Hi, i am 44 with 26k in my HSA, 4k cash for deductible purposes, the rest is invested. We dont use it or go to the doctor much. It just continues to build!
Learning about HSA when my company switched back around 2018 was some of the best time I've ever spent. I now have 25k invested in my at age 31 and am maxing it out every year!
Yeap. Where I work they pay the insurance premium. All of it. And they contribute 214 a month in my plan. It's just awesome plus after 2k I invest it in vanguard stocks.
I have two (hopefully) useful bits of additional information regarding HSAs. (1.) In addition to being exempt from income tax, HSA contributions are not subject to FICA tax. This is unlike traditional 401k contributions, which are subject to FICA tax. (2.) You don't have to use the card associated with your HSA account. Instead, you can use any of your credit cards to pay for qualified medical expenses and then reimburse yourself from your HSA later. This means you get the points, miles, cash back, etc. from using your credit card to pay for the medical expense that you might not get with your HSA card. You can then reimburse yourself by transferring money from your HSA account to your bank account and then paying off the medical expense on your credit card with this money. This can be done right away or at any time in the future. It's your choice. Just remember to keep the receipt in case you get audited in the future.
I have an HSA and I love it. When I first got it, I didn’t fully understand its power. As I learned more about it, I started maxing it every year. I’ve had mine for about 5 or 6 years now. I started investing the monies in my HSA in the summer of 2020. As of this year, I quit using it to pay for any qualified expenses. I started keeping my receipts in a folder and will reimburse myself years down the road when I turn 65. I invest the money in the account in 3 different funds. One is a fund that tracks the S&P 500. The second is a growth fund and the third is a targeted retirement fund. I put more money in the first 2 funds. Also, the contribution limit goes up in 2024 pretty nicely. I will continue to max it. In fact, I am the person who manages the fund at my company. Most of our employees are young and most of them do not contribute to it. They receive the employer portion but fail to add their money. I’ve tried to educate some of the younger employees but they don’t seem interested. There are only 2 people who max their HSAs in our whole company and I am one of them. Great video by the way.
I do not know how old you are currently, but just keep in mind that this plan may change. At 39 years old, I found out I needed heart surgery. Now I have a cardiologist for the rest of my life and get an ECHO test every year too. It's very expensive, even with health insurance. I max out my HSA too, but I use about 80% of it for medical expenses.
@@KayKay0314I often wonder about future “changes.” But for that matter, couldn’t ANY retirement account change? ie- Roth, IRA’s, SS, RMD’s, etc etc. Tough to plan for the unknown.
@@KayKay0314So many take for granted good health and how much fortune they have already even if in financial debt. Insurance doesn't work well on steady-state survival expenses. It's only there to soften the out-of-the-blue health events and really does little else---except maybe to drive up medical costs overall.
I have a HSA and I max it out every year. I am not spending anything in the HSA until I retire. I only learned about the HSA about 4 years ago. It is great for the future!!
I have an HSA and have been investing it for years. Also, I have been saving all my medical receipts so I can tap into those funds if needed. Otherwise it will be like my long term care fund. Mentioned this to my advisor years ago and he did not realize it worked like it did - so I educated him.
One thing I rarely see mentioned in articles and videos like this is the fact that states like CA and NJ still don't view HSA's as retirement accounts. So contributions are taxed and interest, capital gains and dividends in the account all need to be reported come tax time. Most companies don't generate the applicable tax forms for you because of how the federal government treats HSA's, so many people that are in these states and have an HSA are unaware of this different tax treatment.
Also diminishes the tax benefit as you’re still paying State income and payroll taxes as you deposit. For me in California, it’s still beneficial as avoiding FICA taxes is about the same as state income tax plus state payroll taxes.
So basically her advice applies for all other 48 states just not those other two. Her advice helps a lot of people obviously it's up to the person to check what's what works in their own unique state
I use my HSA as an investment/retirement account. I don't use it for current healthcare expenses, instead saving those receipts to take advantage of later. My employer contributes $1100 and I contribute up to the max. I am required to keep $1000 in cash, but every penny above that gets invested in several Vanguard index funds. The growth I've seen in this account has been amazing. I'm planning to use my HSA for healthcare expenses after retiring, as well as to bolster my disposable income, using my saved receipts...and more widely after age 65. I have a coworker who has the HSA as well, but he doesn't invest it. I have tried multiple times to explain to him what he's missing out on, but he just keeps procrastinating. I don't get why you wouldn't do something so simple to grow your money.
@@derbywinner6316 It's definitely not ignorance because I have informed him. It's not laziness either, not in this case anyway. Face it, some people are just oddballs and their behavior often doesn't make sense. That's why I try to educate people if they are open to it and, if not, accept them as they are. Besides, it's not my money so he can do what he wants with it.
