Maximizing Your Hsa Investments With Wageworks: A Guide

A WageWorks Health Savings Account (HSA) is a flexible way to save for healthcare expenses, much like a 401(k) for medical expenses. It allows individuals to set aside money from their paycheck pre-tax into a savings account for eligible expenses, with the interest growing tax-free. HSA funds can be invested in a variety of options, including bank accounts, money market accounts, mutual funds, and stocks. However, it is important to maintain a small liquid balance in the HSA to cover current eligible expenses. With a WageWorks HSA, individuals can easily manage today's healthcare costs and build a healthcare nest egg for the future, benefiting from low fees, competitive interest rates, and investment options.

HSA funds can be invested in bank accounts, money market accounts, mutual funds, and stocks

A WageWorks Health Savings Account (HSA) is a great way to save for future medical expenses or even boost your retirement funds. It enables you to set aside money from your paycheck pre-tax into a savings account used for eligible expenses, and have the interest grow tax-free. You can also invest a portion of your HSA savings in a variety of investment options.

Bank Accounts

You can invest your HSA funds in a bank account, which offers a safe and secure way to grow your money over time. The interest earned on your HSA bank account is tax-free, providing an added benefit. It's important to note that while bank accounts are generally lower-risk, the returns may be lower compared to other investment options.

Money Market Accounts

Money market accounts are another option for investing your HSA funds. These accounts typically offer higher interest rates than traditional savings accounts, providing an opportunity for greater returns. Money market accounts may be suitable if you want to maintain a balance between risk and reward.

Mutual Funds

Investing your HSA funds in mutual funds offers an opportunity to diversify your investments. Mutual funds pool money from multiple investors to purchase a variety of stocks, bonds, or other securities. This diversification can help spread risk and provide access to a wider range of investments.

Stocks

Investing in stocks through your HSA can be a great way to potentially achieve higher returns. Stocks offer the potential for significant growth over time, especially if you invest in well-performing companies. However, it's important to remember that stocks come with higher risk, and the value of your investments can fluctuate with market changes.

It's important to note that while HSA funds can be invested in these options, there are also restrictions on certain investments. For example, HSA funds cannot be invested in collectibles, art, automobiles, or real estate.

By understanding the different investment options available for your WageWorks HSA, you can make informed decisions about how to allocate your funds and maximize their growth potential.

HSA funds cannot be invested in collectibles, art, automobiles, or real estate

A WageWorks Health Savings Account (HSA) is a great way to save for your future healthcare expenses. It is similar to a 401(k) for medical expenses, allowing you to set aside money from your paycheck pre-tax into a savings account for eligible expenses, while the interest grows tax-free. You can also invest a portion of your HSA savings in a variety of investment options.

While you can invest your HSA funds in bank accounts, money market accounts, mutual funds, and stocks, there are some restrictions on what you cannot invest in. HSA funds cannot be invested in collectibles, art, automobiles, or real estate. This means that you cannot use your HSA funds to purchase or invest in tangible assets such as vintage toys, paintings, cars, or property.

The reason for these restrictions is that HSA funds are intended to be used for qualified medical expenses. By restricting the use of HSA funds for certain types of investments, the government ensures that the funds are used for their intended purpose. This helps to maintain the tax advantages of HSA accounts.

It is important to note that while HSA funds cannot be used to invest in these areas, you can still use your HSA funds to invest in a diverse range of other options provided by WageWorks. These options include 32 no-load mutual funds across five classes of investments, including lifestyle and target-date funds. These funds are selected by investment experts and are evaluated on a quarterly basis to ensure they meet certain standards.

By using your HSA funds to invest in the available options, you can take advantage of the triple tax benefit offered by HSAs. Contributions to your HSA are made pre-tax, reducing your annual taxable income. The funds in your HSA grow tax-free, and when you withdraw the funds to pay for qualified medical expenses, those withdrawals are also tax-free.

So, while HSA funds cannot be invested in collectibles, art, automobiles, or real estate, you still have a wide range of investment options available to help you save for future healthcare expenses and maximize the benefits of your HSA account.

HSA funds can be withdrawn at any time, but there is a 20% penalty tax for non-medical expenses

A WageWorks Health Savings Account (HSA) is a tax-efficient way to save for future healthcare expenses. You can withdraw HSA funds at any time, but if they are used for non-medical expenses, you will be taxed on the withdrawal amount and will also have to pay a 20% penalty tax.

