Fidelity HSA question
Fidelity HSA question
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!
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!
Re: Fidelity HSA question
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
https://www.fidelity.com/learning-cente ... n-your-hsa
https://www.fidelity.com/go/hsa/faqs
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Re: Fidelity HSA question
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.
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.
Re: Fidelity HSA question
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.
Re: Fidelity HSA question
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.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.
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.
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Re: Fidelity HSA question
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.jeremyl wrote: ↑Mon Jan 25, 2021 7:50 amI 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.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.
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.
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.
Re: Fidelity HSA question
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.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 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
Re: Fidelity HSA question
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.
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Re: Fidelity HSA question
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.
For the invested portion, I recommend FZROX - total market with no fee.
This does work. I have been doing this now for several years.
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Re: Fidelity HSA question
This.rantk81 wrote: ↑Mon Jan 25, 2021 8:20 amThe 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.
Re: Fidelity HSA question
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
Re: Fidelity HSA question
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%
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%
Re: Fidelity HSA question
+2, using the HSA debit card does not gain you nuttin'AnEngineer wrote: ↑Mon Jan 25, 2021 9:17 amThis.rantk81 wrote: ↑Mon Jan 25, 2021 8:20 amThe 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.
Re: Fidelity HSA question
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!
Thanks!
Re: Fidelity HSA question
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.