*Bonus Hack #5!* - To help document the receipts over the course of your life, take a picture, and email it to yourself with the Subject line: Healthcare Expense + The Year it occurred. You can also set up a specific email account for these receipts. Something like "FamilyNameHSA@Gmail..." 🙂
Just be careful of the purge! Google started purging old photos and emails from user accounts last year. It would be awful to think you have everything saved like that, only to find 20-30 years later that it is just gone because you were over a data cap and missed the notification a decade ago! Of course, storing receipts with your HSA provider can be a crab trap when you change providers or employers too, so that isn't necessarily a good idea either. But If you roll an old HSA over to a private acct that you are sure isn't going to go anywhere, then that could stand a better chance at lasting a good long while. At the end of the day though... paper copies are a pain, but not a terrible thing. I have also gotten in the habit of requesting yearly expense reports from our health care providers, that way we have a single print-out for the year of itemized expenses to work with. Takes a lot less space than storing each bill every time you use a service. We have a family of ADHD, so having all of our counseling and med mgmt visits as separate receipts builds up a lot of paper rather quickly! Getting it as a single summary for each of us every year really makes it easier to store, and easier to look at.
@@bk-xn5tk not sure; might be on the honor system with a potential to be audited, but it makes sense that they would ask for receipts because if you simply take the money out, you DO pay taxes on it all those years later (age 65) because it essentially turns into a tax-deferred IRA. I’m going to keep the receipts, along with lists of qualified expenses (in case those ever change and something formerly allowed no longer is allowed) because I would really be bummed if I did have expenses which I paid out of pocket at the time they occurred and now had to pay taxes on my withdrawal just because I was too lazy or too disorganized to keep receipts. Remember: the government wants their taxes. This understanding alone makes me think yes, they aren’t going to let us slide without receipts.
Great content. I had an HSA account as soon as it was offered by my employer for the last 14 years of my career. I maxed the contributions and only took out one reimbursement for an emergency surgery. I kept $3000 in cash to avoid annual account fees and invested the rest. Since I retired 2 years ago, I have been reimbursing my historical pre retirement medical expenses, as well as current expenses and the account balance is large enough that it still earns more than my withdrawals. It almost feels like my wife and I have free retirement medical because all of our current medical bills are being paid from this account and not from my taxable IRA withdrawals.
@paul-GrnHil, I'm wondering what company you used. Since most companies these days charge an account fee no matter what ($300 annually). OOPS, nvmd, I just remembered mine is a Self-Directed account. Invest in almost any asset, not just stock funds.
My company used HSA Bank. Now that I'm retired, I moved my HSA to Fidelity. It has no fees. I keep 1 year of expected expenses in cash and the rest is invested in a Large Cap Growth fund.@@MissTReviews
Solid video! I've been in the employee benefits space for the past 8 years, with a big focus on HSAs. This video should be shown at open enrollment meetings! There's such a gap in HSA education, with a large amount of account holders just sitting on cash. A financial advisor I partner with once told me 'an HSA is the most powerful investment vehicle out there.' Thank you for putting this together.
Thanks for watching! We love the HSA. Feel free to share with your groups 🙂 We work in the employee benefits space helping with Medicare, so we know the conversations well...
Or churn new credit cards using medical expenses: pay out several thousand to get the signup bonus and the ROI goes up to 8-20%. And the bonus isn’t taxed.
@@UnconventionalThinker I purchase everything w a variety of cash back cards from 2-5%, then pay off the balance every month onthose cards, exploding my Credit Rating, making money, and spending the same amt all along.
I have invested my contributions in my HSA account and have never spent out of it. I currently have 100k balance and will soon switch to dividend stocks to generate enough to cover all medical expenses without touching my principal amount.
at 100k you can probably withdraw your deductible amount each year and still make the money back in investment growth. No real reason so switch to dividends.
The breakdown of Medicare timelines and HSA contributions is super helpful. It's one of those things you might not think about until it's too late. I faced a lot of issues during that transition
Investing your HSA money and letting it grow over time seems like a smart move. Pls what types of funds did you choose, and what kind of returns have you seen?
@@MichaelKeaton-np4fl by consistently maxing out HSA contributions since 2005, the account reached close to $2 million by age 65. Recently reimbursed $100k of documented medical expenses taxfree. Employing a fund manager since 2010, and opted for a stock focused portfolio over ETFs and mutual funds, aimed for a more analytical and less leveraged approach. That strategy combined with contributions, proved solid. I appreciate the caution about using HSA dollars for non-qualified medical expenses. The penalties can be steep. accidentally faced these penalties, i wonder if anyone faced a similar experience?
