Health Savings Accounts aren’t just for paying your medical bills- when used properly, they are pure retirement gold! If you have a qualifying healthcare plan and aren’t taking advantage of an HSA, you’re missing out on massive amounts of money that you could be socking away. This is because an HSA is the most tax advantaged retirement account that exists, maybe even dethroning the Roth IRA as our favorite retirement account! Have a listen as to why we think you should seriously consider opening a Health Savings Account.
If you want to learn more, head over to Lively as they have lots of helpful information and answers to your eligibility questions. It’s completely free for individuals and families and they make it easy to open your HSA to start investing today.
- Here’s a full rundown on HSA triple tax advantage.
- Here’s the list with examples of qualified medical expenses
- As wonderful as HSAs are, not everyone will qualify- I don’t qualify because I actually have a health sharing plan (which might be a great option for some folks).
- Make sure maxing out your HSA is on your end of year financial checklist!
During this episode we enjoyed a Mirror Universe by Fair State Brewing Cooperative- another big thanks to Riley in Minnesota for donating this beer to the show! And if you enjoyed this episode, be sure to subscribe and give us a quick review in Apple Podcasts or wherever you get your podcasts- we’d love to hear from you.
Best friends out!
Matt & Joel,
Really enjoyed your episode about the HSA. I’ve had 2 separate HSA’s through different employers and I’m a big fan. This gave me some good things to think about as I’m currently just using it to pay for medical expenses as we have had a lot of health expenses (having kids, type 1 diabetes, surgeries, braces, etc.) that keep the balance relatively low, even though I contribute the max each year. It may take some time to digest this given that we don’t currently budget for medical expenses, since the all come out of the HSA account, which is great and makes our life easier.
So some things to consider with the HSA that should also be considered:
1-You mentioned the large deductible, but that is a big expense that will need to be budgeted for. Each year you should have enough to at least hit the deductible before any benefits kick in. Many at my employer opt to pay higher premiums for low deductible plans, even though the math usually works out in favor of higher overall savings with the HSA (considering lower premiums, employer contributions, tax savings, etc.). Many are nervous that the year they change to a HDHP, something major will happen in January and they won’t have enough saved to cover the deductible, but we have found that any hospital or doctors office offers no interest payment plans for the first year, which should give you time to build the HSA as it builds.
2- You didn’t go into how many things are covered. HSA provider websites have a large list of “Qualified Medical Expenses”, but many things are covered such as dental, some healthcare premiums, sunscreen, all kinds of therapy, massages, etc. Lot’s of stuff you would never think would count, will usually count in my experience (as long as the HSA card is approved, it’s unlikely you will ever be challenged on it).
3- These funds are generally put on a HSA visa debit card, so it’s really easy to use the money now without having to worry about documentation. This is about 1000 times more convenient than the FSA I used to be on that required that I had to scan and submit all receipts online to be reimbursed. (although I know you are suggesting we use other funds to allow the HSA to grow, so this card would probably not be that great of a benefit in you are saving for the long term).
4- You mentioned the Fidelity and Lively as the best places to start your HSA for investing with low fees. But usually if your employers offer an HSA, you will not have a choice of where your HSA lives. My HSA is with Health Equity. Not sure how their fees stack up with the others, but they have a 0.033% per month admin fee, along with the Operating Expense Ratios (OER) of the fund you choose. Looks like I have about 25 different Vanguard funds available with OERs ranging from 0.02%-0.16%. You need a minimum of $2000 in your HSA before you can start investing it. Also there is a picture of Dave Ramsey on Health Equity’s homepage right now saying he endorses it, so it’s gotta be good, right??? Haha.
Also, I’ve got to mention that Jim Carey was the Riddler, not the Joker. C’mon guys! Hahaha.
Love the show and the insight it brings. I’ll be mulling over the things you discussed today and as usually happens, I’ll probably go with your advice and start using it as a saving vehicle rather than medical expense account. It’s gonna take some budgeting magic though.
Thanks for the great show!