Great video and I was pleased to learn that I had not made any of the mistakes you mentioned. I max out my HSA every year and I invest the monies within my HSA as follows: 40% in a growth fund, 40% in a fund that tracks the S&P 500 and the remaining 20% in a target retirement fund. I keep a folder with my medical receipts and pay for my medical expenses out of pocket. I will reimburse myself years from now when I'm at least 65.
Excellent video Eric. It's too late for me as I'm already retired but I will be sharing with my son and daughter in law and encouraging them to take advantage of this. They are in their early 30's. Larry O.
I just found this channel, I really like what Eric has to share. I feel like I am leaving a lot of money on the table too, and at age 58 I am concerned. I'll be going through his other videos. Great content! I don't follow everything he said, but I am going to go through these videos again to make sure I understand it.
Big thanks! I add my federal taxes already to go in mail today and saw this video. Most of this I was aware and doing, but the biggest surprise was the ability to contribute $1000 to each spouse HSA. I was only doing this to the total, even through I had 2 HSAs.
I've watched about 12 videos on HSAs before this. I still learned a lot from this video. Lots of good info on reimbursement strategy. Thanks a million!
One important fact about reimbursing that I didn't hear covered: while there's no time limit on reimbursing yourself, you can only reimburse yourself for medical expenses incurred AFTER the HSA was opened, even if you have receipts for expenses incurred prior.
Thank you Eric! Your video prompted me to move my HSA cash to the Money Market Fund option available to me through my employer sponsored HSA Plan. Should have done this years ago. Thank you!!!
Happy to have found you and this topic! I’m a offender of many of your points. No more! No plans to use it any time soon and will focus on getting it to work for me. Thank you!
I am 66. I have my entire HSA funded with FDVV, high dividend fund. When I need funds for eyewear, dental, medicare deductibles I make sure there is enough in cash to cover, if not I sell some. The dividends cover most everything except for some high cost eyewear and some dental procedures.
Thanks again. Definitely some applicability to me here! As a result of retiring I was about to start incurring fees that previously had been paid for by my employer so it was time to move the HSA to a lower/no-fee provider. Also the employer sponsored HSA provider required you to keep a minimum amount of cash un-invested. Until very very recently I wasn't aware of the ability to get an extra 1k contributed to a separate HSA opened in my spouse's name. Need to make that happen! The other bookkeeping thing I ran into was that I was relying on the employer sponsored HSA providers website/database to track my qualified expense receipts. As a result of moving it out of that one I realized I needed to have my own tracking/documentation system that is independant of the HSA provider.
Thank you for your clear explanation. I have read that you could also use the HSA as a replacement for Long Term Care Insurance. Assuming that you have enough saved in it you can avoid having to pay for LTC insurance.
I'm 37 now and have been maxing contributions to 401k and IRA for several years now. Sure wish I had known about HSA's earlier in life, especially with a couple times having incurred significant health expenses (several $K each). Using the receipts for deferred distributions is going to be an extremely powerful tool when it comes to retiring early.
I fully fund my hsa and let it grow invested. However whenever i have medical bills i pull out of hsa and move the money to my kids underfunded 529. That way the money still continues to grow tax free and i can discard the receipts after a couple years
Nice vid. Regarding #3, I was pleasantly surprised that my federal government job allowed me to set up direct deposit to an outside HSA. So I recently opened a Fidelity HSA and set everything up. I'm hoping this allows me to obtain the fourth tax advantage (exempt from FICA). 🤞
Huge fan of Lively but learned that Options trading isn't supported for HSA accounts - only ETFs - and I'm suspecting it's because those expenses would be too high for them to be completely free like ETFs.
Fidelity HSA might be your answer. That's who I use and I've bought and sold calls in my account. It's not completely free- $0.65 per contract- but that's insanely cheap.
I have been leaving all funds “invested” in the HSA and will wait to take reimbursements. But I believe there is one important risk. Any funds not withdrawn at the time my wife and I both die will be taxed as ordinary income when received by our children. But I guess in all likelihood we’ll have fair warning to make distributions before DOD.
This was helpful. #2 Under Contributing was an eye opener. I am working and my wife is not. Our health coverage is through my employer and it covers the family, and I contribute to the HSA connected to my health coverage provider through my employer ($8750 this year). Is gaining the additional catch up as simple as reducing my contributions to $4850 and opening a separate HSA for my wife at another provider and funding her contributions ($4850) outside of my employer from savings? Are there any other rules concerning two accounts (e.g. they need to be associated with my health insurer)?
