There’s a lot of buzz around health savings accounts (HSAs) – so much so, apparently, that the Securities and Exchange Commission has issued an investor bulletin on the subject.
A May 18 Investor Bulletin from the SEC’s Office of Investor Education and Advocacy encourages investors to “consult Internal Revenue Service (IRS) guidance before making investment decisions about a health savings account, because receiving favorable tax treatment is an important part of a health savings account.”
The bulletin outlines the purpose of an HSA and defines eligible medical expenses and the limits on contributions to them. It also addresses the advantages over using a traditional checking or savings account to pay for medical expenses.
“Don’t be afraid to shop around,” the bulletin cautions, noting not only that, “It may be worthwhile to shop around for the features that suit you best,” but also that the investor should understand any restrictions and fees that apply, “including if you decide to move your money.”
The bulletin explains that those who plan to use their HSA primarily as a spending vehicle for current medical bills might want to consider features like:
- Ease of access (explaining that some HSAs allow you to pay for qualifying expenses directly using a linked debit card or online bill payment system, while others may require you to pay for eligible expenses out of your own pocket and request reimbursement from your HSA)
- Account maintenance fees
- Interest
On the other hand, the bulletin explains that those planning to use their HSA as an investment vehicle for future health care costs might consider:
- Opportunity to invest (noting that some, but not all, HSAs allow you to invest some or all of their HSA balance)
- Investment choices
- Fees
