One correction with the marginal tax rates: They should've shown the differences between the ladder from 10% to 12%, 22% to 24%, etc. I didn't catch it until after it was already presented, but I want to make sure it is addressed in the comment section. It was presented correctly in the other tax video, but this one showed the incorrect numbers
I don’t get it. The title says new rules for HSA in 2025 you should know. The video is just old generic HSA information that has been the same for years. Well, yes, the limits goes up every year as a results of inflation.
That tip about calling the hospital biller was gold. Never thought of doing that! My son had an ER bill for $3,000. Investing in my HSA, so had to pay OOP 😢. Called and asked for a discount and they gave me %30 off the top, took me just 5 minutes 🎉. Thanks so much!
Mine does two thousand but I have some expensive medication that would eat that and then some. High deductible policies are great if you’re healthy, not so much if you’re regularly using health care services. Way too much out of pocket for my family.
I am using my HSA to save for Long Term Care expenses if I ever need them or paying my Medicare B premiums when I am 65. This can be a great way to save for those expenses.
I just opened my first HSA through Fidelity a couple months ago, and I was able to invest my very first contribution of $100. I didn't know some places require a minimum
HSA are for healthy people. If you have a chronic disease, this is not for you. The best use is being 25 yrs out of your parents health insurance. Then start a HSA ASAP. Maybe you never have a health scare, and get to have $$$ for retirement.
Not necessarily true. You have to calculate the monthly premiums of each plan you are offered along with expected medical expenses plus any contributions your employer gives you plus the tax benefits.
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024
What i do is let most of my HSA grow in investment funds, buy every now and then i will take out reimbursements based on medical receipts and put the money in a 529. So my hsa money is never taxed, plus i get an additional state deduction due to the 529 contribution.
Thanks for sharing this! I moved my hsa funds over to Fidelity just a few years ago but I don’t think they had a managed account for hsa account holders then. It was only about 3 or 4 years ago but nonetheless, this video informed me and it’s free now being that my balance is currently just under $25,000. Now for sure, no hsa provider comes close to Fidelity’s features and fee tiers! 😊
@@CharlotteCarMoments I’ve been investing in my HSA but I’ve been hold all my receipts for previous years worth of medical related procedures and for medicines. I’m probably going to covert them to digital images instead because that’s a lot of receipts but anyhow they don’t expire so I’ll cash them all in when I retire which is in 30 years.
I invest my HSA, except an $1800 cash buffer for use. We max every year, and I consider it my Medical EF. My employer even contributes $1,000 annually!
I would like to contribute to an HSA, but I am military retired and have Tricare and VA medical insurance. From what I can research I do not qualify to contribute to an HSA because of that. I hear people contributing to HSA that have VA medical and or Tricare, is there a work around to will allow this? Am I missing something because an HSA is a great way to build wealth.
You’re not wrong about a dollar today having less buying power 30 years from now. what you’re missing, is that money in the HSA is invested and (hopefully) grows. You are not taxed on that growth
That’s a giant inflation rate. Not unheard of in other parts of the world maybe, but hopefully not the USA. Nonetheless, I expect to spend more on healthcare after I retire than I do in most of my younger years, so I’ll just hold onto it.
I did not overlook this i chose not to do it because i don't like paying over $1000 a month in health insurance. That would leave me a lot less to invest in general.
Love my HSA! But I do use it to pay receipts when the market is up. Even used it for braces for the kids! Of course, when the market is down I don’t withdraw. Fortunately we’ve been relatively healthy so it’s grown a fair amount.
My employer only offers an FSA account, which can't used as a Roth IRA after 65. Would a post-tax HSA account be worth it? Do we still have to pay capital gains taxes if we choose to withdraw after 65?
There is no such thing as a post-tax HSA account; they are all pre-tax. You can only open an HSA account if you have an HDHP (High Deductible Health Plan). That is the law that he said Congress is considering changing, opening up the possibility of everyone having an HSA no matter what kind of health insurance plan they have. If you withdraw from an HSA after 65, as long as the money is used to pay for health-related expenses (or to reimburse yourself for health-related expenses you previously paid out of pocket while you were contributing to your HSA), there are no taxes on the withdrawals.
You can, but if an FSA is an option it might be a better to use that for planned dental as it comes out pretax and is credited to you at the beginning of the year. You just need to use it up in the camshaft year or lose it. That way you can keep all the investible money on your HSA to maximize your benefits.
I have a HSA question. Currently I have a HDHP (2024), this plan will continue through all of calendar 2025, but due to a company layoff, I may need to switch plans in early 2025 as we will be moved to COBRA (still with the same HDHP), however if COBRA costs are unaffordable I might need to change coverage which may cause me to lose my HDHP at that point (let's say March 2025 for an example). Since I will have my HDHP in place in early 2025, can I fully contribute to the max in Jan 2025 to cover my 2025 contributions, even though I may have to move from a HDHP later in 2025?
This is my first year having an HSA. I did my full contribution at once since I don't get it through an employer. I invested it all in SCHD and I'm basically at break even 😭
I like HSA, but I definitely don’t like the high deductible plan. In my opinion, the high deductible plan is only good if you are healthy. I enrolled for the HDP one year, beside the annual exam, I have to pay hundreds dollars for doctor’s visits because of the high deductible.
