My employer is handing us a bunch of healthcare changes starting January 1, including a change in our HSA bank. I’ll find out next week what the mechanics of our transition will be, but to mollify myself until then, I’d like to hear experiences any of you have had in changing HSA banks and/or HSA investment accounts.
You can “roll-over” your HSA balances to a new HSA account at a different bank with relative ease. There should be links at each respective accounts that tell you how to do it. If not, your benefits group should be able to help.
I personally, treat my HSA account like an additional 401k account. I max out my contributions, and invest the funds similar to the way I do my 401k. I don’t currently use these funds for current medical spending as I believe that I will have no problem spending it during retirement.
I’ve been through it and it wasn’t a huge hassle. Original HSA was with a podunk local bank with zero investment options. When my company switched to the new bank the default was that current balances in the old HSA would just stay there. Given that the new HSA had investment options, I opted to transfer it over by submitting the proper form and incurring a small fee for closing the original account (seems like it was $10-$20 or so). Very happy with the new one and the investment options there, since, like Omar Little, I treat it as an additional retirement account.
Now, if my original HSA had an investment option, I’m sure that would have added a few wrinkles.
I didn’t like the fees that the default HSA bank charged, so I went out and opened my own at a local credit union and told HR to send my HSA payments there instead. I had to fill out a form or two. It wasn’t bad.
My HSA changed banks several years ago. My memory is it was pretty seamless with one exception, I remember receiving a confusing Tax form because the first bank considered the roll over a disbursement. Otherwise I don’t remember any issues.
Thanks for the input, everyone. I’ll report back how things go.
Well, I suppose it could be worse. We’ll have to liquidate all our investments, put the money back in the HSA bank, let them automatically transfer the balance to the new HSA bank, and then choose from our new investment options.
Mrs. ToKnow has TDAmeritrade, so she has a powerful set of rules she can put in place between now and the deadline to ensure that (in the event of a downturn) she sells before losing any of her contributions or (in the event of a surging economy), she can sell once her value hits a new high. Alas, I have Devenir and my only option appears to be to tell them to sell it all and transfer back when I click the button. The perils of diversifying, I guess.
You should only be out of the market for about a week to 10 days. Could be a plus if there is a market downturn during that duration.
Fingers crossed!
Follow-up.
Well, the whole process didn’t really go as smoothly as I would have liked (mostly the fault of our HR/payroll folks, but that’s a long and different story), but we are now back in the market with our HSA money. The biggest 2 disappointments at present is that our new HSA bank requires that we keep $2000 in cash (the previous was $1000) and that we reinvested during the like 1 good week the market has had so far this year. But, in the immortal words of Tony Soprano, whatcha gonna do?
Ouch on the non-smooth transition.
When my husband’s company changed, a couple years back (due to audit firm independence rules) it was pretty straightforward. We were issued new debit cards; if you have any expenses auto-billed to the debit card on the old account you’ll need to make sure that gets updated.
Ours seems to have a higher “cash” requirement than others have noted; we can’t invest anything until there is over 5,000 in the account (same with the old and the new banks). Which is a good reminder - we should probably move the excess into something that might earn more (or given the way the stock market is behaving, maybe no rush on that…). Like Omar noted, we don’t use ours for most current expenses, for similar reasons.
Hurricane Ditka’s “opened up a separate account at a local bank” comment was interesting to me; I was pretty sure you could do that with HSA funds, but I didn’t realize you could do that with the payroll deductions. I think if we tried that, we’d lose the company matching (and they pay the fees also, for accounts with balances of less than 5K).