Some years ago I had a similar conversation with a coworker and it was like hitting a brick wall. He was complaining to me that the monthly premiums on his PPO family plan coming out of his paycheck was almost as much as his monthly rent. I explained the whole HDHP and HSA concept and he kept saying to me that he doesn't want any bills, but his actions showed me he would rather continue the status quo on spending $600 dollars a month on premiums even though most of those months he didn't have any visits to medical facilities thereby he just threw away $600 in those months. I tried to explain to him that the monthly premiums on the HDHP were half of what it was for the PPO and you pay yourself the difference into your HSA account every month and you get free money from the company every year into you HSA account. If you get a bill your HSA pays for it if you so choose, but it all just fell on deaf ears as he was dead set on not getting any bills in the mail. Oddly enough even the PPO had a deductible although not quite as much, but it was still over $1,000 so even in the PPO plan you were still going to get a bill in the mail. The guy is well into his 50's and didn't have a pot to piss in after working his whole life, and I mean flat broke. This same guy drove a 15 year old crappy Chevy Trailblazer with a $400 monthly payment for four year repayment term that he bought from one of those buy here pay here places that you see on the roadside and it had one of those engine cut off devices in it in case he didn't pay his monthly bill. Some people just don't want to be educated about money as it seems like they just purposely want to keep committing financial suicide.
I do have my 457 invested in vinix and vdigx. Vanguard funds are awesome low expense ratios. I need to get a little bit more credit card debt paid off then I could give 1000 a Pay period into these accounts.
Another excellent topic. A lot of people have no idea how HSA's work. I have an HSA, which I had the last 3 1/2 years of my working days. I have never used money from the HSA, and it is invested for use much later. I plan to let it grow.
I’m like you, but only got 2 years, wish I’ve had this when I was younger Luckily my wife is 5 years younger than me and couple more years to work We max hers out
I did not know all this when my company first got HSAs. I took the high deductible plan because we did not have many medical expenses. I was lazy, and did not use the HSA to cover the expenses, so the money just stayed in the HSA. I figured - why not move it to a mutual fund. So I stumbled into the 1% purely by accident. I keep receipts now, I didn't at first.
Wow Erin, best HSA video I have seen! Yes we have an HSA; yes we use it as an investment account; yes my adult daughter (covered under our high deductible plan) has her own account. In a 12 minute video, you covered everything it took me months of research to find out - had to talk to multiple insurance advisors, investment advisors, a tax advisor and eventually had to make a few decisions of my own based on what I thought the IRS code said. You covered it all here! Thanks!
I am maxing out and investing my HSA and watching it grow also! Another thing to consider: since I'll be filling out a FAFSA next year and looking into college financial aid for my child, HSA accounts are considered medical spending (even though I'm using it as an extra retirement account) by colleges so these contributions won't be considered "available" for college funding like retirement contributions will.
I had a HSA with HealthEquity with my previous employer which I maxed out for a few years and invested all but about $100. My current employer has a HDHP but they also have a HRA which brings the deductible down to $1,000 so I'm no longer qualified for a HSA. Since my HSA account was no longer active, HealthEquitiy was changing me $3.95/month because I did not have $2500 in cash so I had to move some of my investments over to cash to avoid this fee. I probably would come out ahead leaving the money invested but I hate being charged a fee if I can avoid it. Great video Erin!
Yes, I contribute to an HSA and never take money out to let it grow. In addition, my wife is over 55 which allows us to contribute an additional $1000 per year to her HSA. Great investment tool.
I've had one since 2006. It wasn't until 2019 that I made the effort to keep the money in it and invest it. I wish that I would have done that sooner. I keep a spreadsheet to track my medical receipts and a folder with all those medical receipts.
There's also no limit to the number of HSA accounts you can have but your contribution limit is still the total limit. That means you should probably wait until year end to top off your accounts to leave "space" for the employer's last second contributions. You have until tax day to get it in so no rush. There's a form to file if you need to correct for over contribution. You can roll funds from one account to the other once a year. You have up to 60 days to compete the rollover otherwise the penalty is brutal.
Best account ever. Money in tax free. Invest the money. Pay near term medical deductibles out of pocket and save receipts. Then after years of tax free investment growth make tax free withdrawals for medical expenses and/or those un-reimbursed receipts you saved. Just great. Best if you can open the HSA at a brokerage like Fidelity with access to all investment options. And HSAs at places like Fidelity do not charge fees to have the HSA account. 👍
Something you did not mention that i learned recently. If you manually contribute to your own HSA it is exempt from income taxes BUT not from medicare/social security tax at 7.85% If you contribute to the HSA through your employers plan(cafeteria plan ) then it is exempt from those taxes.
