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I'll have to look into this…..
The HSA has many benefits, both for current and future needs. I have been maxing ours our for several years now, but we do use a good chunk of it on medical bills each year. It's nice to learn that we can use it to pay for medicare premiums after I retire. I look forward to seeing more video's on this subject.
Love my HSA! Good to know as I head into Medicare in about a year! Great stuff to educate us all per usual.
wowsers, I may need to really look at possibly getting an HDHP so I can get an HSA account. more tax deductions for me now and money for my future self. Ok Josh, so what happens to the money in the HSA account if you pass and still have some left? Can beneficiaries use it as they please or only for health stuff?
Another surprising use of the HSA is for ones adult children, under age 26, who are covered under the parents high deductible plan to have there own HSA account. The child can contribute $7,000 to there HSA account assuming the parents health plan is a family plan. If the family has two children covered under the plan the max contributions would be parents account $7,000(+$1,000 if 55 or older), child one's account $7,000 and child two's account $7,000 for a total of $21,000. Note the children can contribute $7,000 since they are covered by a family plan even though they are single. Fidelity has no cost accounts that the children can use. The children don't save on the FICA tax but they will save on federal and state taxes(except NJ and CA).
One thing a lot of people don’t realize is Medicare is 6 months retroactive, so you must stop HSA contributions 6 months before going on Medicare and prorated that for the year.
Thanks Josh great find every bit helps .
I love everything about HSAs except for one…We never had a HDHP so never had access to a HSA. Wish we did or at least that President Trump would make them available to everyone. It's sort of a mute point now as we no longer need the tax deduct-ability any longer. This is a good strategy and hopefully folks will take advantage of it.
So medicare work
That's big
Great video!!! Under the rules, to do the rollover, you have to be enrolled in a high-deductible plan for 12 months after the rollover (if you want to do a “mini Roth Conversion” from a traditional 401k to an HSA, you have to do a tax-free conversion from the 401k to a traditional IRA first). For me, it makes sense to retire at 63.5 and have my HSA fund 18 months of COBRA until I am 65 and move on to Medicare. I will then do the rollover immediately after retirement (because you have the 12 month requirement) and do the other Roth Conversions you have discussed in other videos.
Here is the key thing about HSAs. Pay cash for everything and contribute max to HSA and don’t draw a penny. If there is a $20 co-pay, don’t use your HSA credit card. Pay cash and let your HSA grow and grow.
At some point, I won’t pay a dime for healthcare in retirement (Uncle Sam is paying because of tax free nature of compounded interest). That is why I want to pay cash now for everything and invest my HSA in aggressive stocks.
I am also going to use my HSA as my long-term care insurance plan. The HSA fund will grow quite large by the time I am 90 and the occasion arises that I need to be hooked up to an iron lung at the end of my life. If that never happens (say, if I have a heart attack at 90), then the asset goes to my heirs.
But by paying long-term care insurance after retirement, if I were to have a heart attack, my heirs would get nothing. In other words, for long term care insurance, you are absolutely paying good money now for a future contingency that may never happen. Of course, if you need long term care before your HSA has an opportunity to compound significantly, you are screwed with my approach. Maybe the solution is to pay for long term care insurance until such point as your HSA has had an opportunity to grow. Basically it is the same risk calculation as deciding whether to drop life insurance after a certain age.
Josh or anyone, if I am crazy here, please let me know!!!
What a good idea! We were planning to use our HSA to pay for medicare premiums between 65 and FRA but maybe we just do it forever by rolling over from the IRAs.