Can an HSA get too large?

[Flyfish1]

Yes - you can transfer/rollover, whatever they call it. You can initiate at the new financial institution.

I should have known that. Thank you. Looking at Schwab where everything else is held. Looks like no fees.

Edit: Schwab offers an HSA brokerage account linked to the HSA provider. Schwab does not charge fees but the provider in my case HealthEquity would still charge me maintenance fees. Nope. Not happening.
Fidelity offers a full transfer with no fees at least from my reading thus far. Looks like I can't transfer in kind and have to liquidate but that's OK. Forced market timing...

 

[Montecfo]

Most brokerages do not offer HSAs. I still need to transfer to Fidelity. I have HSA Bank and Schwab. Not a great setup since HSA bank now wants to manage your funds and will not let you use Schwab. So anything you liquidate goes into HSA Bank earning jack.

But I have not wanted to see my high growth positions. Planning to do trustee to trustee.

 

[Flyfish1]

Most brokerages do not offer HSAs. I still need to transfer to Fidelity. I have HSA Bank and Schwab. Not a great setup since HSA bank now wants to manage your funds and will not let you use Schwab. So anything you liquidate goes into HSA Bank earning jack.

But I have not wanted to see my high growth positions. Planning to do trustee to trustee.

I hear ya. Sounds like Fidelity might be the place to land.

 

[SJhawkins]

We use Fidelity for our HSA account. They (also?) do not require any documentation for reimbursement. It's a nice simple process to get a cash transfer at the end of the year based upon our eligible spending - lately mostly dental bills.

This may change my mind on using an HSA account, all I know is to upload every EOB, receipt, etc. for each claim, I have better things to do.

When we move to the ACA in 2027 I'm willing to give it a go at Fidelity (all ready have a relationship with them). For now we are stuck at whatever intuition the spouses work place chooses, been 3 thus far, they all kind of $uck.

Thanks to group for point out the differences, thought what we were dealing with was common practice.

 

[Phroig]

About 90% of my HSA money is at Fidelity. However, HealthEquity is my employer's provider, so I'm stuck with them until I retire. I did one transfer out a couple years ago, but now I just take all my distributions from that account.
HealthEquity also doesn't do transfers in kind; only checks sent via snail mail.

 

[Aerides]

This may change my mind on using an HSA account, all I know is to upload every EOB, receipt, etc. for each claim, I have better things to do.

When we move to the ACA in 2027 I'm willing to give it a go at Fidelity (all ready have a relationship with them). For now we are stuck at whatever intuition the spouses work place chooses, been 3 thus far, they all kind of $uck.

Thanks to group for point out the differences, thought what we were dealing with was common practice.

Yeah Fido is super easy for reimbursements. You do need to keep a lot of the expenses/receipts, in the case of an audit, but not to get your money.

 

[The Cosmic Avenger]

Yeah Fido is super easy for reimbursements. You do need to keep a lot of the expenses/receipts, in the case of an audit, but not to get your money.

Right, you need to know how much you can withdraw tax-free, and be able to justify it in case of an audit.

I anonymized my spreadsheet, in case anyone wants to use it as a template, just go to File and click on Make a Copy. The "Receipt" links are phone pictures of documents, stored in the same folder in Google Drive. HSA expenses (anon)

 

[Stormy Kromer]

According to this article, most dont have the “problem” some of us have.

https://www.psca.org/news/psca-news/2025/3/hsa-account-balances-continue-to-grow/

Many of these accounts are small. About 51% of HSA accounts have balances of $500 or less, and 39% of accounts have balances more than $1,000. Accounts of at least $25,000 make up 2% of HSA accounts.
Apart from general growth, the report noted that many HSA account holders do not invest their HSA assets efficiently, or at all. Only “38% of all HSA assets are in investments as of December 31st, 2023.”

Mulligan, I am not respondingto your post......but is that Frank Cannon?

 

[Mulligan]

Mulligan, I am not respondingto your post......but is that Frank Cannon?

Yes it is, Stormy. From the namesake title “Cannon”, pictured talking into his 70s car phone with the nice extended phone cord. Younger retirees may remember Bob Conrad from “Jake and The Fatman” more than Cannon though, ha.