I love my HSA. I spend my dividends earned on medical expenses and never touch the principal. As a sure thing, I invest my HSA in medical stocks, so yeah, if they increase prices, I get the dividend increase equivalent (hopefully).
The investing part is great until you actually have medical expenses. Then, that HSA is a lifesaver because you don't have to destroy your other investment finances to pay them. That's why I encourage my younger coworkers to do the high-deductible w/ HSA and fill it up, then attach it to an index fund. Most folks in their 20's and 30's aren't looking at chronic illness maintenance or expensive surgeries, so it can grow and grow.
I love the HSA. I am using mine as another retirement account. I am investing the money and don't plan to use it until retirement. It's amazing that the money is completely tax free.
If it means I pay less in monthly premiums and I get to save the difference tax free going in, grow tax free, and come out tax free, and my company throws their own money into my account for free than I'm happy to take on that burden.
I have a HSA and I have some money invested and it’s my plan to invest any thing above my MOOP expenses. I just want to make sure that I have enough for my daughter and me in case of an emergency and everything else will be invested. Thank you for sharing.
We’re trying to get an HSA at work, right now we have an FSA which sucks. You can’t determine how it’s invested and you lose whatever you don’t use at the end of the year. Losing $2500 because you were healthy last year makes the tiny tax savings not at all worth it, I’d rather just use my regular savings. Hopefully we finally switch to the HSA at the end of the year!
Those citing a "quadruple tax advantage" are actually citing the fact that these dollars (if payroll deducted) are taken out before SS and Medicare (payroll) taxes. So that's an additional 7.65% bonus over other pre-tax savings methods (tIRA or t401k.) That's a 7.65% "government match" if compared dollar for dollar against traditional retirement contributions. If you're already getting your employer match in your 401k, go get the govt match in this one.
I do have an HSA and I invest it. I am a retired Fed and they offer a good one through the postal service. I was not in the postal service. This plan through Aetna is open to all federal employees and retirees. The insurance company put 100.00 a month into my HSA and I contribute the rest, up to the annual limit.
Also, I've never had to provide any receipts to request reimbursements from my HSA, like I used to have to do for FSAs. I think I've had them through three different banks now and with all of them could simply make withdrawals, and maybe check a box to say that it was for a qualified expense. It's certainly a good idea to keep the receipts, of course, especially if you might make the withdrawal many years later.
Before I invest any monies in my HSA, I'll make sure an amount equal to my MAX out of pocket deductible... Once I build up that much, I'll start investing anything above that amount... I consider the MAX out of pocket monies as part of my Medical "Emergency Fund".
Also, if your spouse is covered under the same HDHP they can open their own HSA. You can’t exceed the family cap between you, but you can both contribute $1000 catchup contributions into your individual acounts if you are both over 55 which is not covered by the cap. So, you get double catchup contribution to invest. 😁
Right a very important point. The catch up for the spouse needs to go in their own separate account. The family max can be divided, but does not need to be.
I love my HSA and I encourage anyone reasonably healthy to consider a high deductible health plan with an HSA to get one. I go in every few months to move any uninvested money into investments and I plan to let it grow until I'm older and will probably have more health expenses.
I didn't see this mentioned. When an individual or group other than the employee's spouse is named as the HSA beneficiary, the funds must be distributed and taxed at the fair market value of the account on the date of the employee's death. Each beneficiary will pay taxes at their own income tax rate.
I have an HSA through my employer, but had to wait until there was $2000 in the account before I could start investing. Planning on keeping this for retirement.
I invest my HSA as an individual, but since my wife works for the state, we use her insurance to cover her & the kids. It’s like getting the cake and eating it too.
I would argue that all Americans should be able to put money into an HSA for health needs in the future. You shouldn't be forced to get a high deductible health plan to just start saving tax free. The system is designed to make companies money, it's not in the interest of proactive individuals.
Thank you for the informative video content that you make. The advice you give is delivered in lay terms which makes your stuff easy to comprehend for a wider audience. Have you ever thought of making a video about the pros & cons of an Indexed Universal Life insurance policy? I know that some folks use IULs as an additional source of income during their retirement years. I am curious to hear your own take with IULs.
How do you invest using it? I put money in and then use it when I go to the drs. How do I go about actually investing the funds instead, and who do I let know what? - Thanks. :)
HSA are cool, but mine attached to an absolutely useless insurance policy that nearly doubles the cost of medical services. How many years of tax free growth does one need to break even with skyrocketed healthcare cost?
I have a HSA and max it out every year…years ago when I started it I was getting a 5% interest rate and then it went down to about 0%, I’ve never invested it, what do you suggest I put it in?
When I learned about the HSA a few years ago, investing the money was a no-brainer for me. Keep enough cash in it to cover my deductible, and the rest gets swept into a couple funds. Last I saw, the average medical expenses in retirement for a single person is around $185k, and the HSA would never be able to reach that much without the option to invest.
