SEC Lays Out Valuable Features of HSAs

The Securities and Exchange Commission’s (SEC)’s Office of Investor Education and Advocacy has issued an Investor Bulletin regarding health savings accounts (HSAs).

Although the bulletin is directed at employees invested in HSAs, its description of useful HSA features depending on how investors use HSAs can be informative to employers.

The SEC says if investors plan to use the money in their HSA soon, different account features may be useful than if they plan to invest the money for the future.

According to the bulletin, if employees use their HSA primarily as a spending vehicle for current medical bills, ease of access may be helpful. It notes that some HSAs allow investors to pay for qualifying expenses directly using a linked debit card or online bill payment system. However, others may require investors to pay for eligible expenses out of their own pocket and request reimbursement.

In addition, it is important to look at fees. Some HSAs charge a monthly account maintenance fee, while others may have no account maintenance fee, or may waive the fee if the account has a sufficiently high balance. Also, some HSAs pay interest on money investors don’t spend immediately or invest.

If employees use their HSA as an investment vehicle for future health care costs, an important feature is the opportunity to invest. The SEC says investment options offered by HSAs may vary widely. Some HSAs offer a large number of varied investment products. Others may offer only a few options.

If employees invest their HSA assets, fees typically include underlying fund fees and transaction fees in addition to account maintenance fees. Other fees may apply as well. Over time, fees can impact the performance of the investment portfolio, so it is important to understand the total cost of the HSA and any investments.