The 20% penalty tax is waived if you are over 65 or disabled. In these cases, you will only pay income tax on the withdrawal amount.

The IRS defines qualified medical expenses as those that "would generally qualify for the medical and dental expenses deduction". These include:

• Some dental expenses
• Vision care (eyeglasses, contacts, Lasik surgery)
• X-rays
• Long-term care insurance
• Health care continuation coverage (e.g. COBRA)
• Health care coverage while receiving unemployment compensation
• Medicare and other health care coverage for those aged 65 or older

You can invest your HSA funds in bank accounts, money market accounts, mutual funds, and stocks. However, you may not invest in collectibles, art, automobiles, or real estate.

HSA funds can be used for current and future healthcare expenses

A WageWorks Health Savings Account (HSA) is a great way to save for future healthcare expenses. It enables you to set aside money from your paycheck pre-tax into a savings account for eligible expenses, and have the interest grow tax-free. HSA funds can be used for current and future healthcare expenses, including medical, dental, and vision care.

The IRS has a broad list of HSA-eligible expenses, including:

• Ambulance fees and emergency care
• Birth control pills, injections, and devices
• Dental care, including cleanings, fillings, braces, and dentures
• Diabetes supplies, such as blood sugar test kits and insulin
• Eye surgery, including laser surgery
• Eyeglasses, including prescription and reading glasses, and prescription sunglasses
• Hearing aids and batteries
• Hospital expenses for inpatient and outpatient services
• Long-term care premiums, up to a qualifying amount based on your age
• Medical alert bracelets
• Nursing care, provided in your home or a nursing home
• Occupational therapy
• Oxygen and oxygen equipment
• Prescription medications
• Smoking-cessation programs and drugs, including nicotine patches and gums
• Surgery, excluding elective cosmetic surgery
• Vasectomy (male sterilisation) and vasectomy reversal

Funds can also be used for certain preventive care benefits, such as periodic health evaluations, routine prenatal and well-child care, child and adult immunisations, and tobacco cessation programs.

HSA funds can be used for yourself, your spouse, and your dependents. It is important to note that HSA funds cannot be used for common dental items such as toothpaste or dental floss, cosmetic procedures (unless treating an underlying medical condition), health insurance premiums, or infant formula.

With a WageWorks HSA, you can easily contribute, invest, and use HSA funds for current and future healthcare expenses. You can choose from a diverse and flexible lineup of market-leading, low-cost investment options, including bank accounts, money market accounts, mutual funds, and stocks. You can also benefit from attractive, low-fee funds, target date investing, and self-directed allocation on the wealth management platform.

HSA funds can be used for copayments, prescription drugs, and eyeglasses or contact lenses

A WageWorks Health Savings Account (HSA) is a great way to save for healthcare expenses, including copayments, prescription drugs, and eyeglasses or contact lenses. It's like a 401(k) for your medical expenses! With an HSA, you can set aside money from your paycheck pre-tax into a savings account to use for eligible expenses, and the interest grows tax-free. This means you'll save money on taxes while building a nest egg for healthcare costs.

Here's how it works: you decide how much to contribute to your HSA, and those contributions reduce your annual taxable income. You can then use the funds in your HSA to pay for qualified medical expenses, including copayments, prescription drugs, eyeglasses, and contact lenses. The best part? The funds you withdraw to pay for these expenses remain untaxed. So you're saving money while taking care of your health!

When it comes to vision care, HSA funds can cover prescription eyeglasses, contact lenses, and even LASIK surgery. This includes both the cost of the eyewear itself and any related expenses, such as eye exams to get your prescription. It's important to note that non-prescription eyewear, like fashion sunglasses or coloured contact lenses, is not typically covered by HSA funds. But if you have a valid prescription, HSA funds can be used to purchase a variety of eyewear options, including eyeglass frames, prescription sunglasses, and contact lens cleaning solutions.

In addition to vision care, HSA funds can be used for a range of other medical expenses. This includes prescription medications, physical examinations, nursing home services, and even healthcare premiums in certain circumstances. So whether you need to fill a prescription, visit your doctor, or just need new glasses or contacts, your HSA funds can help cover the cost.

Frequently asked questions