I really wanted to start a HSA as pre-saving for Medicare subscriptions in retirement, but we also have exceptional insurance. We have the high deductible qualification covered, but our company reimburses us for the deductibles. I believe the Company account is a HRA and counts as additional insurance. If we have any experts on this, I'd welcome their input.
If both husband and wide are over 55, can they open one HSA account and put $10300 (maximum allowed by govt in 2024), or do they have to open two HSA accounts in order to get the extra $1000 catch up for a person over 55? Note that typically a family enrolls in only one HDHP.
The downside of this HSA thst will limit your accessibility of doctors and specialists. By the time your preauthoriza is approve, you are graveky ill and your HSA account is empty. I still have my PPO, can go to specialist and can go anywhere such as Mayo Clinic . Don't be lure with this HSA, know the cons of it.
so long as your have a qualifying HDHP you can setup an HSA. Presumably, if you don't have an employer, you are getting your plan through the marketplace. If so, there will be HSA-eligible plans listed. You can normally open a personal HSA at a bank or credit union. Fidelity also offers a personal HSA, if you are looking at more investment options rather than savings options. There are HSA providers, but they may charge management and other fees.
Yes, you can mover your employer sponsored HSA funds into your personal HSA, say at Fidelity. You can do this even if your employer provides a match. Once you contribute into your employer sponsored HSA and the employer matches, you can then move those funds into your personal HSA. Do note that your employer sponsosred HSA plan may incur fees for transferring money, so you should look at those before hand. Also, understand that there is a difference between a transfer and a rollover. Transfer goes from your employer sponsored HSA to your personal HSA directly. A rollover goes from your employer sponsored HSA to you, then you have 60 days to deposit those funds into your personal HSA; otherwise, beyond 60 days you incur taxes and penalties. You can also directly contribute to your personal HSA rather than your employer sponsored HSA, but you are going to pay FICA if done outside of payroll and miss out on employer match, if employer provides one. There's also a remote chance your employer could allow you to do a pre-tax payroll deduction directly into your personal HSA rather than the employer sponsored HSA first.
Here is the problem, for 2023, the max amount is $4,850 for a 55+ person. Sounds great. However, if that person has $5,000 in medical, it is not a savings tool. If you have zero health problems and only use $250.00 per year, have at it. There are NO free lunches.
Nope, don't have one and you probably know why. I'll tell you and Steve now, prepare yourself for deductibles and co-pays when be retires, especially dental. 🤣 I still have my PCM on base so that's great. However, it's a co-pays every time I'm seen off base. It's still much better than paying what the average person does.
Haha! Well - being that I work in dental...if I ever have to pay for dental visits I will be really bummed 😂 I still get free toothpaste and floss from my offices!
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Hi, i am 44 with 26k in my HSA, 4k cash for deductible purposes, the rest is invested. We dont use it or go to the doctor much. It just continues to build!
I’m a simple man. I see a video bragging about how awesome and versatile the HSA is I hit the like button.
Learning about HSA when my company switched back around 2018 was some of the best time I've ever spent. I now have 25k invested in my at age 31 and am maxing it out every year!
Yeap. Where I work they pay the insurance premium. All of it. And they contribute 214 a month in my plan. It's just awesome plus after 2k I invest it in vanguard stocks.
I have two (hopefully) useful bits of additional information regarding HSAs. (1.) In addition to being exempt from income tax, HSA contributions are not subject to FICA tax. This is unlike traditional 401k contributions, which are subject to FICA tax. (2.) You don't have to use the card associated with your HSA account. Instead, you can use any of your credit cards to pay for qualified medical expenses and then reimburse yourself from your HSA later. This means you get the points, miles, cash back, etc. from using your credit card to pay for the medical expense that you might not get with your HSA card. You can then reimburse yourself by transferring money from your HSA account to your bank account and then paying off the medical expense on your credit card with this money. This can be done right away or at any time in the future. It's your choice. Just remember to keep the receipt in case you get audited in the future.
Thank you for the information.
Yes! That’s how I do it!
I have an HSA and I love it. When I first got it, I didn’t fully understand its power. As I learned more about it, I started maxing it every year. I’ve had mine for about 5 or 6 years now. I started investing the monies in my HSA in the summer of 2020. As of this year, I quit using it to pay for any qualified expenses. I started keeping my receipts in a folder and will reimburse myself years down the road when I turn 65. I invest the money in the account in 3 different funds. One is a fund that tracks the S&P 500. The second is a growth fund and the third is a targeted retirement fund. I put more money in the first 2 funds. Also, the contribution limit goes up in 2024 pretty nicely. I will continue to max it. In fact, I am the person who manages the fund at my company. Most of our employees are young and most of them do not contribute to it. They receive the employer portion but fail to add their money. I’ve tried to educate some of the younger employees but they don’t seem interested. There are only 2 people who max their HSAs in our whole company and I am one of them. Great video by the way.
