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 the designated balance of $1,000, you may choose to invest a portion of your HSA dollars in mutual funds.
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
Once your HSA reaches the investment threshold of $1,000, you may choose to invest a portion of your HSA dollars in Optum Bank mutual funds. These mutual funds have been reviewed and approved by the State of Tennessee Department of Treasury.
Optum Bank mutual funds include investment offering from a mix of Vanguard funds consisting of:
- International funds
- Bond funds
- Target date 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. 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 $1,100 before you are eligible to invest (assuming $1,000 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 $1,000 and your balance hits $1,500, $500 will be swept over to your investment account.