but you will be subject to standard commissions and investment-related fees.

With both options, you can transfer money from a linked bank account, another HSA, or an IRA. You can also deposit a check or set up direct deposits from your payroll.

Transferring from another provider

Transferring your HSA to Fidelity is a simple process. You can transfer your Health Savings Account (HSA) from another provider to Fidelity at any time.

Steps to Transferring Your HSA to Fidelity:

• Request a Transfer: You can do this online.
• Provide Account Details: You will need to provide the name and address of your other HSA provider and attach a recent statement from them.
• Fidelity Contacts Your Provider: Fidelity will reach out to your other HSA provider on your behalf to initiate the transfer.
• Processing the Request: Your current provider will process the request and send your assets to Fidelity, usually within 2-5 weeks.
• Deposit into Fidelity HSA: Once received, Fidelity will deposit your money into your new Fidelity HSA account.

Important Considerations:

• Separate Accounts: Your existing HSA may include a bank account for your cash balance and a brokerage account for your investments. You may need to submit a separate transfer request for each type of account.
• Cash or In-Kind Transfer: Many HSA providers will only transfer cash. You may need to liquidate any investments and transfer them as cash. However, Fidelity does allow for in-kind transfers, where your investments are also moved to Fidelity.
• Tax Implications: As there are no taxes or forms to worry about for direct trustee-to-trustee transfers, this is a non-reportable transfer.
• Timing: The transfer process can take 2-5 weeks, depending on how quickly your current HSA provider responds.

By transferring your HSA to Fidelity, you can benefit from streamlined management, no account fees or minimums, and higher cash rates.

Using a debit card

You can also use the Fidelity BillPay® for HSAs, a simple online service that enables you to pay bills for qualified medical expenses electronically. You can use BillPay to pay your electronic bills with your HSA money anytime, anywhere with just a few clicks. You can choose a one-time payment or set up automatic recurring payments for free.

You can also pay for qualified medical expenses out-of-pocket and reimburse yourself using your HSA money. You can transfer money online from your HSA to your personal bank account using an electronic funds transfer (EFT) or mail yourself a check through the transfer money feature.

Frequently asked questions