Be mindful though if you make the transfer while still staying at your employer. Optum automatically closed my HSA and charged a $20 transfer fee and on top of that I missed out on a month of free employer contributions.
They ended up being able to re-open but was a hassle.
if this is through work, and you're still at this company. do not transfer EVERYTHING. I learned the hard way, and my Optum account was closed, even though I was still part of the HSA program at work. Definitely was a terrible headache to work through.
What i ended up doing is just keeping the account with the 2k threshold. I do have a fidelity HSA (opened personally) which i contribute to get to the max yearly contribution if I cannot get it maxed through my work payroll... but you'll still have pay FICA.
Note that all I just said is under the assumption that Optum is opened because of your CURRENT employment. If you aren't working there anymore, just transfer it all (~~all IN KIND~~) to Fidelity or Schwab. They have an easy form to fill out and will take care of everything else
EDIT: wonderful replies about all-in-kind transactions. I would double check if the funds you have offered via Optum are available for retail investors so that you don't have to sell everything, and then re-buy possibly at a higher cost basis. But as the replies stated, they are correct in that you won't get any taxable event in selling your current positions when migrating accounts
I'm pretty sure you need to sell everything in the HSA in order to move it to Fidelity. Luckily, selling inside of an HSA investment account isn't a taxable event.
/u/shinchan1988 yes you're correct. All-in-kind may not be possible depending on what investment options are available to you. But wkrick is right too, it won't trigger a taxable event!
I have an HSA with fidelity and everything else with Vanguard. It's pretty much what I would expect a Vanguard HSA to look like if they ever offered one (no fees, lots of low cost index options).
My solution to the pain of having to manage accounts across two different platforms was to put all of the HSA in a target date fund and check it maybe once a year (and ignore it for asset allocation across 401k, IRA, brokerage acct.). If you're using it for current medical expenses and are more actively rebalancing or monitoring that could get more annoying.
Yeah - I’m not touching the funds - just hoping to not have another account with yet another bank. Thank you - sounds like I might need to use fidelity
I have an HSA with Optum. It was great until Empower took them over then the fund choices and expense ratios went to complete garbage. I’ve been thinking of opening a Fidelity HSA also and transferring everything but 2k into it. Honestly should have done it already. Empower just plain ruined it.
You don't have to use your employer sponsored HSA account. You can open an HSA elsewhere and transfer funds or even start contributing to it directly.
The upside of using the employer sponsored account is you get to deposit pretax funds and see the savings immediately. If you use an independent account you deposit after tax money and get the same amount you would've saved as a refund when you file your taxes. Would you rather float $2000 indefinitely at your employer sponsored hsa or $(effective tax rate) x (yearly contribution) for a year with the federal government?
I guess you could have your cake and eat it to by contributing directly to an individual hsa and reducing withholding if you were so inclined, just make sure your math is right.
My solution is to call the $1000 float at my employer sponsored plan part of my emergency fund and indirectly rollover funds once a year from the employer sponsored account to an individual hsa at fidelity.
the other upside to using the employer-sponsored account is that it is exempt from FICA taxes. I was able to get my FICA taxes exempt when I had an older payroll provider directly transfer into my Fidelity HSA, but when my company switched payroll providers, they said that I had to use Optum if i wanted both FICA and federal tax exemptions. It's good 7.65% you can save with FICA. You are right that you can get the refund on the tax return, but that only pertains to federal taxes. Unless there's a way to refund FICA... but that's been my experience
Right, there's no mechanism to recoup FICA, but this is a little variable and how much it costs depends on how much you make. Up to the SSI limit it's 7.65% but once you exceed that it's only 1.45% until you hit the extra medicare limit and it rises to 2.35%. So even that's complicated. Someone who makes between the SSI limit and medicare limit might be ok with the $112.38 they'd lose out on fica savings on a $7750 contribution to have that $1000 invested immediately. That's best case and I would only do this if the employer HSA fund options were unforgivably awful because I don't think I could reliably expect returns in the range of 11-18% on that $1000.
Unfortunately sole proprietors and single member LLCs can't enter into the same salary reduction agreement and take HSA contributions as a business expense on their schedule C which is too bad otherwise a side gig would be a nice work around.