Dude goes straight from "I didn't understand how the US progressive tax system really worked" immediately to "become my personal client" for financial advice... Good on him for being humble, but yeah, I'll pass.
After age 65 you can use it for non-qualified medical expenses but you will pay federal and/or state income taxes (penalty free). Qualified medical expenses are tax free and penalty free regardless of your age
@@nazeercurry5248 Nope, you can use it for non-qualified medical expense and avoid the penalty but not the State and Fed tax. Using for qualified medical expenses avoids both penalties and taxes. Once you enroll in Medicare you must stop contributions.
Good to see HSAs being promoted as a retirement tool. I didn't have access to an HSA for some time because I was under a spouses health insurance. Some of that time my employer offered free high deductible insurance, but I didn't see any reason to take it when I already had great insurance. At some point it dawned on me to take this insurance and the company contribution to an HSA. That money was never touched because I hate doctors. Only recently did it dawn on my that this was an excellent retirement tool. so for a few years now I've been maxing out my HSA contributions. I wish someone had explained to me that this was at least as valuable as a 401K or Roth IRA.
oh my goodness, your idea is to not use the HSA to pay for medical expense now but pay it out of pocket and let it grow like an Roth IRA. But have you considered that the $27000 you paid today but got it back like 15 years later, the $27000 lost value as well due to inflation. Maybe as well use that after tax money to fund the actual roth ira account or 401K roth or after tax 401k with in plan conversion.
So you are supposed to have all this money to fund an HSA, to fund two savings accounts? Who has that kid of money? Secondly what if you have very few medical expenses and a larger HSA fund?
Question, As far as receipts, will my yearly statement from my health insurance provider for claims, what they paid and what I owed be accepted as a receipt for expenses paid out of pocket in order to reimburse myself down the road? I use my HSA strictly as investment tool until I retire and right or wrong have been making that assumption.
The thought is nice but most people are just living paycheck to paycheck. Always have a plan and a back up plan. This would be good once you got your emergency fund set, investments going and have extra cash left. We know what people are going to do when they have extra money. Spend it like no tomorrow.
I've been saving receipts for about 5 years now. Plan on working maybe 3 more years then use some of the receipts to pay taxes on Roth conversion before i start my pensions and ss.
Question. If i go $10 dollars into the 22% tax bracket. Do I get the 22% back from my contribution. I will be retiring soon and will contribute max in cash into my account each year. What determines getting the 12 percent back or the 22% back???
Would you recommend getting an HSA if you start it in 2024, but then will eventually move to CA in 4-5 years, would it be worth it to max it out still?
That tip about calling the hospital biller was gold. Never thought of doing that! My son had an ER bill for $3,000. Investing in my HSA, so had to pay OOP 😢. Called and asked for a discount and they gave me %30 off the top, took me just 5 minutes 🎉. Thanks so much!
Instead of worrying about saving receipts from long ago, you can use your HSA to pay for Medicare (Part B, D, and Medicare Advantage) premiums, co-pays, deductibles, as well as long-term care insurance if you need that. Of course you can use it for medical expenses while in retirement and use it for what ever you like once 65 (avoid penalties) in which it will be treated as ordinary income for taxes. Keep in mind, you must stop HSA contribution once you enroll in Medicare, even if just Part A (which is free).
Excellent points! We are retired and still collecting receipts. Obviously receipts from years ago are devalued, but still helpful if you have substantial amounts in your 😅HSA. Getting the money out tax free is obviously the most helpful. We have substantial HSA money, we treat it as a Roth. But, people who have very large amounts will essentially have just a regular IRA. I think if you have a huge amount of HSA money, it is not better than a Roth Contribution at lower income tax rates, since you have to “spend” money AND contribute, and may not be able to take it out tax free. The money you “spend” and not reimburse yourself for is essentially a tax since the value of that receipt severely deflates over 10-20 years or longer. Based on our current experience as retirees at 63, and now both on Medicare, having about $150k in our HSA, our medical expenses INCLUDING Part B and D and copays are a bout $10k for both combined per year. We should have no problem spending the HSA down, but also expect the funds to last for 15-20 years. The value of our receipts is only about $20k today. If we had $500k in the HSA, we would never be able to spend it all on medical expenses short of long term care. Nothing wrong with saving it for LTC, but good chance we won’t need it all for that. So my advice is to max out an HSA for 15-20 years IF current medical expenses are low. If not so healthy, I would not. After 15-20 years, I would just target a Roth, especially in lower income years.
I max out my family HSA, but withdraw as soon as I have receipts because of a few problems I have with the HSA: 1/ you have to keep receipts for decades. I don't want my wife to have to care about this. 2/ receipt value gets eroded by inflation, so eventually you may or may not have enough receipts to reimburse yourself. 3/ if you don't have receipts after 65, you will face regular income tax rates, at the same time you may have to do Roth conversions or actually have social security income filling up lower tax brackets. 4/ you may be trading long term capital gains tax rate for earned income tax rates. So what I do is max it out through paycheck (for added fica deductions) then I withdraw as soon as I can and put it in taxable brokerage account on low cost etfs. It comes to around 0.3% tax drag while Accumulating but with LTCG rates at the exit. Better imho The final nail in the coffin imo is that I hold a EU citizenship and can hedge against crazy high healthcare cost by relocating to my country of origin.
