I’ve found an issue with Health Savings Accounts that is unique to those changing jobs. The situation is this;

I recently changed jobs and the new company doesn’t offer a health insurance that qualifies for my existing HSA (with Aetna). At the same time, I hadn’t contributed over the minimum amount ($2000) to open an investment account with them either. So what’s happening is that I have an amount of money sitting in limbo with Aetna that isn’t earning me hardly anything.

Finding Out the Facts

Doing a quick search on Wikipedia came across the following;

Most HSAs have more than one possible method for withdrawal. The exact method of withdrawal varies from HSA to HSA and can be considered a marketing design issue. Checks and debits do not have to be made payable directly to the provider. However, in the case of an audit, account holders will be expected to provide documentary evidence that the transaction was for a qualified expense in order to avoid making the amount in question subject to income tax plus a 10% tax penalty for early withdrawal.

So this means if I withdraw the money w/o it going to a medical expense, I pay taxes on it (which I don’t particularly mind) AND pay a 10% penalty to the IRS. I didn’t know about the $2000 minimum to open the investment account with Aetna, or I would have dropped enough money in before leaving to make it over the minimum.

Since the family is fairly healthy, I don’t expect needing to use this money for anything health related for awhile. So the part that bothers me is that it’s just sitting there doing nothing!

One of my core beliefs is that your Money should always be working for you. Aside from my emergency fund, I generally have every penny doing something constructive, rather than sitting in someone’s bank just gathering (virtual) dust.

Help Me Readers, You’re My Only Hope

So here’s the request. If ANYONE HAS ANY IDEAS to resolve the sitting around issue, I’m all ears. Let’s hear it from you smart people out there. How do I get this money doing something constructive without incurring the IRS penalty??

Any takers??

Technorati : HSA, Health Savings Account