@@ConstanceMills-tw5zi One year, all pumped up to make the most of my HSA I went a bit overboard with contributions, totally unintentional, fast forward to tax season, and bam faced some extra taxes
@@JewishGawk and we both have learnt our lessons now, haven't we? my fund manager helps me avoid tax pitfalls with my assets since that one so i don't have to go through that ordeal anymore they are not playing out here
ADDED BONUS - You can also withdraw from your HSA without the penalty after age 65 for NON-MEDIAL EXPENSES, but you would be taxed at your regular rate.
oooh man, thanks for this vid!! I have HSA but totally forgot to setup my investment acct. missed out on the recent market run but better late than never! thanks again!
Tax advantage #4: if you contribute to an HSA through a qualified cafeteria style payroll deduction, that money is not only shielded from state and federal income taxes, but also from payroll taxes like Social Security and Medicare. In that situation it is a quadruple tax advantage.
I went to the comments looking a comment like this. When I do my annual income tax filing I submit how much is in my hsa, is that money taxed then or is it just for documentation?
A "cafeteria" benefits plan is one where employees choose their deductions and contributions, usually upon hire or annual open enrollment periods. The "cafeteria" moniker is due to the way the participant "chooses" which plans and contributions to take off of a "menu" of options your employer provides. If you have such an HSA through a workplace plan and you can elect to contribute to the HSA through payroll deductions, you **probably** have a qualified payroll deduction, but you may need to check the details with the plan administrator. And even in such a qualified plan, the contributions have to come from payroll deductions to avoid SS and Medicare taxes on the contribution amounts. Many plans allow account holders to add additional funds on their own, but funds contributed that way will *not* avoid payroll taxes.
My parents who were teachers with lifetime employer coverage could give me no guidance about navigating the health insurance market. It wasn’t until the ACA was passed and I was shopping for my plan did I learn about HSAs, and only NOW am I learning there are HSA investment accounts. I am helping my 22 year-old to open one this year!
@@Theretirementnerds I have only built about 1500 in my HSA. Do I switch it to investing?. Our HSA only lets us invest 100.00 we can't control the amount. Hope that makes sense. Thanks again for all your help!
@@mariad3011 That is why Self-Directed HSA accounts exist. roll it over there and invest as much as you want in almost anything you want (i.e - Rental property (don't payment), Crypto, Any legal, for-profit Businesses, Stock, Bonds, Mutual Funds. That's where the millions are made- gains on these type of investments using whatever funds are in your HSA account- that way you don't need 30 years!)
I'm on a HDHP for the first time this year, mostly because of the HSA and the tax benefits it offers. I did a lot of research, but one thing no one tells you is that you can only invest in the amount that is above a certain minimum threshold, as defined by your provider. For my case, that amount is $2,000. This means at least $2000 will always be sitting in cash and I can only invest in the amount that is above that.
My HSA was the same but I had to keep $1000 in before the plan allowed me to invest. I didn't like that so I opened a Fedeity account and moved everything over to a fedelity HSA so I can invest 100% of my HSA funds. I recommend you do the same because $2k is alot to be sitting there doing nothing
@@z14sniperzps43 Thanks for the reply. I didn't know that I could choose any provider I wanted...I thought I was stuck with the one set by my employer. I just checked and it looks like I can switch. But the downside is that I can't use pre-tax deductions and instead must use post-tax dollars to fund my HSA. I would potentially get the difference back via my tax returns.
All good advice. I essentially don’t spend my HSA at all and invest 100%. I use it as a secondary retirement account, but with obviously better tax benefits than a traditional or Roth IRA/401k.
Great video. I’ve had an HSA for 10 years, wish i had the option to have one years earlier. Max it out every year if you can, invest it and watch it grow. 💰💰💰
Never realized how powerful HSA. Starting a new job soon and will max out HSA with the pay increase I'm expecting to receive. Thank you for sharing all of this info
I have a debit card for my HSA. When I go to a pharmacy and purchase some items that are medical and some are not, I pay with my HSA card first, and the pharmacy system knows which items are approved, then I pay the balance with my personal debit card. I don't have to figure it out.
WHAT??!!?? You can reimburse yourself? I had no idea! I wish I'd seen this video 20 years ago! I just sent to my kids so at least they can take advantage of this excellent information. Thank you!
Another possibility many people don't know about is that you get a once in a lifetime ability to fund your HSA from your IRA without paying taxes on the IRA withdrawal as long as you move the money directly from the IRA to the HSA. Again this is only once in a lifetime.