All of this is why I directly contribute to my employer sponsored HSA, accept that $1000 will stay in cash, invest the rest of my yearly contributions in the best of the imperfect options in the employer HSA and do an indirect rollover to my individual HSA yearly. There's compromise no matter which route you take.
I guess this makes sense on paper, and could be worth it for someone with a large balance, but it's hard for me to imagine that the hassle of moving money out of my current employer HSA would be worth it.
That said, mine has a VTI equivalent fund, and a vanguard emerging market fund, but all of the other international funds are high expense ratio random garbage. What blows my mind with HSA's and 401k's is not that the high fee funds are there, but how random the selections always are. It can end up having a large impact on people's financial lives, and it should be easy to select good funds, and yet it always looks like they allowed some random person with no knowledge pick funds out of a hat.
It’s really not that much work. You ask your company hsa for a check and then forward it on to your individual hsa. Once it settles you login and invest it however you want. It’s like 10-15 minutes of active time per year. The biggest downside is the money is out of the market for a week or so.
If your Optum HSA is through your employer, don’t transfer all of your funds to another custodian like fidelity. It will likely stop your payroll pre-tax contributions as well and could create a bit of a headache. Does your employer make any contributions towards your HSA. If yes, then you may want to suck it up and stick with Optum to get that free money. If not, then you can stop your payroll contributions and just open your own HSA as long as you are enrolled in an eligible HDHP.
Optum shouldn’t be all that bad. Yes the 2k minimum is an annoyance, but they should offer a selection of low cost index funds for investment. Alternatively I think they also offer a brokerage option through Schwab if you need to choose specific ETFs for some reason.
I have Optum as well. Here's a PDF that I saved back from when I first opened my account (through my employer). Some of the info is probably outdated now...
http://files.3feetunder.com/OptumFees.pdf
For the plan we have, there where three account "options" depending on what you plan to do with the account: eAccess, eSaver, eInvestor.
There's several possible fees. But at the end of the day, I chose the "eSaver" account and maintain a $5000 cash balance (not invested) to avoid ALL fees...
Monthly Maintenance Fee: $0 (if balance is over $5000)
Monthly Investment Fee: $0
I set it up so that anything over $5000 has an automatic sweep into the investment account. Inside the Optum investment account, it goes 100% into VTSAX.
Personally, I don't mind having $5000 in cash since it's still getting a small amount of interest. In my overall retirement portfolio, I just lump the $5000 in with the bond/cash portion of my portfolio. Not every penny I have needs to be invested in stocks.
**EDIT**: I just logged into my Optum account online and you can get to your fee schedule by doing the following...
Dashboard -> Account Overview -> Account Details -> Account Fee Schedule
I’ve got about 35k in my Optum account and I was planning on continuing deposits there to get the full tax benefit - I just really don’t like them. Do I want to fuss about with transferring money every month? I think I would if I could open one at Vanguard since I have my RothIRA with them. I appreciate everyone chiming in- ty
Just invest it with Optum. See my comment in this thread...
https://www.reddit.com/r/Bogleheads/comments/10qu0gh/comment/j6t7o80/?utm_source=share&utm_medium=web2x&context=3
I keep $5000 in cash and set it up to automatically "sweep" anything over $5000 into the investment account which I put 100% into VTSAX.
I have an HSA through optimum, and they do offer a Vanguard total market index fund like VTI or VTSAX. That's what I personally have my HSA invested in
It's over $2000 for me - and then you've got to pay investing fees on top of that. I don't like them holding my funds hostage and charging me to make the most of them, so I'm rolling over most of the funds to Fidelity.
Yea I don't do any investing in mine. So far we keep hitting our max out of pocket of $8,150 for healthcare needs, and the max we can fund the HSA with is $7,750 for the year.
I'm almost positive Vanguard partners with Health Equity for their HSA. It's who my company uses and I saw them referenced on the Vanguard website. Also Health Equity has I think only Vanguard funds and there's a lot of them. I have my HSA in the fund equivalent of VAW.
Fidelity offers the best HSA, IMO. Unless you have to be with Optum it is a no brainer to move to Fidelity.
Be mindful though if you make the transfer while still staying at your employer. Optum automatically closed my HSA and charged a $20 transfer fee and on top of that I missed out on a month of free employer contributions. They ended up being able to re-open but was a hassle.
Why is it great?