My hsa is all in the market. Dividends pay medical bills when needed and reinvested when not. Keep records for bandaid ect that later get cash back out at retirement. Worst is there aren't many free brokerage hsa left. Lively is charging now with Schwab. Was free with Ameritrade
Same, fidelity. My employer switch to wealthcare saver last summer. It's loaded with fees. Moved my entire HSA to fidelity, all invested, only fees are the funds. Just pick low cost ETF's.
If you have adult children 18-26 on your healthcare that are not tax dependants, they can also contribute the family max to their own HSA. Thus $8300 you and $8300 for each adult child!
What of when you have little kids. Whose HSA can pay for them? I thought HSA is based on tax filing status? Will you and your spouse have separate insurances?
My wife and I are on her employers health insurance plan, her employer does not offer an HSA. Can we independently open one & get the tax deduction for it? We have what I consider high deductible plans, our deductible is 3K each and out of pocket max is $8,700 each.
Because of the challenges involved in a tax audit, I would not delay reimbursing myself more than a year after when the medical expense took place. My accountant said it is more difficult to prove all is ligament after several years go by. I have reimbursed myself for medical expense the year after the expense took place in the past.
That's an interesting point. That would significantly decrease the power of the HSA. If you're using it as a "Health IRA", you want to reimburse yourself from the account after years (potentially decades) of growth.
As long as you have qualified expenses on those receipts it really shouldn't be an issue. I would also recommend keeping them digitally in PDF form in the cloud in addition to printed receipts where the odds of it being lost are very unlikely.
Great video! I have a question about how you said that the HSA funds can be used for your spouse's medical expense too. Is that possible even if she's not on my high deductible medical plan + HSA?
Thanks for your input. Just one additional question if you retire at 62 and have had a company sponsored health plan up until that point how can you use this strategy to help you until you reach Medicare thank you
@@g.ajemian4968 I was in that situation. My company offered a choice of plans, including an HDHP that was HSA eligible. After I left, I signed up for a HDHP through “Obama Care” which I’m on now. I contribute the max allowed. My wife started Medicare last year and we stopped contributing for her. Over the years we have contributed over 100k to our HSA. One caution however, if you expect to use a lot of medical care while on a HDHP remember that you will have a lot of out of pocket expenses. We were fortunate not to need to do that over the years, but have kept receipts for things we did pay for.
@@randolphh8005 thank you for your input it is helpful, I have just started looking at available plans in NH and I see mostly HMO plans is that what you have and are you happy with it .? Thanks
9:19 Hopefully an expert will answer your question I’m am not. The first requirement is that you have to be enrolled in a High Deductible health plan as defined by the IRS. I don’t believe there is an upper or lower income limit to contribute. So if you are not employed, not covered by any thing other the High Deductible plan you can contribute. I’ve went thru the IRS documents and it is not clear to me if you have to have income shown on your tax return to cover the HSA like with an IRA. I guess I need to head to the Bogleheads forums - they usually have it covered.
@@ronneves9039 you don’t need income to contribute, but obviously then you won’t get the upfront tax deduction. No upper or lower income limits. You have an HSA after you first establish it. Once established you can keep it forever. However CONTRIBUTIONS can only be made if you have a current HDHP. Withdrawals can be made at any time for eligible expenses incurred after you set up your first HSA
So slightly confused with mistake #2. If I open an HSA for my wife, does she have to be working. And then secondly, is the max still capped total at $8.3k or is it now technically DOUBLED to $16K?
An individual gets to contribute 3,850. A family gets to max it at 7750. If you and your spouse are over 55 years of age, you may make a "catch up" contribution. More than the max mentioned above. So at that time if you're 55+ and you and your spouse each have a separate HSA you can contribute 4850 each. That's $9,700 total. Versus a husband and wife that has 1 single account, and over 55 yrs old they can only contribute $8,750
Eric, truly enjoyable video with one exception? I’m leaving lively at this time not willing to give schwab $24 in fees or have a minimum of $3000 cash account. I’m transferring my HSA account to Fidelity, which has no fees. Any thoughts?
Just moved mine from BankOfAmerica hosted to Fidelity. Once I retired BofA was going to start charging me fees and they had a minimum $1000 cash account. Funds are now fully at Fidelity and fully invested (as I don't plan to use them anytime soon for medical costs) with no fees. Happy so far here but I claim no expertise here...just figuring it out as I go also.... My to-do list is to get a second HSA opened for my wife. Hoping I can also do it through Fidelity but haven't done it just yet.
Keep them in your email inbox, star/highlight them. Make a special HSA folder and upload it to the cloud. Use Google Docs. If you know you're not good at something, figure out how to put the odds in your favor! HSAs are way too powerful to be underutilized because "I'm forgetful."
