How much cash do you build up in your HSA?

Hi,

I've had an HSA for a few years now.  Actually I guess I'm starting my third?  Fourth?  There were two partial years in there to keep things muddled.  Anyway , I have a fair chunk stashed away - roughly $9,000.  I'm trying to determine how much it's worthwhile to build up in the cash portion before having it kicked over into investments.

Due to known upcoming medical expenses (having a baby),the option to have her therapist in-network, and the ridiculously different price of having 1 or more than 1 person on either of our health plans, DW and I decided to each be on separate health plans this year.  I'm on an HDHP, and she's on a traditional PPO.  Obviously when the little one comes along we'll have to figure out which plan to put the little one on and re-evalutate everything.  Possibly we'll all 3 of us be on one plan.  I haven't a clue.  I'm also getting off topic.

Our combined deductible is $2,500, and combined OOP is $5,750.  When we add a baby, the deductible will go up to $4,000, and the OOP will go up to either $9,000 or $9475, depending on which plan we add the second person to.

The question is, how high would you let the cash balance of the HSA build before throwing some of it into the investment options that the HSA company offers?  (they're decent options, though not as awesome as I'd like, but that's just because I think all investment options should be as awesome as I have access to in my new 401K)

 

Answers either in dollar amounts or as multiples of deductibles or OOPs are helpful, but what I'm most interested in is the reasoning behind your answer.

Thanks!

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  • We keep one year of max OOP in cash in our HSA and invest the rest.

    I manually turn on and off the automatic investing as needed because it'll sweep money back into cash if we drop below that amount. If I know we're going to drop below due to upcoming medical bills, I turn it off, pay the bills and allow the balance to come back up to the max OOP amount from new contributions before I turn it back on.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
      • Reported - view

      I probably should have mentioned that living in NJ, HSAs are not recognized and thus are treated like any other taxable brokerage account. So my preference is not to churn the investment-side of things, because HSA custodians do not provide 1099-DIV and 1099-B, which means I would be required to track everything myself.

      In addition, I keep my investments in a Treasury Fund so as to avoid NJ taxation. It is part of my bond allocation in our overall investment asset allocation.

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  • I personally keep whatever amount is needed to avoid the investment fee plus a bit of cushion. For me that's $3,000 in the cash and everything above that in investments. It's fairly simple to move it back over to the cash account if I know an expense is coming up. 

    Like 1
    • Agent99
    • Working to Get Smart at budgeting, finances and life
    • Agent99.1
    • 2 yrs ago
    • Reported - view

    My deductible is $3,000 so I currently have $5,000 in cash and all future contributions going to investments.  I also have $2500 in an MMA with the job of medical/dental emergencies.  I contribute the max allowed  each year to account.  

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    • TheTabby
    • Just a common cat trying to budget uncommonly well.
    • TheTabby
    • 2 yrs ago
    • Reported - view

    nolesrule   Ooh, I hadn't considered looking up the state tax implications... that's an important aspect to things...  I guess I should get looking at that...  Looks like I'm okay.  Phew!

    Thanks everyone for your responses.  I think I'll leave my cash max where it is for now.  I'm definitely contributing the maximum I can, especially since it may be the last year I have the option if it makes more sense for all 3 of us to be on DW's insurance going forward.  It's definitely an interesting conundrum to deal with.

    There's also the added headache that work is sending roughly 2.5x as much as it should be to my HSA.  If it doesn't straighten out in the next couple paychecks I'm going to be calling people and asking what the heck is going on.

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