More and more people are “rolling over” an HSA balance from one year to the next. In fact, at the end of 2016, more than 90% of all HSA accounts had funds accumulated that can be used in the coming years. Remember, unlike an FSA, an HSA has no “use it or lose it” clause, which means rollover is really just a calendar date with your HSA. Your account will be ready to use whenever you need it.
In fact not only are there more HSA accounts than ever (21 million and counting), but the total account balance increased from $1,604 to $2,532 from the beginning of the year. That is a 57% gain in 2016 alone! So what should you do with those new found HSA funds?
Now that you have built some solid health savings, you can take advantage of the triple-tax savings of your HSA and pay for any and all out-of-pocket qualified medical expenses. This is a great way to reduce the real cost of medical expenses. And remember once you have “established” an HSA you can retroactively reimburse yourself. If you saved those receipts, you can pay yourself back with these new HSA funds.
You earned it, so save it. Most HSAs companies include FDIC-insured interest-bearing accounts. This means just by savings, you are earning money on top of the principal amount of your HSA funds. The more you save, the more you can earn. While the interest amount can differ greatly from one HSA provider to the next, review those details so you can get a better idea of how much you can earn, without lifting a finger.
Investing your HSA utilizes the powers of compound interest to grow your HSA nest egg, just like your 401k. You can use this money to grow your HSA well into retirement to pay for out-of-pocket medical expenses or after the age of 65, anything. After 65 years of age, your HSA can be used for anything, not just medical expenses, just like an IRA or 401k. You can use investments to see increased returns on your original HSA funds.
Deciding what to do with your HSA funds is up to you, but make sure you have a strategy no matter it be spend, save or invest. Use the flexibility of your HSA so it works best for you and aligns with your health savings strategy.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.