Wow, I did not know that! Wish I had! Thanks, Rick, for sharing. Obviously, maximum permissable contributions would still apply and this would be pre applying for Medicare @ 65 or when leaving employer high deductible health insurance at a later date. Correct me if I am wrong on this.
@@tinalippincott9823 you must still be covered on the high deductible health insurance plan to do this and you must also not be covered by any form of Medicare. I am a spouse insured on my husband's high deductible health insurance plan and made the once in a lifetime max contribution from my IRA to my HSA last year. Also make sure you have met or will meet the 12 months of coverage on the high deductible plan. Your HSA plan administrator can guide you.
I loooove the HSA account! We also do a limited FSA account on top of the HSA so we can pay for dental and vision. Our kiddos braces were from the limited FSA, the max being $3050 in 2023 which covered most of the braces! Best of both worlds and never have to touch the HSA investment account to get that maximized compound interest baby!
@@Theretirementnerds thanks so much for your channel!! While we’re a bit away from retirement being millennials, you give such great sound content that is super useful for when Medicare considerations have to start! And your guest(s) are so knowledgeable as well!!! Newer to your channel but just fabulous and for some reason fits so much into our FI/FIRE mindset!
I feel lucky any year I don't max our deductible. Seems to be every other year. $400 goes in every month, $400 goes right back out. At least I get one of the tax advantages.
I like the way you explained how to reimburse yourself. I didn't know that about it. We just switched insurance to a high deductible plan with an HSA. I'll divert some funds from solo 401k to start funding HSA. Thanks
Thank you for watching! One way we handle the receipts is we take a picture and email it to ourselves with the YEAR HSA Family Member in the subject line so we can look them up easy in the future. Other friends will set up a separate email account like FamilyHSA@gmail or something and do a similar idea. Hope that helps!
The part about the HSA I didn't hear you discuss was the fact that the type of plan you are on is a high deductible which means if something happens to you you have a high amount go out of your pocket. Also means no co-payments you have to pay the difference between the negotiated Network prices for medical expenses outside of a few Wellness checks. I was surprised to find out a routine skin exam is not a wellness check so I had to pay for it out of pocket. I'm not really tracking out-of-pocket expenses I anticipate they will not add up to much. Generally these plans are very low premium from your employer and then you are freed up financially to contribute to the HSA, besides that I wish I knew about HSA a lot sooner!
Quite different accounts. Roth IRAs are specific retirement accounts built to use as income after age 59.5. Roth contributions are taxed. Roth growth and withdrawals have a lot of flexibility and are tax-free. HSAs are built for healthcare expenses, but have a nice benefit after age 65 of being opened up to use in different ways. Contributions are tax free, growth is tax free, and withdrawals for qualified expenses are tax free. That's where the strategy in the video comes - if you are able to pay for medical costs out of pocket and invest the HSA, later in life, you can reimburse yourself tax free and then use those dollars later however you want. Very different accounts. Many people have both. Hope that helps!
@@Theretirementnerds - Thanks for the engagement on this comment. I have annual medical expenses that are approximately equal to my annual contribution limits for the HSA. So, I'm choosing between reimbursing myself (and funding a Roth) or just leaving the funds in the HSA. Leaving the funds in the HSA will give me some of the same features of Roth (tax free growth, ability to access contributions via medical receipts) while setting me up to efficiently cover health expenses during retirement. The tradeoff for me is (I think) is that I expect to retire before 65 (possibly even before 55) -- so I am thinking that a Roth (with ladders...) gives me more options in that early retirement window. Does anything else jump out at you that I'm overlooking?
Thank you so Much! You saved me from being penalized on my Medicare supplement premiums being paid out of my HSA account. I had just set up auto pay for my supplemental. I had no idea it was not allowed until I saw your video.
Excellent point Casey. California and New Jersey do have state taxes, but your HSA will still be able to grow in those states avoiding Federal taxes. So, there is still an advantage to these accounts, just not as vigorous as in states that do not apply the state tax to the HSA. Thank you for watching and bringing that up!
My employer also contributes to my HSA account, does the six month prior to starting/applying for Medicare count for them also. I am 67 and getting ready to retire in six months. I really appreciate this as I would’ve continued contributing to my HSA account up until I started Medicare. Thanks, Mike.
Another detail that many don’t know is that, for a married couple with both covered by an HSA eligible medical plan as a family (both are covered by the plan from one of the spouses), even if they cannot go over the family maximum contribution limit, if they are both 55yo or over, they can both do the $1000 catch-up contribution, Just note that the catch-up contribution is specific to each spouse, not joined, and therefore needs to be done to each spouses separate HSA account, as there are no HSA joint accounts.
