Fidelity HSA question

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jeremyl
Posts: 360
Joined: Sat Dec 20, 2014 7:38 am
Location: Indiana

Fidelity HSA question

Post by jeremyl »

I have my HSA with Fidelity and I've not used it for any qualified expenses yet. All of it is invested in the Fidelity Total Stock Market fund (FSKAX).

My question is this: In order to use the debit card for an expense (a doctor bill for example), will the HSA account sell the FSKAX fund or do I need to have some money in cash (SPAXX-money market fund) for the money to be taken out?

Thanks!
MrJones
Posts: 775
Joined: Sat Mar 18, 2017 2:23 am

Re: Fidelity HSA question

Post by MrJones »

I'd like to know too from anyone with first hand experience. Looks like you can only spend as much uninvested cash as you have:

https://www.fidelity.com/learning-cente ... n-your-hsa
https://www.fidelity.com/go/hsa/faqs
LVInvestor
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Joined: Mon Nov 19, 2018 7:07 am

Re: Fidelity HSA question

Post by LVInvestor »

I keep some of my Fidelity HSA in a position called CORE, that is used (debited) each time I use my Fidelity Debit Card.

A CORE position is automatically established when you open a Fidelity account. It's primarily used for processing cash transactions and for holding uninvested cash. When you sell a security, the proceeds are deposited in your core position. When you buy a security, cash in your core position is used to pay for the trade.
rantk81
Posts: 356
Joined: Tue Apr 18, 2017 8:12 am

Re: Fidelity HSA question

Post by rantk81 »

May I suggest that you shred your Fidelity HSA Debit Card, and instead, pay for any medical services with a credit card. You can earn rewards on the credit card "purchases". You can then choose to later sell shares of the funds in your Fidelity HSA and ACH transfer an equivalent amount of cash out of your HSA to your checking account whenever you want. Just keep your receipts/EOBs/etc for tax records.
Topic Author
jeremyl
Posts: 360
Joined: Sat Dec 20, 2014 7:38 am
Location: Indiana

Re: Fidelity HSA question

Post by jeremyl »

rantk81 wrote: Mon Jan 25, 2021 7:02 am May I suggest that you shred your Fidelity HSA Debit Card, and instead, pay for any medical services with a credit card. You can earn rewards on the credit card "purchases". You can then choose to later sell shares of the funds in your Fidelity HSA and ACH transfer an equivalent amount of cash out of your HSA to your checking account whenever you want. Just keep your receipts/EOBs/etc for tax records.
I was planning on doing that but then I started thinking of paying for the smaller expenses (under $500-1,000) to avoid having to keep track of many smaller transactions. This, saving the bigger transactions for later.

Just found out we are going to be expecting our 2nd child so a number of doctor visits are in our future along with the hospital bill from delivery is coming. The deductible is $2,800 so I was considering moving that amount to cash. I'm maxing the HSA it by the end of March for the second year.
MotoTrojan
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Joined: Wed Feb 01, 2017 7:39 pm

Re: Fidelity HSA question

Post by MotoTrojan »

jeremyl wrote: Mon Jan 25, 2021 7:50 am
rantk81 wrote: Mon Jan 25, 2021 7:02 am May I suggest that you shred your Fidelity HSA Debit Card, and instead, pay for any medical services with a credit card. You can earn rewards on the credit card "purchases". You can then choose to later sell shares of the funds in your Fidelity HSA and ACH transfer an equivalent amount of cash out of your HSA to your checking account whenever you want. Just keep your receipts/EOBs/etc for tax records.
I was planning on doing that but then I started thinking of paying for the smaller expenses (under $500-1,000) to avoid having to keep track of many smaller transactions. This, saving the bigger transactions for later.

Just found out we are going to be expecting our 2nd child so a number of doctor visits are in our future along with the hospital bill from delivery is coming. The deductible is $2,800 so I was considering moving that amount to cash. I'm maxing the HSA it by the end of March for the second year.
You mention upcoming children so I am presuming you are on the younger side (far from retirement). If you can't afford to cashflow these expenses that makes sense and getting the tax-savings is obviously a win, but if you can afford to leave the HSA funds invested then I strongly suggest you do. If you can afford it, it is far better to save the receipts and let the compounding continue.

https://www.whitecoatinvestor.com/the-b ... se-an-hsa/

If a charge is small enough that you don't care about the 2% credit card boost, then you can probably afford to cashflow that anyways and just pick a threshold for which you'll save the receipts.
lgs88
Posts: 600
Joined: Tue Jun 07, 2016 7:48 am

Re: Fidelity HSA question

Post by lgs88 »

jeremyl wrote: Mon Jan 25, 2021 4:26 am I have my HSA with Fidelity and I've not used it for any qualified expenses yet. All of it is invested in the Fidelity Total Stock Market fund (FSKAX).

My question is this: In order to use the debit card for an expense (a doctor bill for example), will the HSA account sell the FSKAX fund or do I need to have some money in cash (SPAXX-money market fund) for the money to be taken out?