I do not know how old you are currently, but just keep in mind that this plan may change. At 39 years old, I found out I needed heart surgery. Now I have a cardiologist for the rest of my life and get an ECHO test every year too. It's very expensive, even with health insurance. I max out my HSA too, but I use about 80% of it for medical expenses.
Glad you are in great health! See my above comment.
@@KayKay0314I often wonder about future “changes.” But for that matter, couldn’t ANY retirement account change? ie- Roth, IRA’s, SS, RMD’s, etc etc. Tough to plan for the unknown.
@@KayKay0314So many take for granted good health and how much fortune they have already even if in financial debt. Insurance doesn't work well on steady-state survival expenses. It's only there to soften the out-of-the-blue health events and really does little else---except maybe to drive up medical costs overall.
I have a HSA and I max it out every year. I am not spending anything in the HSA until I retire. I only learned about the HSA about 4 years ago. It is great for the future!!
I have an HSA and have been investing it for years. Also, I have been saving all my medical receipts so I can tap into those funds if needed. Otherwise it will be like my long term care fund. Mentioned this to my advisor years ago and he did not realize it worked like it did - so I educated him.
One thing I rarely see mentioned in articles and videos like this is the fact that states like CA and NJ still don't view HSA's as retirement accounts. So contributions are taxed and interest, capital gains and dividends in the account all need to be reported come tax time. Most companies don't generate the applicable tax forms for you because of how the federal government treats HSA's, so many people that are in these states and have an HSA are unaware of this different tax treatment.
Also diminishes the tax benefit as you’re still paying State income and payroll taxes as you deposit. For me in California, it’s still beneficial as avoiding FICA taxes is about the same as state income tax plus state payroll taxes.
So basically her advice applies for all other 48 states just not those other two. Her advice helps a lot of people obviously it's up to the person to check what's what works in their own unique state
I use my HSA as an investment/retirement account. I don't use it for current healthcare expenses, instead saving those receipts to take advantage of later. My employer contributes $1100 and I contribute up to the max. I am required to keep $1000 in cash, but every penny above that gets invested in several Vanguard index funds. The growth I've seen in this account has been amazing. I'm planning to use my HSA for healthcare expenses after retiring, as well as to bolster my disposable income, using my saved receipts...and more widely after age 65.
I have a coworker who has the HSA as well, but he doesn't invest it. I have tried multiple times to explain to him what he's missing out on, but he just keeps procrastinating. I don't get why you wouldn't do something so simple to grow your money.
Ignorance and laziness
@@derbywinner6316 It's definitely not ignorance because I have informed him. It's not laziness either, not in this case anyway. Face it, some people are just oddballs and their behavior often doesn't make sense. That's why I try to educate people if they are open to it and, if not, accept them as they are. Besides, it's not my money so he can do what he wants with it.
Some years ago I had a similar conversation with a coworker and it was like hitting a brick wall. He was complaining to me that the monthly premiums on his PPO family plan coming out of his paycheck was almost as much as his monthly rent. I explained the whole HDHP and HSA concept and he kept saying to me that he doesn't want any bills, but his actions showed me he would rather continue the status quo on spending $600 dollars a month on premiums even though most of those months he didn't have any visits to medical facilities thereby he just threw away $600 in those months. I tried to explain to him that the monthly premiums on the HDHP were half of what it was for the PPO and you pay yourself the difference into your HSA account every month and you get free money from the company every year into you HSA account. If you get a bill your HSA pays for it if you so choose, but it all just fell on deaf ears as he was dead set on not getting any bills in the mail. Oddly enough even the PPO had a deductible although not quite as much, but it was still over $1,000 so even in the PPO plan you were still going to get a bill in the mail. The guy is well into his 50's and didn't have a pot to piss in after working his whole life, and I mean flat broke. This same guy drove a 15 year old crappy Chevy Trailblazer with a $400 monthly payment for four year repayment term that he bought from one of those buy here pay here places that you see on the roadside and it had one of those engine cut off devices in it in case he didn't pay his monthly bill. Some people just don't want to be educated about money as it seems like they just purposely want to keep committing financial suicide.
Hey, shout out. I opened an HSA this year. im 33 years old and healthy.
75% VFIAX
25% VGSLX
Hopefully i get around a 7-10% return. Thanks erin.
One of mine is vmvax and the other is vviax. They gave gone up ever since I owned them plus the company I work for pays any fees.
I do have my 457 invested in vinix and vdigx. Vanguard funds are awesome low expense ratios. I need to get a little bit more credit card debt paid off then I could give 1000 a Pay period into these accounts.