@JI-620 so I am trying to learn as much as I am 62 right now. My neighbor sent me this video as he is also trying to learn. So I have an HSA account. We are self employed and have insurance from the marketplace. You say an HSA is not a joint account? I am confused our insurance is both of our names. I have always used our HSA account for both of us? Am I wrong and is he supposed to have a separate HSA?
@@annethomas5662 I had the same concern. I am not an HSA expert but from what I understand your HSA account can be used for your spouse and immediate family members. I don't think anyone other then the account owner can contribute to the HSA.
@@annethomas5662 If you and your spouse are both covered by an HSA-eligible plan, if you don’t count the catch-up contributions, your family HSA contribution limit for 2023 was $7,750. You can allocate this amount to one HSA in your name, or split it between your HSA account and your spouses separate HSA account, in whatever proportion you like. Separately, you and your spouse are 55+yo and therefore each of you can make an additional catchup contribution of $1000 (total $2000), however, you can only add your $1000 to your account, but your spouse would need to add his/her $1000 to his/her own separate HSA account (would have to open one if he/she does not already have one. HSA accounts are individual, not joint. If the healthcare plan is through an employer or marketplace, and it already came with an attached HSA account, that account is likely in the name of the subscriber to the plan which is probably you, but you need to check. That is perfectly fine to add your family contributions, and $1000 catchup for yourself, but your spouse would need to open/have a separate HSA account for his/her other $1000 catchup contribution. Even if you keep two separate accounts, since you were covered by the same plan, the funds can be used for eligible medical expenses for both of you. This is how I understand it. Your tax advisor may be able to provide more info. You are still in time until the filing deadline to make the other $1000 catchup contribution for 2023 if you did not know to do it last year. For reference, see IRS Publication 969, sections for “Contributions to an HSA” and look for “Rules for married people” on Page 7. Hope this helps.
@@annethomas5662 Fromwhat I’ve learned in comments here and elsewhere, the HSA can be a Family account, and that sounds like what you have. When making the additional 1000 catch-up contribution, that can only be used once per account (per year). If you are both 55, one of you might look into getting a separate HSA (or both of you do it and stop funding the Family Account). This way you can each contribute the additional 1000 for the catch-up contribution, whereas otherwise your Family Account could only accept 1000.
I really need people like you to make videos that help explain all of this to me. This way we can freeze and reverse the video and listen to it when we need to. All of this seems so overwhelming that it makes my head spin.😵💫 LOL, Thanks for sharing! Btw, I’m hitting the Subscribe button Now!😅
Hack#0, if applicable use LPFSA first (some employers provide it for dental and vision expenses) which is pretax and you don't have to spend post-tax/out-of-pocket money. Most HSA has 100-1000 dollars buffer before investemnt rleased to this buffer. So one can djust this buffer. This buffer comes 2nd when you use your card (example MetLife LPFSA + HSA card) after LPFSA allocated money is used. LPFSA can be adjusted between 0-xxxx based on your familt/tax situation and anticipated usage for dental and visioj out of pocket expenses.
Finally got an HSA this year and was shocked (in a good way) to find out it's effectively a pre-tax investment account in a savings account's clothing. I have mine through Fidelity and it's paying close to 5% just having it parked, but once the balance accumulates a bit I'll definitely be investing.
Lets get this important information out there. If you plan on working to 67 and the place you work at has 20 or more employees and offers a group health plan you do not need to apply for Medicare at 65. You can wait until your turning 67 and continue to put money in your HSA. So many people are told by friends or family that you must apply for Medicare at 65 and that is not always true. I plan on waiting myself. Now applying for Medicare at 65 could lower your out of pocket cost of insurance depending on what kind of insurance coverage you have at work but if you save those receipts you can reimburse yourself.
As far back as you had an HSA. If I've had an HSA for 10 years and paid for qualified expenses out of pocket 10 years ago with non-HSA dollars, I could reimburse myself today for those 10-year-old expenses - tax free.
Hi- Next year will be the first year I began having an HSA account. I am SO EXCITED! I plan on retiring around 67 (God Willing.) Do you have to apply for Medicare at 65 or can I wait until I retire? And, if so, can I continue to contribute to my HSA up to the date I retire?
Thank you so much for watching! Your questions are more complicated than we can cover efficiently in a comment, so we have a video on it :) ua-cam.com/video/L2goGwp4Co8/v-deo.html
This was so helpful! Thank you, do you have any videos about whole life insurance policy and tax benefits for those? I’d love to know more about that as well. Thanks!