My husband and I are over 65. According to Medicare rules, we must enrolled Medicare part A, although we have insurance through my husband’s work, we are no longer can contribute his HSA account. Is there a way to get around the rule?
Everything is denied and need MULTIPLE forms to give you your money back. Save the money on your own. Pay for it on your own. Deny, deny, oh here is my receipt, deny. We need your EOB. It takes months to get an EOB.
Need to be careful if you have your HSA fully invested and then need to use it to pay a medical bill. I ran into that where the payment was denied because there was not enough in the cash balance to cover the bill. Also if you are in a high deductible plan, on top of trying to max out your HSA you will need the $3500 - $6000 to cover your yearly deductible if you aren't using the HSA to cover that.
How can my spouce get a HSA if her job doesn't provide one? I'm pretty sure she can't choose the level of healthcare. She only gets what her union provides which is really good since she's in healthcare.
Great video and I was pleased to learn that I had not made any of the mistakes you mentioned. I max out my HSA every year and I invest the monies within my HSA as follows: 40% in a growth fund, 40% in a fund that tracks the S&P 500 and the remaining 20% in a target retirement fund. I keep a folder with my medical receipts and pay for my medical expenses out of pocket. I will reimburse myself years from now when I'm at least 65.
@traybern and the tax burden is?
@traybern let me know what brokerage acct is triple tax advantaged and i'll move 100% of my savings to it
You better laminate the receipts becoz changes are it won’t be in good shape after 2 decades.
@@vv-cv6udscan all your receipts and have backups of your digital files.
@@vv-cv6ud PDFs, Pics, etc. Lots of electronic formats. Just back 'em up. Keep 'em safe. Organize, organize, organize.
Excellent video Eric. It's too late for me as I'm already retired but I will be sharing with my son and daughter in law and encouraging them to take advantage of this. They are in their early 30's. Larry O.
I just found this channel, I really like what Eric has to share. I feel like I am leaving a lot of money on the table too, and at age 58 I am concerned. I'll be going through his other videos. Great content! I don't follow everything he said, but I am going to go through these videos again to make sure I understand it.
Big thanks! I add my federal taxes already to go in mail today and saw this video. Most of this I was aware and doing, but the biggest surprise was the ability to contribute $1000 to each spouse HSA. I was only doing this to the total, even through I had 2 HSAs.
I've watched about 12 videos on HSAs before this. I still learned a lot from this video. Lots of good info on reimbursement strategy. Thanks a million!
One important fact about reimbursing that I didn't hear covered: while there's no time limit on reimbursing yourself, you can only reimburse yourself for medical expenses incurred AFTER the HSA was opened, even if you have receipts for expenses incurred prior.
@@thomaslundenhe did say that expenses occurring after the HSA was opened
Thank you Eric! Your video prompted me to move my HSA cash to the Money Market Fund option available to me through my employer sponsored HSA Plan. Should have done this years ago. Thank you!!!
Happy to have found you and this topic! I’m a offender of many of your points. No more! No plans to use it any time soon and will focus on getting it to work for me. Thank you!
I am 66. I have my entire HSA funded with FDVV, high dividend fund. When I need funds for eyewear, dental, medicare deductibles I make sure there is enough in cash to cover, if not I sell some. The dividends cover most everything except for some high cost eyewear and some dental procedures.
Thank you. I almost missed the 1k catch up.
Thanks again. Definitely some applicability to me here! As a result of retiring I was about to start incurring fees that previously had been paid for by my employer so it was time to move the HSA to a lower/no-fee provider. Also the employer sponsored HSA provider required you to keep a minimum amount of cash un-invested. Until very very recently I wasn't aware of the ability to get an extra 1k contributed to a separate HSA opened in my spouse's name. Need to make that happen! The other bookkeeping thing I ran into was that I was relying on the employer sponsored HSA providers website/database to track my qualified expense receipts. As a result of moving it out of that one I realized I needed to have my own tracking/documentation system that is independant of the HSA provider.
Great content as usual Eric. Thanks !
Great information
Thank you for your clear explanation. I have read that you could also use the HSA as a replacement for Long Term Care Insurance. Assuming that you have enough saved in it you can avoid having to pay for LTC insurance.
Great informative video! Thanks for the tips.
Always great, thanks Eric
I'm 37 now and have been maxing contributions to 401k and IRA for several years now. Sure wish I had known about HSA's earlier in life, especially with a couple times having incurred significant health expenses (several $K each). Using the receipts for deferred distributions is going to be an extremely powerful tool when it comes to retiring early.