Another excellent topic. A lot of people have no idea how HSA's work. I have an HSA, which I had the last 3 1/2 years of my working days. I have never used money from the HSA, and it is invested for use much later. I plan to let it grow.
I’m like you, but only got 2 years, wish I’ve had this when I was younger
Luckily my wife is 5 years younger than me and couple more years to work
We max hers out
I did not know all this when my company first got HSAs. I took the high deductible plan because we did not have many medical expenses. I was lazy, and did not use the HSA to cover the expenses, so the money just stayed in the HSA. I figured - why not move it to a mutual fund. So I stumbled into the 1% purely by accident.
I keep receipts now, I didn't at first.
Wow Erin, best HSA video I have seen! Yes we have an HSA; yes we use it as an investment account; yes my adult daughter (covered under our high deductible plan) has her own account. In a 12 minute video, you covered everything it took me months of research to find out - had to talk to multiple insurance advisors, investment advisors, a tax advisor and eventually had to make a few decisions of my own based on what I thought the IRS code said. You covered it all here! Thanks!
This comment made my day! (And I LOVE that you are checking all the boxes with your HSA….and that your daughter has her own account as well!!)
I like to think of HSA’s as ‘Medical IRA’s’
Happy investing everyone. And thanks Erin for your continued great information and kindness.
I am maxing out and investing my HSA and watching it grow also! Another thing to consider: since I'll be filling out a FAFSA next year and looking into college financial aid for my child, HSA accounts are considered medical spending (even though I'm using it as an extra retirement account) by colleges so these contributions won't be considered "available" for college funding like retirement contributions will.
I had a HSA with HealthEquity with my previous employer which I maxed out for a few years and invested all but about $100. My current employer has a HDHP but they also have a HRA which brings the deductible down to $1,000 so I'm no longer qualified for a HSA. Since my HSA account was no longer active, HealthEquitiy was changing me $3.95/month because I did not have $2500 in cash so I had to move some of my investments over to cash to avoid this fee. I probably would come out ahead leaving the money invested but I hate being charged a fee if I can avoid it.
Great video Erin!
Yes, I contribute to an HSA and never take money out to let it grow. In addition, my wife is over 55 which allows us to contribute an additional $1000 per year to her HSA. Great investment tool.
I've had one since 2006. It wasn't until 2019 that I made the effort to keep the money in it and invest it. I wish that I would have done that sooner. I keep a spreadsheet to track my medical receipts and a folder with all those medical receipts.
There's also no limit to the number of HSA accounts you can have but your contribution limit is still the total limit. That means you should probably wait until year end to top off your accounts to leave "space" for the employer's last second contributions. You have until tax day to get it in so no rush. There's a form to file if you need to correct for over contribution. You can roll funds from one account to the other once a year. You have up to 60 days to compete the rollover otherwise the penalty is brutal.
Best account ever. Money in tax free. Invest the money. Pay near term medical deductibles out of pocket and save receipts. Then after years of tax free investment growth make tax free withdrawals for medical expenses and/or those un-reimbursed receipts you saved. Just great.
Best if you can open the HSA at a brokerage like Fidelity with access to all investment options. And HSAs at places like Fidelity do not charge fees to have the HSA account. 👍
Something you did not mention that i learned recently.
If you manually contribute to your own HSA it is exempt from income taxes BUT not from medicare/social security tax at 7.85%
If you contribute to the HSA through your employers plan(cafeteria plan ) then it is exempt from those taxes.
@Erin.talk.moneys I'm sorry, I do not follow
I love my HSA. I spend my dividends earned on medical expenses and never touch the principal. As a sure thing, I invest my HSA in medical stocks, so yeah, if they increase prices, I get the dividend increase equivalent (hopefully).
Great video! I started an HSA about 5 years ago and have been maxing it out/investing each year. It's "my" favorite account! :-)
The investing part is great until you actually have medical expenses. Then, that HSA is a lifesaver because you don't have to destroy your other investment finances to pay them. That's why I encourage my younger coworkers to do the high-deductible w/ HSA and fill it up, then attach it to an index fund. Most folks in their 20's and 30's aren't looking at chronic illness maintenance or expensive surgeries, so it can grow and grow.
I love the HSA. I am using mine as another retirement account. I am investing the money and don't plan to use it until retirement. It's amazing that the money is completely tax free.
Do you think high deductible HSA plans are just a way for employers to push the cost burden onto employees? Kind of like moving from pensions to 401K.
If it means I pay less in monthly premiums and I get to save the difference tax free going in, grow tax free, and come out tax free, and my company throws their own money into my account for free than I'm happy to take on that burden.
I have a HSA and I have some money invested and it’s my plan to invest any thing above my MOOP expenses. I just want to make sure that I have enough for my daughter and me in case of an emergency and everything else will be invested. Thank you for sharing.