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
Hello. I am not really understanding this video. I currently have an HSA account. I have to set the amount in advance through my employer the year prior through our open enrollment period. I charge my medical expenses, doctor visits, etc to the HSA account, but at the end of the calendar year any excess funds up to around $570, I was told, would carry over. Nothing over that amount. So how do you save/invest to these large amounts that you are noting in this video when they are capping me at a $570 rollover? Thank you.
Hi there, what you are describing is an FSA, not an HSA. FSAs work differently and, typically, have the use-it-or-lose-it concept you are describing. Another account type you could have is an HRA. Works similarly to what you described. FSA - you and your employer can contribute. HRA - just your employer contributes. Hope that helps!
Yes, its HSA account. I was told that only certain amount will be carry forward to next year. FSA also similar in my company. I need to check with my HR is it possible to invest the money from HSA account.
We've been investing in an HSA since 2018 and not using it for any medical expenses. Investing has helped reach $75K. I hadn't heard about reimbursement for pre-retirement expenses. I need to start a folder to save the receipts.
Noice ;) ... I do exactly everything as you mentioned. I am on year 1 at 52 years old and am excited to see where the next 15 years of it go till I retire.
I'm 49 and wish I would've known about HSA a LONG time ago - I don't know if it's too late for me but I started using an HSA about 3 years ago through my employer and I invest my money heavily and I hand-pick the more aggressive stocks - hope I can build a decent amount before I retire. (I don't want to include or think about inheritance dollars which I will get a large amount, I want this to be like an added bonus).
For sure. Same way here. I hope I never need my HSA, but over time, I'm hoping that the balance is nice and healthy once retirement hits. Thank you for watching and sharing your thoughts!
I wish I knew about it much earlier as well. Discovered it by accident. Absolutely no one in my workplace had ever heard of it. I believe could’ve had as early as 2004. A huge missed opportunity for thousands of workers. Sad.
Hope you would cover the case that you have to apply for Medicare because of retirement, but you did not stop HSA contributions for last six months. There should be a way you can fill a form and withdraw the contributions so they become taxable income. Correct?
Also if this helps anyone - couples counseling IS NOT a qualified medical expense unless you have a note from a medical provider and the counseling is addressing an existing mental health illness/issue. Made this mistake and had to pay tax on my distributions from my HSA. Won’t let that happen again!
HSA provides a triple tax advantage, allowing tax-free contributions, growth, and withdrawals for qualified medical expenses. Implementing smart HSA hacks can supercharge your wealth.
For me, involves strategically timing your HSA withdrawals. By covering current medical expenses with out-of-pocket funds and letting the HSA funds grow, I'm building a robust tax-free savings pool for future needs.
QUESTION: When investing the HSA, are the returns received from the investment considered a 'contribution' creating a tax issue with Medicare's 6month look back? If you stop contributing funds for the 6 month look back, but the HSA continues to grow, due to investment, is the growth considered a contribution?
No, growth is not a contribution. The 6 month rule is a tricky one that gets misunderstood quite often. If you haven't seen this video, it clarifies: ua-cam.com/video/xKuXEojvdmA/v-deo.html
Also, something that was sort of mentioned, but not too clearly…. HSA contributions, assuming they are funded with deferrals through an employer plan, are not subject to payroll tax. Which is an additional layer of tax savings. This differs from 401(k) Pre-tax contributions which will lower your taxable income, however you still pay payroll tax on the these deferrals.
7:30 hint hint, if your doctor recommends something, even just an OTC supplement, to help with some _specific_ medical condition you have, get that recommendation _in writing_ and keep that “doctor's note” with the receipts for said item.
Keep in mind that HSAs are tax inefficient at death. Consider submitting qualified medical expenses immediate instead of letting it grow and use those reimbursements for Roth contributions or conversions which also enjoy tax free growth. You still get the triple tax advantage but in a way that is more advantageous for your heirs. Alternatively, consider listing your favorite charity as the HSA beneficiary at your death.
Excellent video! Very informative, but two questions: 1. Once you're on Medicare, does the money already invested in the HSA remain invested and continue to make more money? 2. Is the restriction on front-loading your HSA right before you get Medicare only for that specific situation, or can you not front-load it at all, no matter your age?
Thank you for watching! 1. You can keep the money invested and growing once on Medicare. You just can't contribute more to it. 2. You can only contribute an amount equal to the number of months you were covered by a qualified High Deductible Health Plan (HDHP) and not Medicare. So... if you know you will be on a HDHP all year, you can make your full, max contributions in January. If you lose the HDHP after 6 months though, you are only allowed to have made 6/12ths of the max contributions for that year. Does that make sense?