I fully fund my hsa and let it grow invested. However whenever i have medical bills i pull out of hsa and move the money to my kids underfunded 529. That way the money still continues to grow tax free and i can discard the receipts after a couple years
Nice vid. Regarding #3, I was pleasantly surprised that my federal government job allowed me to set up direct deposit to an outside HSA. So I recently opened a Fidelity HSA and set everything up. I'm hoping this allows me to obtain the fourth tax advantage (exempt from FICA). 🤞
Thanks for what you do, great videos...would love to see video that explains how bucket strategy and 60/40 portfolio should be used together
Huge fan of Lively but learned that Options trading isn't supported for HSA accounts - only ETFs - and I'm suspecting it's because those expenses would be too high for them to be completely free like ETFs.
Fidelity HSA might be your answer. That's who I use and I've bought and sold calls in my account. It's not completely free- $0.65 per contract- but that's insanely cheap.
When can I take all the money?
I have been leaving all funds “invested” in the HSA and will wait to take reimbursements. But I believe there is one important risk. Any funds not withdrawn at the time my wife and I both die will be taxed as ordinary income when received by our children. But I guess in all likelihood we’ll have fair warning to make distributions before DOD.
This was helpful. #2 Under Contributing was an eye opener. I am working and my wife is not. Our health coverage is through my employer and it covers the family, and I contribute to the HSA connected to my health coverage provider through my employer ($8750 this year). Is gaining the additional catch up as simple as reducing my contributions to $4850 and opening a separate HSA for my wife at another provider and funding her contributions ($4850) outside of my employer from savings? Are there any other rules concerning two accounts (e.g. they need to be associated with my health insurer)?
My hsa is all in the market. Dividends pay medical bills when needed and reinvested when not. Keep records for bandaid ect that later get cash back out at retirement. Worst is there aren't many free brokerage hsa left. Lively is charging now with Schwab. Was free with Ameritrade
I have Fidelity through work with no charges. Not sure what it will be like after I retire, but so far I am pleased.
Fidelity is where mine is too. $0 charges and 100% invested
Same, fidelity. My employer switch to wealthcare saver last summer. It's loaded with fees. Moved my entire HSA to fidelity, all invested, only fees are the funds. Just pick low cost ETF's.
I have fidelity as well love it .
How would you recommend keeping the receipts for use a decade later or more
Excel document and two folders- "paid out" and "not yet paid out"- with pictures/pdfs of your receipts uploaded to the cloud.
I do not understand how you split an HSA into two. Anybody have more info?
If you have adult children 18-26 on your healthcare that are not tax dependants, they can also contribute the family max to their own HSA. Thus $8300 you and $8300 for each adult child!
How are you getting 8300?
What of when you have little kids. Whose HSA can pay for them? I thought HSA is based on tax filing status? Will you and your spouse have separate insurances?
My wife and I are on her employers health insurance plan, her employer does not offer an HSA. Can we independently open one & get the tax deduction for it? We have what I consider high deductible plans, our deductible is 3K each and out of pocket max is $8,700 each.
Can U save receipts in email under a HSA Receipts folder?
Because of the challenges involved in a tax audit, I would not delay reimbursing myself more than a year after when the medical expense took place. My accountant said it is more difficult to prove all is ligament after several years go by. I have reimbursed myself for medical expense the year after the expense took place in the past.
Absolutely
That's an interesting point. That would significantly decrease the power of the HSA. If you're using it as a "Health IRA", you want to reimburse yourself from the account after years (potentially decades) of growth.
As long as you have qualified expenses on those receipts it really shouldn't be an issue. I would also recommend keeping them digitally in PDF form in the cloud in addition to printed receipts where the odds of it being lost are very unlikely.
Qualified payments should be pretty easy to prove. I would keep the receipts in pdf on your hard drive as well as keep them in a filer.
This is truly bad advice.
Great video! I have a question about how you said that the HSA funds can be used for your spouse's medical expense too. Is that possible even if she's not on my high deductible medical plan + HSA?
Yes.
Can anyone at any age open an HSA? If not, what are the criteria to make you eligible? Thank you.
you need to be enrolled in a high deductible health plan for you to be eligible for an HSA
You can’t contribute once on Medicare, but you can withdraw at any age for eligible expenses including Medicare premiums
Thanks for your input. Just one additional question if you retire at 62 and have had a company sponsored health plan up until that point how can you use this strategy to help you until you reach Medicare thank you
@@g.ajemian4968 I was in that situation. My company offered a choice of plans, including an HDHP that was HSA eligible. After I left, I signed up for a HDHP through “Obama Care” which I’m on now. I contribute the max allowed. My wife started Medicare last year and we stopped contributing for her.
Over the years we have contributed over 100k to our HSA.