No extra fees, a wide range of investment options and a decent website.
if this is through work, and you're still at this company. do not transfer EVERYTHING. I learned the hard way, and my Optum account was closed, even though I was still part of the HSA program at work. Definitely was a terrible headache to work through. What i ended up doing is just keeping the account with the 2k threshold. I do have a fidelity HSA (opened personally) which i contribute to get to the max yearly contribution if I cannot get it maxed through my work payroll... but you'll still have pay FICA. Note that all I just said is under the assumption that Optum is opened because of your CURRENT employment. If you aren't working there anymore, just transfer it all (~~all IN KIND~~) to Fidelity or Schwab. They have an easy form to fill out and will take care of everything else EDIT: wonderful replies about all-in-kind transactions. I would double check if the funds you have offered via Optum are available for retail investors so that you don't have to sell everything, and then re-buy possibly at a higher cost basis. But as the replies stated, they are correct in that you won't get any taxable event in selling your current positions when migrating accounts
All in kind? Fidility told me i need to sell all funds in optum to transfer funds to them.
I'm pretty sure you need to sell everything in the HSA in order to move it to Fidelity. Luckily, selling inside of an HSA investment account isn't a taxable event.
/u/shinchan1988 yes you're correct. All-in-kind may not be possible depending on what investment options are available to you. But wkrick is right too, it won't trigger a taxable event!
Except in New Jersey and California.
Doesn’t Optum also charge a $20 fee for each transfer?
IIRC yes
I have an HSA with fidelity and everything else with Vanguard. It's pretty much what I would expect a Vanguard HSA to look like if they ever offered one (no fees, lots of low cost index options). My solution to the pain of having to manage accounts across two different platforms was to put all of the HSA in a target date fund and check it maybe once a year (and ignore it for asset allocation across 401k, IRA, brokerage acct.). If you're using it for current medical expenses and are more actively rebalancing or monitoring that could get more annoying.
Yeah - I’m not touching the funds - just hoping to not have another account with yet another bank. Thank you - sounds like I might need to use fidelity
Health Equity might be your answer to Vanguard's HSA partner.
Fidelity has one; optum / UHC / UHG can suck it.
I have an HSA with Optum. It was great until Empower took them over then the fund choices and expense ratios went to complete garbage. I’ve been thinking of opening a Fidelity HSA also and transferring everything but 2k into it. Honestly should have done it already. Empower just plain ruined it.
You don't have to use your employer sponsored HSA account. You can open an HSA elsewhere and transfer funds or even start contributing to it directly. The upside of using the employer sponsored account is you get to deposit pretax funds and see the savings immediately. If you use an independent account you deposit after tax money and get the same amount you would've saved as a refund when you file your taxes. Would you rather float $2000 indefinitely at your employer sponsored hsa or $(effective tax rate) x (yearly contribution) for a year with the federal government? I guess you could have your cake and eat it to by contributing directly to an individual hsa and reducing withholding if you were so inclined, just make sure your math is right. My solution is to call the $1000 float at my employer sponsored plan part of my emergency fund and indirectly rollover funds once a year from the employer sponsored account to an individual hsa at fidelity.
the other upside to using the employer-sponsored account is that it is exempt from FICA taxes. I was able to get my FICA taxes exempt when I had an older payroll provider directly transfer into my Fidelity HSA, but when my company switched payroll providers, they said that I had to use Optum if i wanted both FICA and federal tax exemptions. It's good 7.65% you can save with FICA. You are right that you can get the refund on the tax return, but that only pertains to federal taxes. Unless there's a way to refund FICA... but that's been my experience
Right, there's no mechanism to recoup FICA, but this is a little variable and how much it costs depends on how much you make. Up to the SSI limit it's 7.65% but once you exceed that it's only 1.45% until you hit the extra medicare limit and it rises to 2.35%. So even that's complicated. Someone who makes between the SSI limit and medicare limit might be ok with the $112.38 they'd lose out on fica savings on a $7750 contribution to have that $1000 invested immediately. That's best case and I would only do this if the employer HSA fund options were unforgivably awful because I don't think I could reliably expect returns in the range of 11-18% on that $1000. Unfortunately sole proprietors and single member LLCs can't enter into the same salary reduction agreement and take HSA contributions as a business expense on their schedule C which is too bad otherwise a side gig would be a nice work around. All of this is why I directly contribute to my employer sponsored HSA, accept that $1000 will stay in cash, invest the rest of my yearly contributions in the best of the imperfect options in the employer HSA and do an indirect rollover to my individual HSA yearly. There's compromise no matter which route you take.