The best, most thorough explaination of an HSA I have heard, thanks Erin!
I thought I know HSA, but I definitely still learn a lot more from your video. Thanks, Erin!
We’re trying to get an HSA at work, right now we have an FSA which sucks. You can’t determine how it’s invested and you lose whatever you don’t use at the end of the year.
Losing $2500 because you were healthy last year makes the tiny tax savings not at all worth it, I’d rather just use my regular savings.
Hopefully we finally switch to the HSA at the end of the year!
Erin is a beautiful money expert!
Those citing a "quadruple tax advantage" are actually citing the fact that these dollars (if payroll deducted) are taken out before SS and Medicare (payroll) taxes. So that's an additional 7.65% bonus over other pre-tax savings methods (tIRA or t401k.) That's a 7.65% "government match" if compared dollar for dollar against traditional retirement contributions. If you're already getting your employer match in your 401k, go get the govt match in this one.
I do have an HSA and I invest it. I am a retired Fed and they offer a good one through the postal service. I was not in the postal service. This plan through Aetna is open to all federal employees and retirees. The insurance company put 100.00 a month into my HSA and I contribute the rest, up to the annual limit.
Absolutely fantastic information!!!! I Max out my HSA and invest it in a fidelity index fund. I'm retired and this is awesome 👍.
You can also assign beneficiaries to your HSA!
@Erin.talk.moneys Hi Erin. I'm sorry, I don't know how to signal you in confidence. I'm not familiar with the steps.
I'm also not familiar with how private chats work.
Also, I've never had to provide any receipts to request reimbursements from my HSA, like I used to have to do for FSAs. I think I've had them through three different banks now and with all of them could simply make withdrawals, and maybe check a box to say that it was for a qualified expense. It's certainly a good idea to keep the receipts, of course, especially if you might make the withdrawal many years later.
Before I invest any monies in my HSA, I'll make sure an amount equal to my MAX out of pocket deductible... Once I build up that much, I'll start investing anything above that amount... I consider the MAX out of pocket monies as part of my Medical "Emergency Fund".
Also, if your spouse is covered under the same HDHP they can open their own HSA. You can’t exceed the family cap between you, but you can both contribute $1000 catchup contributions into your individual acounts if you are both over 55 which is not covered by the cap. So, you get double catchup contribution to invest. 😁
Right a very important point. The catch up for the spouse needs to go in their own separate account. The family max can be divided, but does not need to be.
You are so smart Erin -- I love the format and pace of your show!
I love my HSA and I encourage anyone reasonably healthy to consider a high deductible health plan with an HSA to get one. I go in every few months to move any uninvested money into investments and I plan to let it grow until I'm older and will probably have more health expenses.
I didn't see this mentioned. When an individual or group other than the employee's spouse is named as the HSA beneficiary, the funds must be distributed and taxed at the fair market value of the account on the date of the employee's death. Each beneficiary will pay taxes at their own income tax rate.
learned alot ! thank you
4000/year should cover a 5 minute visit with a doctor in the ER
LOL 😂
These accounts are for financially secure individuals
@@Just_StevoAlso people who are young, healthy and have health insurance.
Better than nothing.
I have an HSA through my employer, but had to wait until there was $2000 in the account before I could start investing. Planning on keeping this for retirement.
only been able to invest $300 in the HSA this year so far, but its better than zero!
Thanks.
I invest my HSA as an individual, but since my wife works for the state, we use her insurance to cover her & the kids. It’s like getting the cake and eating it too.
Thank you
I didn’t know about the deferred reimbursement strategy. This might change my views of HSAs.
great information Erin. Thank you for publishing this!
I would argue that all Americans should be able to put money into an HSA for health needs in the future. You shouldn't be forced to get a high deductible health plan to just start saving tax free. The system is designed to make companies money, it's not in the interest of proactive individuals.
Great video and clear explanation. Thank you so much. Very helpful
Thank you for the informative video content that you make. The advice you give is delivered in lay terms which makes your stuff easy to comprehend for a wider audience. Have you ever thought of making a video about the pros & cons of an Indexed Universal Life insurance policy? I know that some folks use IULs as an additional source of income during their retirement years. I am curious to hear your own take with IULs.
Cigna hsa requires a minimum amount in the account before it can be invested. Sharing an experience of mine. :)
Great video- thanks do much for posting!
some HSA even has Money Market Fund option, so even you are extreme risk-adverse don't miss the "free" 5%🤑🤑
How do you invest using it? I put money in and then use it when I go to the drs. How do I go about actually investing the funds instead, and who do I let know what? - Thanks. :)
this is a terrific and comprehensive overview of the HSA. Can you address if the HSA can be passed on to heirs or beneficiaries?
