I read on an article at Nerdwallet titled 5 Health Savings Account Rules You Need to Know (mirror):

Irvine warns that the majority of HSA administrators require the accountholder to have a steep minimum amount in their HSA before they can open up an investment account.

Why do the majority of HSA administrators require the accountholder to have a minimum amount in their HSA before they can open up an investment account? Isn't it in the best interests of the HSA administrators to offer an HSA account to their customers that is as flexible as possible (i.e., not having any such minimum)?

  • 1
    It's in their best interests to minimize paperwork, particularly from low-paying customers. Letting the customer do whatever he pleases creates a lot of paperwork.
    – Ben Voigt
    Jan 15, 2019 at 6:41
  • @BenVoigt what kind of paperwork appears when there is no minimum amount set being interesting? Jan 15, 2019 at 6:42
  • The minimum doesn't affect the amount of paperwork, it affects the fees they're collecting. They don't want to do the investment paperwork until they're making enough money off of you to make it worthwhile.
    – Ben Voigt
    Jan 15, 2019 at 6:44
  • @BenVoigt they sometimes (often?) have fees on investment e.g. trading or maintenance fees Jan 15, 2019 at 6:45
  • If those are proportional, same reasoning applies. If they are fixed, maybe they want to avoid the negative news coverage ("HSA custodian took 25% of my account balance in fees!")
    – Ben Voigt
    Jan 15, 2019 at 6:47

1 Answer 1


Because there is a lot of churn in most HSA accounts. Funds are deposited and payments are made many times a month. If you could invest any balance within the HSA, then there would be a lot of transactions to deal with. Every deposit would be a buy, and every payment would be a sell. Transactions are cheap, but not free. If you instead require a minimum amount, then the "churn" is handled outside of the investible amounts, and the number of investment transactions drops dramatically.

Imagine if your checking account were invested in Apple stock. Every time you wrote a check you'd have to sell shares to liquidate cash to cover the check. Every time you deposited money you'd have to put in a buy order. Would you want to manage that?

  • If I write a check of 1000 USD with my HSA account and the account has 500 USD cash+ >500 USD of Apple stocks, whenever someone cash out the check it will cause my Apple stock to be sold? I would have guessed the check would be rejected. Jan 15, 2019 at 15:55
  • It may depend on the provider but yes I would expect some of the investments to be sold. Some may allow negative cash balances for a short for, but trueup periodically. Why would you want the check to be rejected? The purpose is to pay medical bills, not to be an investment vehicle.
    – D Stanley
    Jan 15, 2019 at 16:10

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