Reader FAQ

Have a question you want answered? Email evan[at]HSAedge[dot]com and we will get you an answer, and maybe feature it here!

Is an HSA Required?

Is it REQUIRED to buy an HSA if you have an insurance policy that is HSA eligible? Or can one just not get the HSA and have no consequence other than the loss of the advantages?

Opening a Health Savings Account is totally optional. They piggy back on regular insurance plans, but not all insurance plans allow them. Thus some insurance plans are “HSA eligible” but by no means is opening an HSA required. You can just treat your plan as a regular insurance plan and ignore the HSA, but you can always open one in the future.

Investing my HSA

I’ve had an HSA through my company since day 1 and I’ve made an effort to keep the money there as much as possible, so I have quite a bit of money in my account, enough that I would feel comfortable investing part of it and keeping a chunk in reserve for possible QMEs. I’m frustrated because the money is in a savings account with a nominal interest, although I don’t pay any fees. Other options I’ve researched have higher returns, but fees everywhere and I don’t see great customer satisfaction when I look at feedback. Do you have any thoughts?

The key comes down to where your ‘account’ is located. You have an HSA eligible plan, which allows you open up an HSA (account). It sounds like this is currently related to your health plan, but the options may not be great.

The key might be transferring custody of your HSA account. I have my HSA with HSAbank and have found the service to be pretty good. After a certain amount of assets there is no fee, and you can open a TD Ameritrade account to manage your HSA investments. That gives you a lot of options and you can invest a percentage of your assets in a way that you feel comfortable.

Obama Care and HSA’s

Have there been any changes to HSAs in light of the ACA (Obama Care law)? Do you think that… in light of the ACA, I would be able to include my premiums for COBRA and individual health care in an HSA?

There were a few minor (unfavorable) changes to HSA’s as a result of the ACA:

The Affordable Care Act did make some changes to Health Savings Accounts – also called HSAs – and how they will work:
First, the law eliminated one’s ability to use money in their HSA account to buy over-the-counter drugs The second big change is that the law increased the penalty for withdrawing funds from your HSA before you reach age 65. The early withdrawal penalty increased from 10% to 20%.

To answer your question, my understanding is that health insurance premiums are an eligible HSA expense while you are unemployed, so you could use your account to pay for these. Depending how much COBRA is, you may want to consider purchasing a high deductible health plan for you and your partner in the short term as it may be cheaper.