 

[JDARNELL]

I think we should all lobby to expand the categories of expenses HSA money can be used to reimburse expenses. Transportation and lodging to and from medical tourism. I would have no problem making an annual trip to SE Asia for medical check ups. This would solve the having to much money in a HSA.

 

[RunningBum]

Yes it is, Stormy. From the namesake title “Cannon”, pictured talking into his 70s car phone with the nice extended phone cord. Younger retirees may remember Bob Conrad from “Jake and The Fatman” more than Cannon though, ha.

Dang, I thought it was Roy Biggins from "Wings", one of my favorite sitcoms ever.

 

[cathy63]

I think we should all lobby to expand the categories of expenses HSA money can be used to reimburse expenses. Transportation and lodging to and from medical tourism. I would have no problem making an annual trip to SE Asia for medical check ups. This would solve the having to much money in a HSA.

You can already reimburse travel costs from your HSA as long as the purpose of the trip is primarily for medical care. You can't just visit a doctor one afternoon while on vacation and call the whole thing a medical trip, but if you're flying overseas to have a specific treatment and then spend a few extra days recovering before returning home ...

You can also reimburse costs that are incurred for getting to local care providers, such as taxi, rideshare, bus fares; and mileage at the medical miles rate, which is 21 cents per mile for 2025 and 20.5 cents per mile for 2026.

 

[Stormy Kromer]

I really wish HSA accounts could be used to pay for ACA premiums. When I was self employed I could deduct the premiums I paid myself. Employees are not taxed for their employer sponsored health benefits. But if you pay your own premium after you retire it is no longer deductible. Allowing HSA funds to pay for premiums would level the playing field. Trouble is there aren't many in my situation, paying your own Health Insurance with no ACA premium reductions and no ability to deduct the premium.

Don't I have problems.....

 

[Mulligan]

I really wish HSA accounts could be used to pay for ACA premiums. When I was self employed I could deduct the premiums I paid myself. Employees are not taxed for their employer sponsored health benefits. But if you pay your own premium after you retire it is no longer deductible. Allowing HSA funds to pay for premiums would level the playing field. Trouble is there aren't many in my situation, paying your own Health Insurance with no ACA premium reductions and no ability to deduct the premium.

Don't I have problems.....

I was trapped in your exact same situation several years ago and didnt like it either. Fortunately I found a way out of the problem…. Had my long time GF move in and we became domestic partners and now I get my HI basically for free now through her employer.

 

[leeg]

I'm about to turn 75, wife will be 74 later this year. Our HSA has about $150,000 in it. I plan to withdraw it early next year to cover the cost of a kitchen renovation. We have medical expense receipts that will make the entire withdrawal non-taxable. In the meantime, I've sold down equities to the point where less than $20,000 is in stocks, the rest in 1 year CDs. Should be another 5 or 6 thousand dollars in the HSA by the time we withdraw it. Record keeping for a long-term HSA is a bear. We have a large file box full ot paper, organized by year. Whew! ....

 

[pb4uski]

^^^ Why wait until next year? Why not do it now while you can? I don't see that waiting a year is going to be a lot more beneficial and if you're on the right side of the grass a year from now you can always do another withdrawal.

 

[old medic]

Yes it is, Stormy. From the namesake title “Cannon”, pictured talking into his 70s car phone with the nice extended phone cord.

Just watched it the other night,,, couldnt sleep and it was on OTA at 2AM

 

[Flyfish1]

Finally got my acount set up at Fidelity- a little bit of a hassle because I have a Donor Advised Fund there as well and the online system would not allow me to get out of the Charitable Fidelity side and process a new account. Had to call in the support team at Fidelity. Then literally had to print out an application and mail it....just like the good old days. Anyways it worked . Now I sit and wait for the assets to transfer over which I am told can take a minimum of 4- 6 weeks. The good news is I sold everything in the HealthEquity investment account a couple of weeks ago and it sits in cash. Possibly very fortuitous unplanned market timing on my part. We shall see.

 

[JoeWras]

Doing taxes, I was pondering if I'll ever get this HSA down. Go to the dentist, get a referral to an endodontist. ... I'm now on my way to getting my HSA down. Oh well.