One caution however, if you expect to use a lot of medical care while on a HDHP remember that you will have a lot of out of pocket expenses. We were fortunate not to need to do that over the years, but have kept receipts for things we did pay for.
@@randolphh8005 thank you for your input it is helpful, I have just started looking at available plans in NH and I see mostly HMO plans is that what you have and are you happy with it .? Thanks
If one spouse is over age 65 and on Medicare, then it is not possible to open an HSA for each spouse (Mistake#2)
When can you no longer have or fund an HSA?
9:19 Hopefully an expert will answer your question I’m am not. The first requirement is that you have to be enrolled in a High Deductible health plan as defined by the IRS. I don’t believe there is an upper or lower income limit to contribute. So if you are not employed, not covered by any thing other the High Deductible plan you can contribute. I’ve went thru the IRS documents and it is not clear to me if you have to have income shown on your tax return to cover the HSA like with an IRA. I guess I need to head to the Bogleheads forums - they usually have it covered.
After you are 65, you’ll be on Medicare, and presumably therefore no longer on the high deductible health plan you need in order to qualify for HSA.
once you go on medicare you can't enroll in an HSA
@@ronneves9039 you don’t need income to contribute, but obviously then you won’t get the upfront tax deduction. No upper or lower income limits.
You have an HSA after you first establish it. Once established you can keep it forever. However CONTRIBUTIONS can only be made if you have a current HDHP. Withdrawals can be made at any time for eligible expenses incurred after you set up your first HSA
@@ianollmann9393 6 months before you’re 65 you’ll have to stop contributing to your HSA.
who saves receipts.? I am not sold on it.
With an HSA, I'd highly advise it.
You need to if audited. I suggest saving electronic scans is easiest.
It's too bad that not everyone is eligible to have an HSA.
So slightly confused with mistake #2. If I open an HSA for my wife, does she have to be working. And then secondly, is the max still capped total at $8.3k or is it now technically DOUBLED to $16K?
An individual gets to contribute 3,850.
A family gets to max it at 7750.
If you and your spouse are over 55 years of age, you may make a "catch up" contribution. More than the max mentioned above.
So at that time if you're 55+ and you and your spouse each have a separate HSA you can contribute 4850 each. That's $9,700 total. Versus a husband and wife that has 1 single account, and over 55 yrs old they can only contribute $8,750
Mistake 2 was aimed at people over 55
Eric, truly enjoyable video with one exception? I’m leaving lively at this time not willing to give schwab $24 in fees or have a minimum of $3000 cash account. I’m transferring my HSA account to Fidelity, which has no fees. Any thoughts?
Fidelity is the best! I got lucky a few years ago when my employer switched to Fidelity for our HSA's. Wouldn't have it anywhere else.
Just moved mine from BankOfAmerica hosted to Fidelity. Once I retired BofA was going to start charging me fees and they had a minimum $1000 cash account. Funds are now fully at Fidelity and fully invested (as I don't plan to use them anytime soon for medical costs) with no fees. Happy so far here but I claim no expertise here...just figuring it out as I go also.... My to-do list is to get a second HSA opened for my wife. Hoping I can also do it through Fidelity but haven't done it just yet.
I keep my insurance deductible amount in cash in my HSA, and the rest is invested in the market
Also, some companies contribute to your HSA, so why leave money on the table...
I love the idea of using cash for medical expenses and letting the investment grow, but I just know I'll lose track of the receipts.
Keep them in your email inbox, star/highlight them. Make a special HSA folder and upload it to the cloud. Use Google Docs. If you know you're not good at something, figure out how to put the odds in your favor! HSAs are way too powerful to be underutilized because "I'm forgetful."
My husband and I are over 65. According to Medicare rules, we must enrolled Medicare part A, although we have insurance through my husband’s work, we are no longer can contribute his HSA account. Is there a way to get around the rule?
Unfortunately not.
Everything is denied and need MULTIPLE forms to give you your money back. Save the money on your own. Pay for it on your own. Deny, deny, oh here is my receipt, deny. We need your EOB. It takes months to get an EOB.
Need to be careful if you have your HSA fully invested and then need to use it to pay a medical bill. I ran into that where the payment was denied because there was not enough in the cash balance to cover the bill. Also if you are in a high deductible plan, on top of trying to max out your HSA you will need the $3500 - $6000 to cover your yearly deductible if you aren't using the HSA to cover that.
Sell something
How can my spouce get a HSA if her job doesn't provide one? I'm pretty sure she can't choose the level of healthcare. She only gets what her union provides which is really good since she's in healthcare.
Then her plan likely does not qualify to have an HSA