Why Should I Use a Health Savings Account (HSA)?
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In today’s healthcare landscape, it’s crucial to have a plan in place to cover medical expenses. One effective way to do this is by utilizing a Health Savings Account (HSA). An HSA is a tax-advantaged savings account specifically designed for healthcare costs. It offers numerous advantages and flexibility that can benefit individuals and families alike.
First and foremost, an HSA allows you to contribute pre-tax dollars directly from your paycheck. This means that your contributions are not subject to federal income tax, allowing you to reduce your overall taxable income. By contributing to your HSA regularly, you are effectively setting aside money specifically for healthcare expenses without any tax implications.
Furthermore, the funds in your HSA grow tax-free, similar to a retirement account. The money you contribute can be invested in various financial instruments, such as stocks, bonds, or mutual funds, depending on the options provided by your HSA provider. These investments can yield significant returns over time, helping your healthcare savings grow exponentially.
Another advantage of using an HSA is its portability. Unlike flexible spending accounts (FSAs), funds in an HSA do not expire at the end of the year. This means that any money left over in your account can roll over to the next year and beyond. This flexibility allows you to accumulate savings over time, building a substantial cushion for future medical expenses.
What truly sets HSA apart from other healthcare savings options is its triple tax advantage. Not only do you contribute to your account with pre-tax dollars and grow the funds tax-free, but qualified withdrawals are also tax-free. This means that when you use your HSA to pay for qualified medical expenses, such as doctor visits, prescriptions, or even major surgeries, you won’t be subjected to any taxes on those withdrawals.
Moreover, an HSA provides individuals with more control over their healthcare decisions. Being a direct participant in managing healthcare costs empowers you to make informed choices about where and how to spend your healthcare dollars. You have the freedom to choose between different healthcare providers, potentially negotiate prices for services, and make decisions based on your personal needs and preferences.
Lastly, an HSA can serve as an additional retirement savings tool. Once you reach the age of 65, you can withdraw funds from your HSA for any reason without incurring a penalty. While non-medical withdrawals are subject to income tax, the ability to tap into this account during retirement can provide a safety net for unexpected expenses or supplement your retirement income.
Overall, utilizing a Health Savings Account (HSA) offers numerous advantages. From the triple tax advantage and investment opportunities to the portability and increased control over healthcare decisions, an HSA can be a valuable tool in your financial arsenal. By taking advantage of its benefits, you can proactively plan and prepare for current and future healthcare expenses while enjoying significant tax savings.
I’m looking into my company’s HSA plan (fully covered by them) but I see that I would pay 30% after reaching my high deductible. Is this still worth it? I heard Dave say In this video his is covered 100% after reaching the high deductible. Would you still recommend me to sign up for mine if I have to pay 30%? Thank you!
Keep in mind that I don’t have to pay anything monthly due to the company covering it for me. I’m on the reg PPO as of now. Thanks!
i LOVE the HSA account. The brilliant thing about it is you can invest it and let it grow completely tax free for anything medical, and if you pay for any medical stuff out of pocket you can take that amount out of the HSA any time in the future even decades down the road at no penalty or tax as long as you can provide proof of the medical expense you paid for with your own money. By that time the account will have grown as long as you invest it wisely. Bonus is if you lead a healthy life and dont need to dip into your HSA funds, at age 65 the assets can be used as another retirement account, can use the expenses for non medical and just pay the taxes on it. We will all have medical expenses near end of life, im definitely taking advantage of the HSA and should have a few hundred thousand by retirement age
I just spoke with my insurance agent. She recommends an HSA for me. I suggest talking to your agent and seeing if it is a good thing for you. As a single person, I can contribute $5400. I can also contribute $1000 because I'm 58 years old. I will have a tax write off of $6400, meaning that I will lower my income tax by $2000.
After learning how to manage my income by listening to Dave I've finally reached the point I'm trading markets and building my own business
All the plans that have HSA in my state are more expensive then the ones without it. Otherwise I would get one. I think everyone should have the option to get an HSA with any insurance plan, deductibles are way too high.
Interest that I earn through the HSA, does it come tax free?