 

[Exit 2024]

Our HSAs are close to $300k, and yes, I do think we may overfunded it. All invested in VIG and continue to grow. We also have about $50k saved receipts that we will start cash out as soon as we stop working. Plan is to get current on reimbursements by 65 and then assess if we should start depleting HSAs as IRA.

 

[DangerousNachos]

Some quick numbers, our one HSA is at about 180K. My wife has been maxing it for quite some time to lower our taxable over the years. It’s invested 50/50 bond and equity funds. We are both 52, plan to retire end of 2027. The HSA is about 3% of our portfolio.

Our strategy for health insurance once retired will be to take a high deductible policy and fund out of pocket with the HSA until we’re eligible for Medicare.

Granted, a major health issue could easily wipe it out. But family health history is generally favorable. I don’t think having a balance this high is a bad thing but I’m curious about feedback.

I'm late to the party, but I want to commend you on your savings. Whenever I give employee benefits presentations, I tell people to contribute to the "match" amount of their 401(k), then switch to fully funding an HSA. Of course, both have to be available, but I try to explain an HSA like a medical IRA. Get the deduction, including FICA and Medicare, if through payroll, and take it out tax free for qualified expenses. Unfortunately, we don't get healthier as we get older, so you either pay taxes out of a retirement account for those expenses, or tax free. Congratulations on your savings discipline.

 

[Mulligan]

I'm late to the party, but I want to commend you on your savings. Whenever I give employee benefits presentations, I tell people to contribute to the "match" amount of their 401(k), then switch to fully funding an HSA. Of course, both have to be available, but I try to explain an HSA like a medical IRA. Get the deduction, including FICA and Medicare, if through payroll, and take it out tax free for qualified expenses. Unfortunately, we don't get healthier as we get older, so you either pay taxes out of a retirement account for those expenses, or tax free. Congratulations on your savings discipline.

I agree….But I will take it a step further. An article I read years ago resonated with me about HSA’s. Paraphrasing from being many years ago. Dont kid yourself, an HSA has nothing to do with your health, its all about taking advantage of valuable tax breaks. And that is certainly true for me. I have several hundred thousand in my HSA and it certainly hasnt made me any healthier. But it has made me wealthier. Not being to Medicare age yet, there are all sorts of potential medical receipt situations that could occur before I have to worry about pulling it out efficiently before I die. So I will let it ride. But I did get some info here that changed my mind a bit. Im definitely going Medigap over Advantage. But now I will go Medigap low premium higher deductible. And the HSA is available to cover the Medigap deductible.

 

[DangerousNachos]

I agree….But I will take it a step further. An article I read years ago resonated with me about HSA’s. Paraphrasing from being many years ago. Dont kid yourself, an HSA has nothing to do with your health, its all about taking advantage of valuable tax breaks. And that is certainly true for me. I have several hundred thousand in my HSA and it certainly hasnt made me any healthier. But it has made me wealthier. Not being to Medicare age yet, there are all sorts of potential medical receipt situations that could occur before I have to worry about pulling it out efficiently before I die. So I will let it ride. But I did get some info here that changed my mind a bit. Im definitely going Medigap over Advantage. But now I will go Medigap low premium higher deductible. And the HSA is available to cover the Medigap deductible.

During a presentation once, the presenter actually referred to the HSA a Medical IRA. The thought process was to max fund it, while paying your medical costs, save the receipts and let your HSA grow, tax free, and then reimburse yourself from yiur saved receipts with tax free income. It doesn't work for everyone, but it was an interesting idea.

 

[Montecfo]

During a presentation once, the presenter actually referred to the HSA a Medical IRA. The thought process was to max fund it, while paying your medical costs, save the receipts and let your HSA grow, tax free, and then reimburse yourself from yiur saved receipts with tax free income. It doesn't work for everyone, but it was an interesting idea.

This is exactly what I did, and invested aggressively. It is just another wealth building tool in the toolbox.

 

[SunGuy]

Isn't that the best possible scenario? iits a triple tax advantage account, that at the worst for non medical things is like an extra 401k. i would hiope most ppeile would want tit to ne as fat as possible