@@dec1slh it does when you Grow up with 0 healthcare cost and are used to it. I rip 90% of the benefits of the HSA by maxing it out from paycheck. And I can get 0% LTCG at the exit by filing married filing jointly. I also did not talk about a big estate drawback of the HSA, which is that it becomes fully taxable to the recipient the year of the death of the account owner. If the recipient doesn't have the receipts to show for it'll be costly. A taxable brokerage account gets a step up in basis. If you want to compute the tax drag, think about the fact that an sp500 etf has 100% qualified dividends and yields around 2%. So while the account grows the real tax drag is (your LTCG rate) * 2%. In my case, I am at 24% marginal, hence 15% LTCG. Investing in a brokerage accounts cost me (15% * 2%) per year, so an added expense ratio of 0.3% to gain the full flexibility of a brokerage account. The tax torpedo is real with an HSA and I think many people will be surprised in the incoming decades.
@@dec1slh it starts to make sense if you're filing married filing jointly, that you can get 0% long term capital gains tax, that your spouse won't have to care about receipt when you die, that she'll have a step up in basis instead of a tax torpedo. It makes super sense when you grew up outside the US and are used to pay 0 for Healthcare costs!
Man. Hard to decide or make that decision to max out Everythung. 401, rith, hsa. Lol. Close with roth and has...but 491 is 15% + 2% match. Make More in stock market on average. Like 15-30%. So many variables
Curious, I’m pretty sure the employer match is not included the the limits. I could be wrong here, can you do some digging? My source was from HSA bank back in maybe 2023 Also, paying out of pocket isn’t entirely the best financial decision. Put it on a payment plan at zero percent and pay it off when your account has recovered. Don’t pay these figures with post tax dollars if you don’t have to. We are in tax arbitration at this point, keep it simple and use the dollars for what they are meant for
@@rkem1000 if under age 65 & spend HSA $ on non-qualified medical expenses, you will pay a tax penalty on those withdrawals. So, yes you can access the money, but it will cost you to do so.
Contribute money to your HSA, tax-free. If you have a health related expense, pay it out of pocket but keep the receipt. After you turn 65, you can reimburse yourself from your HSA account for all those receipts you've kept, even if they go back for decades. Your HSA money was tax-free when you contributed it, and now tax-free when you withdraw it. Tax-free going in and tax-free coming out, including both contributions and gains. That is not true of literally any other investment account. In the meantime, your HSA monies have been invested and compounding, so you could have six figures or even seven figures saved, depending on how early you start and how much you contribute each year.
Another beast of a video! If I withdraw some of the growth or compound interest of my HSA for non-qualifying expenses will I still pay taxes before age 65?
If you use it for non-qualified medical expenses set forth by the IRS before age 65, not only will you pay federal and state income taxes but you will be penalized 20% on top of it. That’s not just the growth or interest but also your contributions because they’re in pre-tax
For 2024, the IRS defines HSA-eligible plans as high-deductible health plans (HDHPs) with a deductible of at least $1,600 for an individual and $3,200 for families. These health plans must also have an annual out-of-pocket maximum spending amount of no more than $8,050 for an individual and $16,100 for families.
hi i have question about Hsa if i live in California. Can you explain what are the difference? 1. i wonder can i use this for my tax deduct when i do income tax? 2. if i sell the stock that i invest but i dont put dont use it yet do i have to pay tax ?
You cannot write off out-of-pocket medical expenses unless you paid more than 7.5% of your annual gross income in said expenses. Paying medical expenses out-of-pocket and losing out on the tax deferred benefits of the HSA is not smart and it's bad math. If you are making a profit doing what you are saying, you are committing tax fraud, and I would probably avoid posting a video about it or maybe you need to explain better what you're doing. Not only that, but you cannot claim medical expenses AND take the standard deduction, you need to itemize. This is assuming you are paying less than 7.5% AGI, like I mentioned, like most US citizens will be.
Yeah you need to watch the video again but this time slowly. Never did I say to write off medical expenses with the standard deduction in the video. The HSA contributions are in pre-tax dollars and reduce your taxable income. It’s not a schedule A write off. IRS Form 8889 reports the HSA contributions.
@@FIREPsyChat Ok, since you want to get smart with a comment like that, you should reread my comment again. At no point did I say that is what you said. I’m saying that is what would need to be done for what you’re saying to work. I’m also saying your advice is bad for many different reasons. It is NOT beneficial in any way to pay for medical expenses with post-tax dollars if you have a tax deferred HSA. It doesn’t matter that you can invest that money tax free or not. If you have to pay $3,000 in expenses, as you showed, you’re essentially paying $3,720 when figuring for lost taxed money at 24%. If you paid your medical expenses with your HSA and invested that leftover $720 instead, you would come out ahead using your tax deferred account every single time. People that use their HSA like this are not doing the math correctly and need to stop giving advice.
@@logandaniels5 if you invest your HSA roll it all over for 5 years and save the receipts from the out of pocket expenses you can keep your original HSA invest and later reimburse yourself with the interest earned. All while deduction the HSA contributions. That’s why you pay out of pocket, you’ll never build your HSA if you’re pulling it out all year every year
@@xaxb4178 say you invested $10k in an HSA and purchased stock XYZ and it grew to $50k after 20 years. When you sell the stock in the account, California will tax the capital gain.