Thanks!
I called Fidelity and asked about this a year ago or so. As I recall, they suggested that I keep however much I may spend on medical expenses in the near future in cash.

I am not one for saving receipts so, although it is financially sub-optimal, I spend my HSA money on current healthcare expenses using the debit card.
merely an interested amateur
rantk81
Posts: 356
Joined: Tue Apr 18, 2017 8:12 am

Re: Fidelity HSA question

Post by rantk81 »

jeremyl wrote: Mon Jan 25, 2021 7:50 am I was planning on doing that but then I started thinking of paying for the smaller expenses (under $500-1,000) to avoid having to keep track of many smaller transactions. This, saving the bigger transactions for later.
The thing is though, the documentation/receipts IRS requirement is the same, whether you pay for the services with the HSA debit card, or if you pay out-of-pocket and reimburse yourself later from the HSA. Just because you pay a provider directly from a HSA debit card, doesn't remove the responsibility to prove that the expenditure is reimbursable.
fishhead442
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Joined: Wed Mar 25, 2020 1:27 pm

Re: Fidelity HSA question

Post by fishhead442 »

If you plan to use some of the HSA money now, my Fidelity advisor recommended putting all of a cash portion in SPRXX. Invest the rest. As you use the debit card, Fido automatically sells the right amount of SPRXX and pays the bill. He said to ignore the warning when purchasing SPRXX telling you to keep the right amount in cash/core - don't remember exactly how it is stated, but there is a warning. (this probably does not work with other investments - only money market funds)

For the invested portion, I recommend FZROX - total market with no fee.

This does work. I have been doing this now for several years.
AnEngineer
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Joined: Sat Jun 27, 2020 4:05 pm

Re: Fidelity HSA question

Post by AnEngineer »

rantk81 wrote: Mon Jan 25, 2021 8:20 am
jeremyl wrote: Mon Jan 25, 2021 7:50 am I was planning on doing that but then I started thinking of paying for the smaller expenses (under $500-1,000) to avoid having to keep track of many smaller transactions. This, saving the bigger transactions for later.
The thing is though, the documentation/receipts IRS requirement is the same, whether you pay for the services with the HSA debit card, or if you pay out-of-pocket and reimburse yourself later from the HSA. Just because you pay a provider directly from a HSA debit card, doesn't remove the responsibility to prove that the expenditure is reimbursable.
This.
motiv8ed
Posts: 120
Joined: Fri Jul 03, 2020 9:37 pm

Re: Fidelity HSA question

Post by motiv8ed »

fishhead442 wrote: Mon Jan 25, 2021 8:40 am For the invested portion, I recommend FZROX - total market with no fee.

This does work. I have been doing this now for several years.

+1
audioengr
Posts: 140
Joined: Thu Dec 17, 2020 9:44 am
Location: Knoxville

Re: Fidelity HSA question

Post by audioengr »

What are the advantages of using SPRXX instead of FDRXX, SPAXX, or even FDIC sweep?
The expense ratio of SPRXX is 0.42%
The expense ratio of SPAXX is 0.42%
The expense ratio of FDRXX is 0.38%
I didn't see an expense ratio for FDIC sweep, I would believe it would be pretty minimal.

I did find this resource who basically said, you should always pic SPAXX:
https://www.personalfinanceclub.com/whi ... -fidelity/

It looks like SPRXX performs slightly better, but realistically, they are all returning basically 0%
nalor511
Posts: 5058
Joined: Mon Jul 27, 2015 1:00 am

Re: Fidelity HSA question

Post by nalor511 »

AnEngineer wrote: Mon Jan 25, 2021 9:17 am
rantk81 wrote: Mon Jan 25, 2021 8:20 am
jeremyl wrote: Mon Jan 25, 2021 7:50 am I was planning on doing that but then I started thinking of paying for the smaller expenses (under $500-1,000) to avoid having to keep track of many smaller transactions. This, saving the bigger transactions for later.
The thing is though, the documentation/receipts IRS requirement is the same, whether you pay for the services with the HSA debit card, or if you pay out-of-pocket and reimburse yourself later from the HSA. Just because you pay a provider directly from a HSA debit card, doesn't remove the responsibility to prove that the expenditure is reimbursable.
This.
+2, using the HSA debit card does not gain you nuttin'
Topic Author
jeremyl
Posts: 360
Joined: Sat Dec 20, 2014 7:38 am
Location: Indiana

Re: Fidelity HSA question

Post by jeremyl »

Thanks for all of your suggestions. We can cash flow our expenses and let the HSA grow. Which I understand the great advantage of doing that. I guess I need to get a system of record keeping down to make sure I keep track of the expenses for tax times.

Thanks!
GeauxBR
Posts: 121
Joined: Mon Sep 12, 2011 10:53 pm
Location: Baton Rouge

Re: Fidelity HSA question

Post by GeauxBR »

I do what I saw another poster here do. I keep my deductible in cash and invest everything else in the hsa. It took a year of contributions to get the deductible 'cushion' but now it's moving right along.
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