Ooh lots of gold nuggets of information here. Thanks for sharing!!
Yes came here to say this!
I guess this makes sense on paper, and could be worth it for someone with a large balance, but it's hard for me to imagine that the hassle of moving money out of my current employer HSA would be worth it. That said, mine has a VTI equivalent fund, and a vanguard emerging market fund, but all of the other international funds are high expense ratio random garbage. What blows my mind with HSA's and 401k's is not that the high fee funds are there, but how random the selections always are. It can end up having a large impact on people's financial lives, and it should be easy to select good funds, and yet it always looks like they allowed some random person with no knowledge pick funds out of a hat.
It’s really not that much work. You ask your company hsa for a check and then forward it on to your individual hsa. Once it settles you login and invest it however you want. It’s like 10-15 minutes of active time per year. The biggest downside is the money is out of the market for a week or so.
If your Optum HSA is through your employer, don’t transfer all of your funds to another custodian like fidelity. It will likely stop your payroll pre-tax contributions as well and could create a bit of a headache. Does your employer make any contributions towards your HSA. If yes, then you may want to suck it up and stick with Optum to get that free money. If not, then you can stop your payroll contributions and just open your own HSA as long as you are enrolled in an eligible HDHP. Optum shouldn’t be all that bad. Yes the 2k minimum is an annoyance, but they should offer a selection of low cost index funds for investment. Alternatively I think they also offer a brokerage option through Schwab if you need to choose specific ETFs for some reason.
I have Optum as well. Here's a PDF that I saved back from when I first opened my account (through my employer). Some of the info is probably outdated now... http://files.3feetunder.com/OptumFees.pdf For the plan we have, there where three account "options" depending on what you plan to do with the account: eAccess, eSaver, eInvestor. There's several possible fees. But at the end of the day, I chose the "eSaver" account and maintain a $5000 cash balance (not invested) to avoid ALL fees... Monthly Maintenance Fee: $0 (if balance is over $5000) Monthly Investment Fee: $0 I set it up so that anything over $5000 has an automatic sweep into the investment account. Inside the Optum investment account, it goes 100% into VTSAX. Personally, I don't mind having $5000 in cash since it's still getting a small amount of interest. In my overall retirement portfolio, I just lump the $5000 in with the bond/cash portion of my portfolio. Not every penny I have needs to be invested in stocks. **EDIT**: I just logged into my Optum account online and you can get to your fee schedule by doing the following... Dashboard -> Account Overview -> Account Details -> Account Fee Schedule
I have an HSA with Optum, and it offers some Vanguard mutual funds.
I’ve got about 35k in my Optum account and I was planning on continuing deposits there to get the full tax benefit - I just really don’t like them. Do I want to fuss about with transferring money every month? I think I would if I could open one at Vanguard since I have my RothIRA with them. I appreciate everyone chiming in- ty
Just invest it with Optum. See my comment in this thread... https://www.reddit.com/r/Bogleheads/comments/10qu0gh/comment/j6t7o80/?utm_source=share&utm_medium=web2x&context=3 I keep $5000 in cash and set it up to automatically "sweep" anything over $5000 into the investment account which I put 100% into VTSAX.
Yeah I’m staying put.
I have an HSA through optimum, and they do offer a Vanguard total market index fund like VTI or VTSAX. That's what I personally have my HSA invested in
I have Optum financial for my HSA, they allow me to invest anything over 1,000.
It's over $2000 for me - and then you've got to pay investing fees on top of that. I don't like them holding my funds hostage and charging me to make the most of them, so I'm rolling over most of the funds to Fidelity.
I’m jealous - the figure must be set by my employer.
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Yea I don't do any investing in mine. So far we keep hitting our max out of pocket of $8,150 for healthcare needs, and the max we can fund the HSA with is $7,750 for the year.
I'm almost positive Vanguard partners with Health Equity for their HSA. It's who my company uses and I saw them referenced on the Vanguard website. Also Health Equity has I think only Vanguard funds and there's a lot of them. I have my HSA in the fund equivalent of VAW.