I’m hearing conflicted information on things HSA can be used for. Some people are claiming they’ve been allowed to use for gym memberships and nutritionists, is there a list of things that are “qualified medical expenses”
I have a HSA and do everything stated here except for saving the receipts for reimbursement at a later date. I think it is a wash because you are not calculating the opportunity cost of not investing the cash in the Expected Expenses Cash account. Instead, I just keep all that cash invested and pay my here and there medical expenses straight from the HSA as intended. Both my invested cash and the HSA funds will continue to grow and I’ll end up at the same place with no headache of tracking receipts. Also, the invested cash in the brokerage account will be taxed at long term capital gains vs this massive HSA which will be taxed as ordinary income when withdrawn and used for retirement after 65. Pretty much a wash 🤷🏾♂️
Yeah I don't agree with doing what he mentioned either. There's basically no benefit considering even once you get 65, if you do, it will still be taxed if you take it out to pay for non medical expenses. Like maybe if you're just overflowing with cash and you don't know what to do with then his way works fine.
@@shaw7598 Mot sure if this was for me, but my HSA is invested in FXAIX, and I max my contributions yearly. Fortunately, I only use about 10 to 20% from it for yearly medical expenses.
I don’t think you are understanding what he’s saying. I invest my HSA funds and pay for my medical expenses out of pocket. I save my receipts while my HSA investments keep growing. I will reimburse myself at age 65 or older for all the years of expenses I’ve already paid. I pay myself back tax free after years of compounding that money.
I think it is absurd that self employed people who opt out of high deductible health insurance plans or any other plan due to the insane costs are not allowed to have an HSA. We are the very population that would benefit from one. HSA is nothing more than an incentive plan to participate in an ObamaScare program.
Why in the world would they increase the contribution limit to $4300 and only increase the HSA contribution limit for a family to $8550. They should have just increased it to $8600.
I'm glad they didn't have hsa back when my wife needed two hospital stays, 80,000 and 60,000 bills we could never pay were just went away or insurance took care of it years later. If I had a hsa at the time it would have been wiped out.
One correction with the marginal tax rates:
They should've shown the differences between the ladder from 10% to 12%, 22% to 24%, etc. I didn't catch it until after it was already presented, but I want to make sure it is addressed in the comment section. It was presented correctly in the other tax video, but this one showed the incorrect numbers
You should pin this comment to top.
I don’t get it. The title says new rules for HSA in 2025 you should know. The video is just old generic HSA information that has been the same for years. Well, yes, the limits goes up every year as a results of inflation.
Listening comprehension really be tearing y’all up. He went over the new contribution limits
That tip about calling the hospital biller was gold. Never thought of doing that! My son had an ER bill for $3,000. Investing in my HSA, so had to pay OOP 😢. Called and asked for a discount and they gave me %30 off the top, took me just 5 minutes 🎉. Thanks so much!
that's a great idea. I should have asked for a discount for that $800 x-ray bill.
My employer contributes $1000 a year to my HSA at the start of the year, which is awesome. :)
Mine does two thousand but I have some expensive medication that would eat that and then some. High deductible policies are great if you’re healthy, not so much if you’re regularly using health care services. Way too much out of pocket for my family.
So the breaking news about new HSA rules for 2025 is that the limits have gone up?
You should always start saving to an HSA. It gives you an automatic 7.5% tax break on the medical expenses you would need to pay anyways.
I am using my HSA to save for Long Term Care expenses if I ever need them or paying my Medicare B premiums when I am 65. This can be a great way to save for those expenses.
I didn’t know you can use it for Medicare premiums. That’s good info
@@CharlotteCarMoments he said that after 65 you can use it for anything, not only medical related. I didn't know this but it is great info.
I just opened my first HSA through Fidelity a couple months ago, and I was able to invest my very first contribution of $100. I didn't know some places require a minimum
my job uses Optum bank, and i couldn't invest until I had $1,000
@@JayLewTheTruth Must not be an Optum bank thing because I use Optum bank and my minimum is $2,000 unfortunately.
Medcom is also 1k
HSA are for healthy people. If you have a chronic disease, this is not for you.
The best use is being 25 yrs out of your parents health insurance. Then start a HSA ASAP. Maybe you never have a health scare, and get to have $$$ for retirement.
Not necessarily true. You have to calculate the monthly premiums of each plan you are offered along with expected medical expenses plus any contributions your employer gives you plus the tax benefits.
I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024
🎉 I'm David and I love my health savings account😂😊
😂
I will never understand why anyone is barred from continuing an HSA at 65 if they take Medicare A even if they are still working. Makes NO sense to me
What i do is let most of my HSA grow in investment funds, buy every now and then i will take out reimbursements based on medical receipts and put the money in a 529. So my hsa money is never taxed, plus i get an additional state deduction due to the 529 contribution.
Thanks for sharing this! I moved my hsa funds over to Fidelity just a few years ago but I don’t think they had a managed account for hsa account holders then. It was only about 3 or 4 years ago but nonetheless, this video informed me and it’s free now being that my balance is currently just under $25,000. Now for sure, no hsa provider comes close to Fidelity’s features and fee tiers! 😊
I didn’t know that you can go back to previous years for reimbursement. That is great info
@@CharlotteCarMoments I’ve been investing in my HSA but I’ve been hold all my receipts for previous years worth of medical related procedures and for medicines. I’m probably going to covert them to digital images instead because that’s a lot of receipts but anyhow they don’t expire so I’ll cash them all in when I retire which is in 30 years.