I am retiring next yr at 57, I don't have HSA, I have steady income stream from my $2 Million dividend portfolio total $450,000 a yr to live comfortably, and its all because of my Fee only Advisor who handles activities in my Portfolio.🌹✅
I work with Essmildaa too! transferred all of my IRA from managing it myself, to making her my advisor. BEST decision ever! I truly enjoy the trades. I found exactly what I was looking for.
Unfortunately I have a chronic illness that costs significant amounts of money out of pocket. My understanding was also that you get higher deductibles if using an HSA. Which seemed to be a wash when considering how much I regularly spend on medical bills. But seeing it as just an extra investment account makes me more enthusiastic about getting one.
I have to say, while the idea of maximizing the benefits of an HSA is intriguing, it feels a bit like exploiting loopholes in the system. Shouldn't healthcare be about taking care of people, not finding ways to manipulate tax systems?
Lol do some research into how the healthcare system actually works in the USA and how bad you're being overcharged. If anything hsa advantages don't even come close to making our healthcare system affordable for people that don't qualify for subsidies.
I would like to do a IRA to HSA rollover but as of now my employer health plan doesn't qualify me to open one. I will be able to open an HSA in the month i retire if I get a high deductible plan
Investing HSA has too many restriction, minimum, & fees before any money is invested. Its more optimal to use HSA on qualified expense right away & invest savings on Brokerage, T-ira, roth, or 401K. HSA investing is only optimal for people who can max out 401K & IRA accounts. Because they need more tax breaks.
How does the reimbursement work? Example: I pay dental cleanings out of pocket as I go to an out of network dentist. I submit a claim to my insurance to get reimbursement. I am not fully reimbursed. Will the HSA know I already received a partial reimbursement and will only allow me to reimburse myself the difference?
You'd be checked on the receipt from what you paid out of pocket, so hold onto receipts or take a picture and email it to yourself with HSA Reimbursement Receipt in the subject line (or whatever works for you) so you can easily search for it later.
I don't understand how paying for medical expenses out of pocket are supposed to save money. It's basically a wash. I did a 25 year simulation of maxing out HSA contributions and paying $5k/yr in medical expenses and either: A) Save all money in HSA and pay expenses with taxable income B) Pay for all medical expenses with HSA and save the taxed income money that would have paid for expenses in A in the same high yield account. After 25 years the total net worth is a wash. The tax man taketh either way.
As someone has started a HSA, I love the concept. However, medical costs have skyrocketed. In the case of an emergency, nevermind if you have kids, one feels a bit exposed with a high deductible health plan.
First time watching ur videos and must say im super impressed and have subscribed. Will follow ur channel now. Just started getting financially literate myself. Quick question, when an employer contributes to your HSA, is it in addition to the family max of $8350 or just to make up the family yearly match? Thank you.
Thank you so much! It is not an addition to the max. The employer contributions plus your contributions cannot exceed the annual max. Those who are 55+ do get an additional $1000 in catchup contributions. Hope that helps!
@jodidoz5927 As @90DaysFromRetirement mentioned, your contribution + employer's should not exceed the annual limit. If you exceed that limit you need to call your brokerage where HSA is and withdraw the excess amount before IRS penalizes you.
My husband and I file taxes jointly but we have separate HSA eligible health insurance plans for 2024. His is an individual policy and mine is a parent plus children policy because I have the kids on my policy. For some reason the premiums were slightly cheaper doing it this way. My question is can my husband contribute the individual max into his own Fidelity HSA account AND me contribute the family max to my own HSA account.
I’m new to HSAs and this may be a simple question - say I’m “Eric the Investor” and use an HSA to invest in funds. How is an HSA beneficial compared to a 401(k) where employer matched contributions are common? Asking this without any potential awareness that employers also match contributions to an HSA… so I’m not sure
Great question. Yes, employers can also contribute to HSAs. The big benefit is tax deductible contributions, tax free growth, and tax free distributions for qualified expenses. In a perfect world, you and your employer are contributing to both 🙂
Turned 65 in Feb and applied for Medicare in Jan. Contributed 1 month (1/12) to HSA in Feb....so according to you I was one month too late or should not have contributed at all this year... how will I be penalized and is there anything I should do to correct this?
Nope, you are OK. You can make 1/12 of your max contributions in 2024 with your birthday being in Feb. It's less about timing, more a put the pro-rated amount for the year. Theoretically, you could've made that 1/12th contribution in December and been fine. They are looking at amounts.
