Hack your HSA

Welcome to Let’s talk money, the show that empowers you with knowledge about personal finance and investing. I’m your host Stephen Libman, and today, we have an exciting episode lined up for you. We’ll be diving into the world of Health Savings Accounts or HSAs.

But just before we do that, I need to tell you and give you a reminder, if you are ready to start your new life with money and investing then you need the 5 insights for Making Better Financial Decisions, the completely free guide, that you can sign up for and enrol at today at stephenlibman.com.

NOW let’s discuss What’s the heck is an HSA and how we might be able to hack one to make it even better.

Remember, money moves or it dies.

So, you might be wondering, what’s an HSA, and why should I care about it? Well, my friends, HSAs are a powerful financial tool that can help you save money, especially when it comes to managing your healthcare expenses. In the next few minutes, we’ll explore the incredible benefits of HSAs.

One of the most significant advantages of an HSA is its TAX BENEFITS.

When you contribute to your HSA, those contributions are tax-deductible. It means you can reduce your taxable income for the year, which can lead to significant savings during tax season. Plus, any interest or investment earnings within the HSA are tax-free! And, guess what, if you use those funds for medical expenses, they are completely tax free as well.

HSAs allow you to save money for future healthcare expenses that may not be covered by your insurance. Think of deductibles, copayments, and even elective medical procedures. The best part? The funds in your HSA roll over from year to year. So, you can build a substantial balance over time.

With an HSA, you have control over how you use the funds. You decide when and how to spend the money on qualified medical expenses. Plus, HSAs are portable, meaning you can keep your account even if you change jobs or health insurance plans.

Pairing an HSA with a high-deductible health plan often means lower monthly premiums. This can save you money on your monthly insurance costs, putting more dollars back into your pocket.

And, If you’re lucky, your employer might even contribute to your HSA. That’s like free money! Some companies match your contributions, which can provide additional funds for your healthcare expenses.

Welcome to the investor insights segment. Now that you’ve got an idea about HSA, let me roll out some other details for a bigger picture.

Some HSA providers offer investment options, allowing you to potentially grow your HSA balance over time through investments like stocks and bonds. And here’s the kicker – this investment growth can be tax-free, as long as you use the funds for qualified medical expenses.

HSAs can also provide a financial safety net in case of unexpected medical expenses or emergencies. It helps you cover healthcare costs without relying solely on your regular income or going into debt.

Did you know that after the age of 65, you can withdraw funds from your HSA for non-medical expenses without penalties? While regular income tax applies, this effectively turns your HSA into a retirement savings account.

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So what are the Myths about HSAs?

One common myth is that HSA funds expire at the end of the year. In reality, HSA funds roll over from year to year, and they can continue to grow tax-free.

Some people believe that HSAs are only beneficial for healthy individuals. In truth, HSAs can be valuable for anyone, as they can help offset both routine and unexpected medical expenses.

Some think that HSAs only offer limited investment options. However, many HSA providers offer a range of investment choices, similar to a 401(k).

Many worry about penalties. While it’s true that HSA funds are primarily for medical expenses, individuals over the age of 65 can withdraw funds for non-medical expenses without penalty (though regular income tax would apply). Do be careful not to over contribute though.

Probably the biggest fear is that of not understanding how HSAs work or how to manage them can deter individuals from opening an HSA. Well, that’s exactly why you are here.

What would the show be without a little Wealth Wizardry. Let’s see if we can’t up-level your HSA with a few Hacks you may want to consider.

1. Create a self-directed HSA so you have investment choices beyond simply stocks, bonds, cash, mutual funds, and ETFs, but also, real estate, private lending, precious metals, and more.

2. Pay your healthcare expenses out of pocket while you are still earning money and save the receipt for later. Since there is no reimbursement timeline, you can reimburse yourself whenever you want! Let your money grow inside your HSA completely tax free

Let’s look at an example: If you contribute $200/m to your HSA for 30/y @ 10% return, that will grow completely tax free and become $1.3M @ age 70

3. You can make a one-time transfer of the annual limit from your IRA to your HSA making that contribution tax free.

4. If you are 55+ you can make an annual $1,000 catch-up contribution. If you spouse has their own coverage, you are BOTH eligible for the extra $1,000 annual catch up contribution. But, if you have a family plan, it will just $1,000 in total.

Now this podcast is for informational purposes only and should not be considered legal, tax, investment, or professional advice. Always seek input and guidance from vetted, licensed, professionals.

So, there you have it – the incredible benefits of Health Savings Accounts. Whether you’re looking to save on taxes, build a financial safety net, or invest for the future, HSAs offer a wealth of opportunities.

Thank you for tuning in to Let’s talk money. If you found this episode helpful, please subscribe, rate, and leave us a review. It helps us reach more people like you. And, if you’ve got any questions let me know on LinkedIn at https://www.linkedin.com/in/stephenlibman/

Remember, money moves or…it dies.

Stephen’s Website: www.stephenlibman.com

LinkedIn: https://www.linkedin.com/in/stephenlibman/

Disclaimer:

This podcast is for informational purposes only and should not be considered legal, tax, investment, or professional advice.

We are not responsible for any losses, damages, or liabilities that may arise from the use of this podcast.