The other thing is that if you do not need the money because you are healthy, generally, amounts over $2000 can be invested. In most HSA plans you have to keep $2000 in the cash balance acct but the other amounts over and above $2000 can be invested. If you never need that, all of those invested dollars and earnings that the invested are not taxable when you use them for expenses. Keep records of all of your expenses if you pay it out of pocket, and then down the road, you can take out the money to reimburse yourself and you are not taxed on it. Do that before you turn age 65. Once you turn age 65, You can draw out of it money over and above the amounts that you would reimburse yourself for, and then you are only taxed on those amounts at your ordinary income tax rate. It's a great additional bucket of savings for your retirement.
The healthcare system will find a way to take that 150k from Dave
does anyone have an HSA and HMA?
Is there any cons having a lot of money in this account when you report your taxes every year ???
Thank you
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This YouTube channel is really very informative and effective.
Thank you a lot for this video. This is very interesting and informative. Keep posting like those amazing videos, this is awesome.
Question: I have an HSA account from my previous HSA plan which is no longer active as I moved to my spouse's HSA plan.
Can I put my own after tax money directly to HSA bank account and invest?
Would the limit be same of $3650?
and would there be a tax on gain?
My question would be is it better to simply try and cover your medical bills and allow the HSA to just grow? I understand the pretax and after tax argument. Use the HSA only if it’s catastrophic and allow HSA to stay invested and grow?
My hsa premium is higher than my hra premium.
Do not have to worry about this now, On Medicare las year spent 10 days in the hospital bill was 550K, costed me $650 that included the 24/7 ER visit, Ambulance ride and hospital bill
How do you move your money from your HSA account into an investment account? Sorry this is my first year having an HSA and I don’t understand all the details.
Plus with an HSA I write off 8100 a year on my taxes. Thats a direct writeoff, not a percentage of medical bills. I will slowly build it up over the years.
Question does making deposits into my hsa offset or lower my federal tax liability??
I understand that if I setup contribution to HSA through my employer it goes pre tax. But if I put in the money I have in bank which is already taxed, how do I get my tax paid on that amount back?
Split a check and get that money into your HSA with HSAPAY.
Should I if I’m about to go to grad school within 18 months of starting this position?
Another example of why he knows nothing
Why do we have $1800 premium and $3000 deductible? Healthy chiropractors. We just pay either way.
I am currently maxing out my HSA and investing any contributions. My goal is to get my balance high enough and eventually move into dividend paying stocks and let the dividends received pay any medical expenses incurred.
What happens if you don't have a high deductible health insurance plan and you opened an HSA? Do you need to withdraw your money and close the account? What happens to the growth from the account? Any advice would be appreciated.
Can you still use HSA for taxes, if you use standard deduction? In other words, not itemized taxes.
Just curious. So what are you going to do with your 150k HSA nest egg?
Get a heart transplant?
Put it towards old-age health expenses?
It’s not like you can buy a home with it.
After they gutted Obama care We all saw our insurance premiums spike, So I’m wondering why they would hate a lower cost plan
I have 80/20….. soooo I should switch to the HSA ???
How much money are you allowed to have in your hsa account
I max out my HSA every year. It’s a nice savings account.
so if its pre tax does that mean it lowers the income that i will get taxed om at the end of the year?
Can you ever draw the money out for non medical reasons? What happens to it when you die?
What if my employer offers health insurance but no real HSA. Can I just fund one independently like at fidelity? Or is that a bad idea?
Dave also left out the fact you can invest your HSA money and it grows tax free next best thing to an Roth IRA
My employer has a HSA option and I am thinking about using it. I can put in 3,100 and my company will match $500 per year to max out at $3,800. Is this normal and should I start a HSA next enrollment.
Obamacare has many benefits, it’s far from perfect, but tell someone who’s life was saved or didn’t go bankrupt paying hospital bills that “Obamacare is a mess” because Obamacare gave them the opportunity to buy healthcare without being disqualified for a preexisting condition!
Those are dumb. Use it or lose it. Just set up and contribute in a special bank account at your bank..
He actually missed alot of benefits that HSA's offer.
What is you're already another healthcare plan like Tricare? Can you add an HSA account?
If I have medical bills in a previous year (2019) and open an HSA now (2021) can I pay into the HSA and use those tax advantages and then use those funds for those medical expenses?
No one knows everything, even you Dave. Connect your HSA to brokerage account and invest those money in some stocks for compound growth…I’m not financial advisor-do your own diligence)
Not a very good explanation but whatever nor very good advice. Max out HSA first!! Then invest!
What if you don't need to use the HSA? How do you get your money? Do you get penalized if you take it out for non health purposes?
I love my hsa