Very informative ! I've heard something about transferring 401k money into HSA...If true, Where might I find info on that.. limits timeframe etc? Would that still make sense as a retiring reserve military vet closing in at 60? Happy Easter BTW.
You said after 65 you can use HSA dollars on anything, like a traditional retirement account. But later you said you can use them on Medicare premiums,etc but not on Medicare supplement plans. I'm confused. Can you clarify? TIA!
Great question! Yes, you can use HSA dollars tax-free for qualified medical expenses. Medicare Supplement plan premiums do not count as qualified medical expenses. So... if you technically want to take out HSA money, have it taxed, they there's a theoretical way for you to use it for Supplement premiums. Does that help, or make it more confusing?
Let's check my comprehension. 😊 To keep the triple tax advantage it ALWAYS must be used for qualified health expenses. However, after you reach your FRA, you can use the HSA dollars for anything without penalty.. you just have to pay tax on it, similar to a traditional IRA?@@Theretirementnerds
What is the difference between a FSA and HSA? Are those two the same? Because I max contribute to it to lower my tax liabilities. And there where years that I didn’t use it. I’ve been contributing to my fsa since I was 24 and I’m already 45. You mean to say that I could invest in it? How?
Can I still contribute to my HSA? if it’s my husband that is retired 68 and just started collecting ss 5 months ago. I am still working and 64. I know my company stopped adding his portion of their contribution to my HSA but I am still adding money but not my husband
Yes, as long as you are still covered by a qualified high deductible health plan, you can make contributions. If it is just you on the plan, you have the single max plus $1,000 catch up contributions. If you have you and a dependent (spouse or child) on the plan, you can contribute the family max.
Thank you for that second paragraph because I forgot to put that information in that my husband is on my plan and he has Medicare A. It doesn’t use it at all. Second question, if I may, I’ll be 65 in Oct so do I need to apply for A ? I’ll be working to 67
@Paulsapartment no, you do not need to apply for Part A, in fact, from what you've shared, you should not apply for Part A. If you did, you would have to stop HSA contributions. Now, if your company plan is very expensive, that changes things. But if it is a solid plan with good costs, don't take Part A
Thank you thank you thank you I will not apply for part a now because of your information. Just thank you so much because all I’ve ever heard is about how I have to apply for part A no matter what otherwise I’ll get a penalty.
This is a very good video, but there is a slight issue from my side at least. My company offers FSA dependent care and regular FSA but I cannot enroll in it if i do HSA. I use FSA for my family medical expenses. So what to do?
Questions for a newbie. How do I invest the HSA money? Also, if I do invest the HSA money, does any money I make go back into the HSA automatically, or do I need to ensure it each time?
Your HSA Custodian - the company holding the HSA dollars - will be where you invest it. They should have investment options for you. If they don't, you may want to look into moving to a custodian that does. As the money grows, it all stays in the HSA.
Great part is not only do you save our marginal tax rate on the way in, but FICA taxes as well. So, if you were to eventually use it in retirement for non-medical expenses it would still be better than a traditional IRA, bc you wouldnt have to repay those 7.6% of FICA taxes! Also, if you dont have the money to max out or significantly contribute to an HSA, just open 1 and put in like $100, bc I believe that would start the date form which you can at least start saving your medical bills, so then in later years if you max it, you will have more bills saved up then
I have an HSA, and invest with it. I divorced in 2022 but my daughter is still on my medical/vision/dental insurance. Does that qualify me for the family contribution limits or am I stuck at the individual contributions limit? Thank you in advance.
*Bonus Hack #5!* - To help document the receipts over the course of your life, take a picture, and email it to yourself with the Subject line: Healthcare Expense + The Year it occurred.
You can also set up a specific email account for these receipts. Something like "FamilyNameHSA@Gmail..." 🙂
Just be careful of the purge! Google started purging old photos and emails from user accounts last year. It would be awful to think you have everything saved like that, only to find 20-30 years later that it is just gone because you were over a data cap and missed the notification a decade ago!
Of course, storing receipts with your HSA provider can be a crab trap when you change providers or employers too, so that isn't necessarily a good idea either. But If you roll an old HSA over to a private acct that you are sure isn't going to go anywhere, then that could stand a better chance at lasting a good long while.
At the end of the day though... paper copies are a pain, but not a terrible thing.
I have also gotten in the habit of requesting yearly expense reports from our health care providers, that way we have a single print-out for the year of itemized expenses to work with. Takes a lot less space than storing each bill every time you use a service. We have a family of ADHD, so having all of our counseling and med mgmt visits as separate receipts builds up a lot of paper rather quickly! Getting it as a single summary for each of us every year really makes it easier to store, and easier to look at.