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I invest my HSA, except an $1800 cash buffer for use. We max every year, and I consider it my Medical EF. My employer even contributes $1,000 annually!
Lively is who i use for my HSA. It doesnt require a cash balance to invest, i just roll my employer HSA plan over once per year
Your 2024 Marginal Tax Chart does NOT LOOK CORRECT!!!!! EX 383900 at 24%=92136. The whole amount is not at 24%. 180k at 24
Yup completely my bad for not double checking the numbers. Thanks for pointing that out
I would like to contribute to an HSA, but I am military retired and have Tricare and VA medical insurance. From what I can research I do not qualify to contribute to an HSA because of that. I hear people contributing to HSA that have VA medical and or Tricare, is there a work around to will allow this? Am I missing something because an HSA is a great way to build wealth.
Is it true that an employer HSA saves you more on taxes versus a self directed HSA? Heard employer HSA doesn't pay social security tax but other does
Thanks! Using HSA to pay bills 30 years afterwards may not jive with inflation. A $500 bill today will seem like $.05 30 years from now. Am I wrong?
You’re not wrong about a dollar today having less buying power 30 years from now.
what you’re missing, is that money in the HSA is invested and (hopefully) grows. You are not taxed on that growth
That’s a giant inflation rate. Not unheard of in other parts of the world maybe, but hopefully not the USA. Nonetheless, I expect to spend more on healthcare after I retire than I do in most of my younger years, so I’ll just hold onto it.
well thats the rub. to invest it tax free and make it grow greater than the inflation rate. there is a thing called a real rate and a nominal rate
I’m very glad I found you. You’re a really good teacher!
The tax info is all for pretax, HSA… I’m contributing to an after tax HSA. Ate the benefits similar?
The HSA is starting to look like the 401k in the early 2000s or so. Pretty soon, in 20 or 30 years,HSA limit will be what the 401k limit is now
Hopefully higher if congress passes the new HSA bills
@@FIREPsyChat Yeah, the HSA contribution limit should really be equal to the max annual out of pocket for HDHPs.
People are sick and slowly dying from the corrupt food system, so I can see why
When healthcare costs are $15,000 annually it’s kind of crazy that you’re limited to less than 1/3rd of actual costs. Hopefully they do increase this.
It’s got to! Has to keep up with rising health costs.
Perfect timing for this news. Thanks for covering this update!!!! 😊
Anyone else forced to not use Schwab through HSA anymore? Can’t do anything except sell now. Now I use HSA invest.
I did not overlook this i chose not to do it because i don't like paying over $1000 a month in health insurance. That would leave me a lot less to invest in general.
Love my HSA! But I do use it to pay receipts when the market is up. Even used it for braces for the kids! Of course, when the market is down I don’t withdraw. Fortunately we’ve been relatively healthy so it’s grown a fair amount.
My employer only offers an FSA account, which can't used as a Roth IRA after 65. Would a post-tax HSA account be worth it? Do we still have to pay capital gains taxes if we choose to withdraw after 65?
There is no such thing as a post-tax HSA account; they are all pre-tax. You can only open an HSA account if you have an HDHP (High Deductible Health Plan). That is the law that he said Congress is considering changing, opening up the possibility of everyone having an HSA no matter what kind of health insurance plan they have. If you withdraw from an HSA after 65, as long as the money is used to pay for health-related expenses (or to reimburse yourself for health-related expenses you previously paid out of pocket while you were contributing to your HSA), there are no taxes on the withdrawals.
10:24 I didn’t know we could use our HSA for dental work. My benefits manager told me I couldn’t.
You can, but if an FSA is an option it might be a better to use that for planned dental as it comes out pretax and is credited to you at the beginning of the year. You just need to use it up in the camshaft year or lose it. That way you can keep all the investible money on your HSA to maximize your benefits.
I am 66 and working full time. I have Medicare can I open a has acct.
No, I do not believe you can. Once on Medicare, you cannot contribute to an HSA.
Can anyone open and contribute to an HSA?
I have a HSA question. Currently I have a HDHP (2024), this plan will continue through all of calendar 2025, but due to a company layoff, I may need to switch plans in early 2025 as we will be moved to COBRA (still with the same HDHP), however if COBRA costs are unaffordable I might need to change coverage which may cause me to lose my HDHP at that point (let's say March 2025 for an example). Since I will have my HDHP in place in early 2025, can I fully contribute to the max in Jan 2025 to cover my 2025 contributions, even though I may have to move from a HDHP later in 2025?
I have ALS and am on short term disability until Jan 2025. Can i contribute in January 2025 for year 2025? If so how do I do that?
This is an excellent video. I learned a lot here.
This is my first year having an HSA. I did my full contribution at once since I don't get it through an employer. I invested it all in SCHD and I'm basically at break even 😭
In 20 years you will thank your younger self.
@@chriswb7 except that I don't have 20 years for an HSA.
