HR leaders in companies large and small need to acquaint themselves with the rules concerning advise on investing or keeping dollars attached to benefit programs particularly when installing a new Health Savings Account plan.
To avoid conflict with ERISA and other regulatory requirements, it is best to offer a variety of options in the Health Savings Account package offered to employees. In addition, the company should not provide financial advice or suggestions nor permit solicitations of advisory services on company premises except under strict guidelines.
HSAs permit a wide variety of investment options, indeed about the only thing an employee can not invest in his diamonds and collectibles, The Treasury Department has issued guidelines on its websites concerning HSA accounts www.treas.gov.
But for many employees, the opportunity to invest in long term options is becoming more and more prevalent, according to www.hsafinder.com's latest survey.
Experts agree that Bond mutual funds are an excellent option for long term HSA investment. Many financial advisors recommend that employees keep only a limited amount of their HSA account in a liquid checking or savings account. The most frequently cited amount is $4,000 when the account is eligible to keep this amount. (First year savings are limited to a maximum of $2,100 for single and $5250 for families.)
According to Daryl Kulak, the author of the book "Health Insurance Off the Grid - A Wonderful Way to Use Alternative Medicine and Save Money on Insurance Using the New Health Savings Account (HSA), “A Health Savings Account is an investment. You may not have thought of it that way, but it is.”
Surveys by Information Strategies, Inc. shows that most account holders view the account as a retirement vehicle, many calling it “a Medical IRA.”
Financial advisors divide investments into two camps --- stable and violatile.
A volatile investment would be putting money into a fast-moving stock on the stock market. One day it's up, the next day it takes a dive.
The most stable investment is a bank account. The investor gets paid a certain interest rate and that's that. No volatility. And not much benefit either, because the interest rate will be quite small.
Kulak recommends a bond mutual fund. Bonds are a special type of investment that are less risky than stocks, but more beneficial than a bank account.
By investing in a bond mutual fund, Kulak argue the account holder has a steady rate of growth with no big up's or down's. Some months the investment might go down a little, but it won't be dramatic. And, over time, Kulak believes they will beat that bank account interest by several percentage point.
Many HSA custodians are gearing up to offer this type of investment for their HSA account holders. If they don't, Kulak recommends shopping around until one is found
There are other options besides a bond fund including a commonly available money market account. He argues that this is the second-best choice. They are very stable, because an account holder never knows when the need to tap into that money will come up. Healthcare emergencies don't give advance notice.
Kulak and many others believe HSAS will change how we think of healthcare. Like many other advocates, he believes they are the key to fixing the current healthcare crisis in America, and they will help your small business, self-employment or individual healthcare situation.
