This is my first year with a HSA account. Hoping y'all can help me with a quick question on minimum cash balance requirements...

Selecting a HSA minimum cash balance:

Option 1: $3,200 minimum qualifying deductible (keep enough to cover the minimum IRS requirement)
Option 2: $2,000 minimum required
Option 3: enter a custom amount

My understanding is this is the minimum 'cash' I need to have in my HSA before I can then move excess deposits into my attached HSA brokerage account. Am I interpreting this correctly and is their an advantage of keeping the 3,200$ minimum for IRS requirements vs going with the 2,000$ option?

Follow up question: I need to hit my cash balance minimum before I can start putting money into my associated brokerage account?

fulshearAg96 said:

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Follow up question: I need to hit my cash balance minimum before I can start putting money into my associated brokerage account?

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Yep do that first then if possible set up a reoccurring transfer to brokerage account fund you want to buy for any amount over the minimum cash balance

Yes. It's a threshold set by your plan/HSA administrator.

But once it's meet them there will probably be a minimum to transfer. That may be $25 it may be $100, again it depends on the plan rules. But one you set it to it's automated. Set it and forget it

permabull said:

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This sounds like plan rules, not IRS requirements. My HSA is 100% invested.

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Yea I've never heard of some arbitrary $3,200 number thrown out there in regards to this. Last couple of HSA providers I have had make you keep at least $1,000 in cash to start investing, then you can invest after that. If you do draw down on that cash balance after already investing, what is nice is that the investments don't get pulled or anything. You're just restricted from investing more until the cash balance once again exceeds $1,000.

Yuk, that sounds like they are too hand holding. Id roll it out to fidelity. They treat it like a regular brokerage account and you can even trade options and sell covered calls and cash secured puts.

It's not really too much skin off of my back…I don't mind holding a $1,000 cash balance. All of my current paycheck deductions go straight to the investment balance in the HSA. Got a young family so our healthcare costs the past handful of years has been high and we have definitely had to draw down on the HSA some here and there.

$3200 was the minimum family deductible required for a high deductible health plan to qualify for an HSA. I think it's $3400 now.

Regardless, it shouldn't have anything to do with cash requirements vs investing within an HSA.

Ah, I see. In that case it sounds like the OP is misconstruing things?