I started my HSA 2 years ago & invested it in NVDA/ AMD/QQQ/SCHD/O, now I am up 51%, w/ NVDA average cost @ $35. 😊
I like HSA, but I definitely don’t like the high deductible plan. In my opinion, the high deductible plan is only good if you are healthy. I enrolled for the HDP one year, beside the annual exam, I have to pay hundreds dollars for doctor’s visits because of the high deductible.
I wish I could have an HSA.
Dude goes straight from "I didn't understand how the US progressive tax system really worked" immediately to "become my personal client" for financial advice... Good on him for being humble, but yeah, I'll pass.
@@JustinAZ that's like a doctor saying they didn't know how to be a doctor before going to medical school amd you saying I don't trust that 🤦🏾♂️
Do you pay taxes when you take the money out of the HSA after 65?
Yes, unless it is used for approved medical expenses. It is basically another IRA at that point.
No. You can use the money for anything after the age of 65.
After age 65 you can use it for non-qualified medical expenses but you will pay federal and/or state income taxes (penalty free). Qualified medical expenses are tax free and penalty free regardless of your age
@@nazeercurry5248 Nope, you can use it for non-qualified medical expense and avoid the penalty but not the State and Fed tax. Using for qualified medical expenses avoids both penalties and taxes. Once you enroll in Medicare you must stop contributions.
Good to see HSAs being promoted as a retirement tool. I didn't have access to an HSA for some time because I was under a spouses health insurance. Some of that time my employer offered free high deductible insurance, but I didn't see any reason to take it when I already had great insurance. At some point it dawned on me to take this insurance and the company contribution to an HSA. That money was never touched because I hate doctors. Only recently did it dawn on my that this was an excellent retirement tool. so for a few years now I've been maxing out my HSA contributions. I wish someone had explained to me that this was at least as valuable as a 401K or Roth IRA.
oh my goodness, your idea is to not use the HSA to pay for medical expense now but pay it out of pocket and let it grow like an Roth IRA. But have you considered that the $27000 you paid today but got it back like 15 years later, the $27000 lost value as well due to inflation. Maybe as well use that after tax money to fund the actual roth ira account or 401K roth or after tax 401k with in plan conversion.
has nothing to do with 2025
So you are supposed to have all this money to fund an HSA, to fund two savings accounts? Who has that kid of money? Secondly what if you have very few medical expenses and a larger HSA fund?
Question, As far as receipts, will my yearly statement from my health insurance provider for claims, what they paid and what I owed be accepted as a receipt for expenses paid out of pocket in order to reimburse myself down the road? I use my HSA strictly as investment tool until I retire and right or wrong have been making that assumption.
The thought is nice but most people are just living paycheck to paycheck. Always have a plan and a back up plan. This would be good once you got your emergency fund set, investments going and have extra cash left. We know what people are going to do when they have extra money. Spend it like no tomorrow.
Seriously? I can saved the recipes and withdraw from HSA years later?? That's new to know!!
This is awesome information. Thanks for sharing.
I've been saving receipts for about 5 years now. Plan on working maybe 3 more years then use some of the receipts to pay taxes on Roth conversion before i start my pensions and ss.
Question. If i go $10 dollars into the 22% tax bracket. Do I get the 22% back from my contribution. I will be retiring soon and will contribute max in cash into my account each year. What determines getting the 12 percent back or the 22% back???
Would you recommend getting an HSA if you start it in 2024, but then will eventually move to CA in 4-5 years, would it be worth it to max it out still?
What is the expense ratio? Plus, how much does Fidelity charge?
I didn’t know Medicare premiums were reimbursed…
That tip about calling the hospital biller was gold. Never thought of doing that! My son had an ER bill for $3,000. Investing in my HSA, so had to pay OOP 😢. Called and asked for a discount and they gave me %30 off the top, took me just 5 minutes 🎉. Thanks so much!
💪
This video was way longer than it needed to be
Instead of worrying about saving receipts from long ago, you can use your HSA to pay for Medicare (Part B, D, and Medicare Advantage) premiums, co-pays, deductibles, as well as long-term care insurance if you need that. Of course you can use it for medical expenses while in retirement and use it for what ever you like once 65 (avoid penalties) in which it will be treated as ordinary income for taxes. Keep in mind, you must stop HSA contribution once you enroll in Medicare, even if just Part A (which is free).
Excellent points! We are retired and still collecting receipts. Obviously receipts from years ago are devalued, but still helpful if you have substantial amounts in your 😅HSA. Getting the money out tax free is obviously the most helpful. We have substantial HSA money, we treat it as a Roth. But, people who have very large amounts will essentially have just a regular IRA.
I think if you have a huge amount of HSA money, it is not better than a Roth Contribution at lower income tax rates, since you have to “spend” money AND contribute, and may not be able to take it out tax free. The money you “spend” and not reimburse yourself for is essentially a tax since the value of that receipt severely deflates over 10-20 years or longer.
Based on our current experience as retirees at 63, and now both on Medicare, having about $150k in our HSA, our medical expenses INCLUDING Part B and D and copays are a bout $10k for both combined per year. We should have no problem spending the HSA down, but also expect the funds to last for 15-20 years. The value of our receipts is only about $20k today. If we had $500k in the HSA, we would never be able to spend it all on medical expenses short of long term care. Nothing wrong with saving it for LTC, but good chance we won’t need it all for that.
So my advice is to max out an HSA for 15-20 years IF current medical expenses are low. If not so healthy, I would not. After 15-20 years, I would just target a Roth, especially in lower income years.