HSA are cool, but mine attached to an absolutely useless insurance policy that nearly doubles the cost of medical services. How many years of tax free growth does one need to break even with skyrocketed healthcare cost?
I have a HSA and max it out every year…years ago when I started it I was getting a 5% interest rate and then it went down to about 0%, I’ve never invested it, what do you suggest I put it in?
When I learned about the HSA a few years ago, investing the money was a no-brainer for me. Keep enough cash in it to cover my deductible, and the rest gets swept into a couple funds. Last I saw, the average medical expenses in retirement for a single person is around $185k, and the HSA would never be able to reach that much without the option to invest.
This is one thing that I've not been able to do.
I really wanted to start a HSA as pre-saving for Medicare subscriptions in retirement, but we also have exceptional insurance. We have the high deductible qualification covered, but our company reimburses us for the deductibles. I believe the Company account is a HRA and counts as additional insurance. If we have any experts on this, I'd welcome their input.
If both husband and wide are over 55, can they open one HSA account and put $10300 (maximum allowed by govt in 2024), or do they have to open two HSA accounts in order to get the extra $1000 catch up for a person over 55? Note that typically a family enrolls in only one HDHP.
Mike Philpot, below, answered your question. They should open an account for each to maximize the catch-up contribution.
This is actually GREAT news! For as long as I've tried to keep up with it, was always only 4% investing, it's finally went up!
Really wish I qualified for an HSA.
@Erin.talk.moneys I hate these bots so much.
I find it crazy that only 9% would invest their money in an HSA. Why wouldn't more? Just this year I've made over $7,000 on my investments in my HSA.
VFIAX for my HSA, FXAIX for my 401K & VTSAX for my Roth IRA's. I max out all retirement accounts.@marionsmith4308
I have excellent health insurance but it's not a high deductible plan so this account isn't an option for me but I'll keep your tips in mind 😁💸⚕
The downside of this HSA thst will limit your accessibility of doctors and specialists. By the time your preauthoriza is approve, you are graveky ill and your HSA account is empty. I still have my PPO, can go to specialist and can go anywhere such as Mayo Clinic . Don't be lure with this HSA, know the cons of it.
We have private insurance and unfortunately our plan doesn't qualify for HSA
when I don't have a employer what I can do to use the account ?
so long as your have a qualifying HDHP you can setup an HSA. Presumably, if you don't have an employer, you are getting your plan through the marketplace. If so, there will be HSA-eligible plans listed. You can normally open a personal HSA at a bank or credit union. Fidelity also offers a personal HSA, if you are looking at more investment options rather than savings options. There are HSA providers, but they may charge management and other fees.
My wife’s employer only gives us HSA options which are low interest savings. Can I move that money outside the plan?
Yes, you can mover your employer sponsored HSA funds into your personal HSA, say at Fidelity. You can do this even if your employer provides a match. Once you contribute into your employer sponsored HSA and the employer matches, you can then move those funds into your personal HSA. Do note that your employer sponsosred HSA plan may incur fees for transferring money, so you should look at those before hand. Also, understand that there is a difference between a transfer and a rollover. Transfer goes from your employer sponsored HSA to your personal HSA directly. A rollover goes from your employer sponsored HSA to you, then you have 60 days to deposit those funds into your personal HSA; otherwise, beyond 60 days you incur taxes and penalties. You can also directly contribute to your personal HSA rather than your employer sponsored HSA, but you are going to pay FICA if done outside of payroll and miss out on employer match, if employer provides one. There's also a remote chance your employer could allow you to do a pre-tax payroll deduction directly into your personal HSA rather than the employer sponsored HSA first.
@@hanwagu9967 thank you, I enjoy your videos.
@@clintstetler2471 thank Erin fro the videos...I don't do any. I just blabber.
Here is the problem, for 2023, the max amount is $4,850 for a 55+ person. Sounds great. However, if that person has $5,000 in medical, it is not a savings tool. If you have zero health problems and only use $250.00 per year, have at it. There are NO free lunches.
The limit is way too low! Needs to be 25K
I’ve been researching different ways of keeping track of receipts for reimbursement later. How would you recommend doing this? Thanks again!
Following- I’m thinking of scanning or emailing all receipts electronically and keeping them saved via email form in a folder. 🤷♂️👍
Nope, don't have one and you probably know why. I'll tell you and Steve now, prepare yourself for deductibles and co-pays when be retires, especially dental. 🤣 I still have my PCM on base so that's great. However, it's a co-pays every time I'm seen off base. It's still much better than paying what the average person does.
Haha! Well - being that I work in dental...if I ever have to pay for dental visits I will be really bummed 😂 I still get free toothpaste and floss from my offices!
@@ErinTalksMoney 🤣🤣🤣. My sister does as well. I try and wait until I go back to Boston to visit before having anything done!