Invest in your future
Your Optum Bank® health savings account (HSA) provides more than medical cost savings. It’s a smart investment option that can help you build a ﬁnancial plan for today and tomorrow.
Investing HSA dollars has many potential tax benefits and can be an additional way to save for long-term health care needs and financial goals. HSAs are triple tax advantaged, making them an effective savings and investment account.
- Withdrawals for qualified medical expenses are income tax-free
- All contributions to an HSA are income tax-free
- And, any interest earnings and investment growth from deposits are income tax-free
Once your HSA reaches a certain designated balance, typically $2,000, you may choose to invest a portion of your HSA dollars. In addition to mutual funds, Optum Bank is excited to announce a new investment option: digitally managed investments with Betterment.
You can use your HSA with other retirement accounts to maximize your after-tax retirement income. Saving in an HSA for retirement gives you a tax-advantaged account dedicated to future medical expenses — allowing you the opportunity to avoid dipping into retirement accounts intended for cost-of-living expenses. Also, HSAs are a great way to pay for qualiﬁed medical expenses in retirement. Once you reach age 65 you may use your HSA funds for non-qualiﬁed medical expenses without penalty — just pay ordinary income tax.
- When funds are transferred to your investment account, the amount of the transfer cannot bring the balance of your HSA below your investment threshold.
- The minimum amount that can be transferred to your investment account is $100.
- You can’t make payments for qualified medical expenses directly from your investment account. If you wish to use funds from your investment account to make payments, the funds will first need to be moved back into your HSA.
Start investing your HSA dollars
See the two investment options below
Optum Bank offers a diverse set of mutual funds that average a four-star Morningstar rating and represent some of the lowest expense ratios in the industry. Once your HSA reaches the certain investment threshold, typically $2,000, you may choose to invest a portion of your HSA dollars in mutual funds.
Optum Bank mutual funds include:
- Vanguard funds
- Target date funds
- Lifestyle funds
When you set up your Optum Bank investment account, you can choose how you want the funds to be allocated among the available mutual funds. Our asset allocation calculator can help you decide which funds are right for you. There is no minimum initial investment amount required by mutual funds.
- You have the ability to transfer between funds and re-allocate balances
- You may set up automatic portfolio rebalancing
- If a qualified medical expense comes up, it’s easy to move money back to your HSA cash account to pay for it
After your account is established, you can change your investment elections, transfer funds and rebalance your account.
To start investing your HSA in mutual funds, simply follow these steps:
- Sign in to your HSA and set up your investment account by choosing the funds you want to invest in.
- Indicate the amount you want to transfer into your investment account. The minimum amount that can be transferred at one time is $100. So you will need to have a balance of $2,100 before you are eligible to invest (assuming $2,000 investment threshold).
- To make things easier, you can choose to set up recurring transfers/sweeps. This means that you can choose an amount and any time your account exceeds it, funds will be automatically transferred to your investment account. For example, if you choose $2,000 and your balance hits $2,500, $500 will be swept over to your investment account.
Optum Bank is offering automated online advice and investing through Betterment, the largest independent online financial advisor. Betterment combines low-cost, tax-efficient investment strategies with technology and personalized advice to empower you to achieve your financial goals.
Betterment starts by gaining an understanding of your HSA investment goals. For example, you may be using your HSA to save for medical costs during retirement or to be prepared to pay for expenses now and in the near future. Once Betterment understands your goals, they will build you a personalized portfolio with a risk level and investments mix that suits your needs. And if you'd like to adjust that mix, you can. The Betterment portfolio is a globally diversiﬁed mix of exchange-traded funds (ETFs), chosen to help earn better returns at various levels of risk.
When the time comes to use the invested HSA funds, Betterment automatically sells the right investments, allowing you to access your funds for eligible medical expenses without the hassle of needing to choose which investments to sell. Betterment knows it sometimes takes multiple accounts to save for a goal and can provide holistic advice across all accounts — including combined external accounts like employer-sponsored 401ks — so you can easily track your progress and they can help you maximize your after-tax retirement income.
To start investing your HSA in digitally managed investments with Betterment, simply follow these steps:
- Sign in to your HSA, navigate to Investment Options, and answer a few questions to help Betterment gain a better understanding of your goals and risk level to create a personalized portfolio for your HSA assets.
- Choose the initial amount you want to transfer to your Betterment account. Set up Auto-Transfers so that any funds over the threshold of your choice will automatically be invested and managed by Betterment.
- If you need your funds to cover a qualified medical expense, Betterment automatically sells the right investments, making it easy for you.
- Finally, Betterment will provide options for aggregating your other investment and retirement accounts to help maximize your after-tax retirement income, if you chose to do so.
Advisory services provided by Betterment LLC, an SEC-registered investment adviser.
Brokerage services provided to clients of Betterment LLC by Betterment Securities, an SEC-registered broker-dealer and member of FINRA/SIPC. To the extent that this message is notifying you of the availability of a trade confirmation or account statement, this notification is being made by Betterment Securities.
Investments in securities: Not FDIC Insured • No Bank Guarantee • May Lose Value. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and Betterment LLC’s charges and expenses. Past performance does not guarantee future results, and the likelihood of investment outcomes are hypothetical in nature.