I max out my family HSA, but withdraw as soon as I have receipts because of a few problems I have with the HSA:
1/ you have to keep receipts for decades. I don't want my wife to have to care about this.
2/ receipt value gets eroded by inflation, so eventually you may or may not have enough receipts to reimburse yourself.
3/ if you don't have receipts after 65, you will face regular income tax rates, at the same time you may have to do Roth conversions or actually have social security income filling up lower tax brackets.
4/ you may be trading long term capital gains tax rate for earned income tax rates.
So what I do is max it out through paycheck (for added fica deductions) then I withdraw as soon as I can and put it in taxable brokerage account on low cost etfs. It comes to around 0.3% tax drag while Accumulating but with LTCG rates at the exit. Better imho
The final nail in the coffin imo is that I hold a EU citizenship and can hedge against crazy high healthcare cost by relocating to my country of origin.
Never looked at it this way.
@@oness1334why would you, it doesn't make that much sense
@@dec1slh it does when you Grow up with 0 healthcare cost and are used to it.
I rip 90% of the benefits of the HSA by maxing it out from paycheck.
And I can get 0% LTCG at the exit by filing married filing jointly.
I also did not talk about a big estate drawback of the HSA, which is that it becomes fully taxable to the recipient the year of the death of the account owner. If the recipient doesn't have the receipts to show for it'll be costly. A taxable brokerage account gets a step up in basis.
If you want to compute the tax drag, think about the fact that an sp500 etf has 100% qualified dividends and yields around 2%. So while the account grows the real tax drag is (your LTCG rate) * 2%.
In my case, I am at 24% marginal, hence 15% LTCG.
Investing in a brokerage accounts cost me (15% * 2%) per year, so an added expense ratio of 0.3% to gain the full flexibility of a brokerage account.
The tax torpedo is real with an HSA and I think many people will be surprised in the incoming decades.
@@dec1slh it starts to make sense if you're filing married filing jointly, that you can get 0% long term capital gains tax, that your spouse won't have to care about receipt when you die, that she'll have a step up in basis instead of a tax torpedo.
It makes super sense when you grew up outside the US and are used to pay 0 for Healthcare costs!
The money in your HSA grows until you take it out.
Man. Hard to decide or make that decision to max out Everythung. 401, rith, hsa. Lol. Close with roth and has...but 491 is 15% + 2% match. Make More in stock market on average. Like 15-30%. So many variables
If you have a roth and 401k - just put what your company matches in the 401k and then max out what you can in the IRA.
Great information 🎉
8300 is for 55+ and 7300 for all.
If you turn 55 mid year next year can you contribute that extra 1000?
You can contribute the extra $1k in the year that you turn 55.
Curious, I’m pretty sure the employer match is not included the the limits. I could be wrong here, can you do some digging? My source was from HSA bank back in maybe 2023
Also, paying out of pocket isn’t entirely the best financial decision. Put it on a payment plan at zero percent and pay it off when your account has recovered. Don’t pay these figures with post tax dollars if you don’t have to. We are in tax arbitration at this point, keep it simple and use the dollars for what they are meant for
The employer match is included.
See IRS Pub 969, employer contribution Definitely counts toward your annual contribution limit
I have a question about HSA accounts. I know they cover medical bills, but can I cash out for personal use, like with a 401k or Roth IRA?
@@rkem1000 if under age 65 & spend HSA $ on non-qualified medical expenses, you will pay a tax penalty on those withdrawals. So, yes you can access the money, but it will cost you to do so.
If you have medical records, you can use them to take out money as long as you can show the price/payment.
What if you’re dirt poor
Could you please explain what you mean by reimbursing yourself? Like how?
Contribute money to your HSA, tax-free. If you have a health related expense, pay it out of pocket but keep the receipt. After you turn 65, you can reimburse yourself from your HSA account for all those receipts you've kept, even if they go back for decades. Your HSA money was tax-free when you contributed it, and now tax-free when you withdraw it. Tax-free going in and tax-free coming out, including both contributions and gains. That is not true of literally any other investment account. In the meantime, your HSA monies have been invested and compounding, so you could have six figures or even seven figures saved, depending on how early you start and how much you contribute each year.
@@Geronimo2Fly thank you
Another beast of a video!
If I withdraw some of the growth or compound interest of my HSA for non-qualifying expenses will I still pay taxes before age 65?
If you use it for non-qualified medical expenses set forth by the IRS before age 65, not only will you pay federal and state income taxes but you will be penalized 20% on top of it. That’s not just the growth or interest but also your contributions because they’re in pre-tax
Optum min cash is 500
What’s considered high deductible? What’s the amount?
For 2024, the IRS defines HSA-eligible plans as high-deductible health plans (HDHPs) with a deductible of at least $1,600 for an individual and $3,200 for families. These health plans must also have an annual out-of-pocket maximum spending amount of no more than $8,050 for an individual and $16,100 for families.
hi i have question about Hsa if i live in California. Can you explain what are the difference? 1. i wonder can i use this for my tax deduct when i do income tax? 2. if i sell the stock that i invest but i dont put dont use it yet do i have to pay tax ?
You cannot write off out-of-pocket medical expenses unless you paid more than 7.5% of your annual gross income in said expenses. Paying medical expenses out-of-pocket and losing out on the tax deferred benefits of the HSA is not smart and it's bad math. If you are making a profit doing what you are saying, you are committing tax fraud, and I would probably avoid posting a video about it or maybe you need to explain better what you're doing. Not only that, but you cannot claim medical expenses AND take the standard deduction, you need to itemize. This is assuming you are paying less than 7.5% AGI, like I mentioned, like most US citizens will be.
Yeah you need to watch the video again but this time slowly. Never did I say to write off medical expenses with the standard deduction in the video. The HSA contributions are in pre-tax dollars and reduce your taxable income. It’s not a schedule A write off. IRS Form 8889 reports the HSA contributions.
@@FIREPsyChat Ok, since you want to get smart with a comment like that, you should reread my comment again. At no point did I say that is what you said. I’m saying that is what would need to be done for what you’re saying to work. I’m also saying your advice is bad for many different reasons. It is NOT beneficial in any way to pay for medical expenses with post-tax dollars if you have a tax deferred HSA. It doesn’t matter that you can invest that money tax free or not. If you have to pay $3,000 in expenses, as you showed, you’re essentially paying $3,720 when figuring for lost taxed money at 24%. If you paid your medical expenses with your HSA and invested that leftover $720 instead, you would come out ahead using your tax deferred account every single time. People that use their HSA like this are not doing the math correctly and need to stop giving advice.
@@logandaniels5 if you invest your HSA roll it all over for 5 years and save the receipts from the out of pocket expenses you can keep your original HSA invest and later reimburse yourself with the interest earned. All while deduction the HSA contributions. That’s why you pay out of pocket, you’ll never build your HSA if you’re pulling it out all year every year
i just got to move out of California before I retire, CA doesn't recognize HSAs and tax them like any non-qualified account.
What does this mean? I know the state does not not, but federal is accepted?
@@xaxb4178 say you invested $10k in an HSA and purchased stock XYZ and it grew to $50k after 20 years. When you sell the stock in the account, California will tax the capital gain.
I’m hearing conflicted information on things HSA can be used for. Some people are claiming they’ve been allowed to use for gym memberships and nutritionists, is there a list of things that are “qualified medical expenses”
So if you’re over 55, you can only contribute 1000. Is it worth starting HSA? Thanks.
Start with IRS Publication 969, the Distribution section refers you to IRS Pub 502, which is a very specific list of eligible expenses
@@jmclay4317no, if you’re over 55, you can contribute an ADDITIONAL $1000 above the annual contribution limit
Thank you so much for sharing information about HSA account, I have a question. I am recently retired, can I open an HSA account?
You can as long as you’re on a HDHP
you cannot be on Medicare, if you are no.
Is GEHA HDHP HSA minimum still $1000 or $100 before I can transfer the funds to my fidelity HSA account?
I did not know you could transfer money from one HSA to another
$100 before you transfer to the brokerage.
$100
I have a HSA and do everything stated here except for saving the receipts for reimbursement at a later date. I think it is a wash because you are not calculating the opportunity cost of not investing the cash in the Expected Expenses Cash account. Instead, I just keep all that cash invested and pay my here and there medical expenses straight from the HSA as intended. Both my invested cash and the HSA funds will continue to grow and I’ll end up at the same place with no headache of tracking receipts. Also, the invested cash in the brokerage account will be taxed at long term capital gains vs this massive HSA which will be taxed as ordinary income when withdrawn and used for retirement after 65. Pretty much a wash 🤷🏾♂️
Yeah I don't agree with doing what he mentioned either. There's basically no benefit considering even once you get 65, if you do, it will still be taxed if you take it out to pay for non medical expenses. Like maybe if you're just overflowing with cash and you don't know what to do with then his way works fine.
Why are you not investing? My HSA is invested in SPX index fund
@@DefinitelyNotRin Most people will have medical expenses at 65. But I agree with your views.
@@shaw7598 Mot sure if this was for me, but my HSA is invested in FXAIX, and I max my contributions yearly. Fortunately, I only use about 10 to 20% from it for yearly medical expenses.
I don’t think you are understanding what he’s saying. I invest my HSA funds and pay for my medical expenses out of pocket. I save my receipts while my HSA investments keep growing. I will reimburse myself at age 65 or older for all the years of expenses I’ve already paid. I pay myself back tax free after years of compounding that money.
I think it is absurd that self employed people who opt out of high deductible health insurance plans or any other plan due to the insane costs are not allowed to have an HSA. We are the very population that would benefit from one.
HSA is nothing more than an incentive plan to participate in an ObamaScare program.
I just get a box of bandaids to cover my medical emergencies in order to not touch my HSA 😂
Why in the world would they increase the contribution limit to $4300 and only increase the HSA contribution limit for a family to $8550. They should have just increased it to $8600.
They did this in 2022 and it’s pretty annoying. I wish they would just double it to make it even
@@FIREPsyChat I agree. It's annoying.
It’s a consequence of rounding to the nearest $50. The single limit made the cut and the family limit didn’t. In other years the opposite can occur.
Do medicare ask to see your assests to determine if you qualify?
I'm glad they didn't have hsa back when my wife needed two hospital stays, 80,000 and 60,000 bills we could never pay were just went away or insurance took care of it years later. If I had a hsa at the time it would have been wiped out.