Nice!
Great tip! In the process of doing that now for 2023 and whatever we've incurred already for 2024!
Does irs really ask for reciepts? Could be like 50yrs old! Sounds unreasonable
@@bk-xn5tk not sure; might be on the honor system with a potential to be audited, but it makes sense that they would ask for receipts because if you simply take the money out, you DO pay taxes on it all those years later (age 65) because it essentially turns into a tax-deferred IRA.
I’m going to keep the receipts, along with lists of qualified expenses (in case those ever change and something formerly allowed no longer is allowed) because I would really be bummed if I did have expenses which I paid out of pocket at the time they occurred and now had to pay taxes on my withdrawal just because I was too lazy or too disorganized to keep receipts.
Remember: the government wants their taxes. This understanding alone makes me think yes, they aren’t going to let us slide without receipts.
Great content. I had an HSA account as soon as it was offered by my employer for the last 14 years of my career. I maxed the contributions and only took out one reimbursement for an emergency surgery. I kept $3000 in cash to avoid annual account fees and invested the rest. Since I retired 2 years ago, I have been reimbursing my historical pre retirement medical expenses, as well as current expenses and the account balance is large enough that it still earns more than my withdrawals. It almost feels like my wife and I have free retirement medical because all of our current medical bills are being paid from this account and not from my taxable IRA withdrawals.
Sounds like you did all of the 4 hacks 🙂
Well done!!
What was the max value your HSA hit before you started spending it down? Of that peak balance, how much of it was earnings, at the peak?
I don’t think I can save 30 years worth of receipts 😅. I use it for thé larger bills. Thankfully I’m healthy
@paul-GrnHil, I'm wondering what company you used. Since most companies these days charge an account fee no matter what ($300 annually). OOPS, nvmd, I just remembered mine is a Self-Directed account. Invest in almost any asset, not just stock funds.
My company used HSA Bank. Now that I'm retired, I moved my HSA to Fidelity. It has no fees. I keep 1 year of expected expenses in cash and the rest is invested in a Large Cap Growth fund.@@MissTReviews
Solid video! I've been in the employee benefits space for the past 8 years, with a big focus on HSAs. This video should be shown at open enrollment meetings! There's such a gap in HSA education, with a large amount of account holders just sitting on cash. A financial advisor I partner with once told me 'an HSA is the most powerful investment vehicle out there.' Thank you for putting this together.
Thanks for watching! We love the HSA. Feel free to share with your groups 🙂
We work in the employee benefits space helping with Medicare, so we know the conversations well...
Great video! One thing I've done is pay all medical bills on credit to snag 2% cash back, just to increase that dollar all the more
Look at that 🙂 another hack! Thank you for sharing!
I pay through my spouse's FSA
Us, too!
Or churn new credit cards using medical expenses: pay out several thousand to get the signup bonus and the ROI goes up to 8-20%. And the bonus isn’t taxed.
@@UnconventionalThinker I purchase everything w a variety of cash back cards from 2-5%, then pay off the balance every month onthose cards, exploding my Credit Rating, making money, and spending the same amt all along.
I have invested my contributions in my HSA account and have never spent out of it. I currently have 100k balance and will soon switch to dividend stocks to generate enough to cover all medical expenses without touching my principal amount.
That is so awesome! Great job!
Literal goals.
I made the transition to dividend stocks... VZ, O, PFE, and MO for around a 7 percent payout mean.
at 100k you can probably withdraw your deductible amount each year and still make the money back in investment growth. No real reason so switch to dividends.
Boom 🤯
The breakdown of Medicare timelines and HSA contributions is super helpful. It's one of those things you might not think about until it's too late. I faced a lot of issues during that transition
It's an important thing to consider! We go over timelines in this one a bit more as well:
ua-cam.com/video/xKuXEojvdmA/v-deo.html
Investing your HSA money and letting it grow over time seems like a smart move. Pls what types of funds did you choose, and what kind of returns have you seen?
@@MichaelKeaton-np4fl by consistently maxing out HSA contributions since 2005, the account reached close to $2 million by age 65. Recently reimbursed $100k of documented medical expenses taxfree. Employing a fund manager since 2010, and opted for a stock focused portfolio over ETFs and mutual funds, aimed for a more analytical and less leveraged approach. That strategy combined with contributions, proved solid. I appreciate the caution about using HSA dollars for non-qualified medical expenses. The penalties can be steep. accidentally faced these penalties, i wonder if anyone faced a similar experience?
@@ConstanceMills-tw5zi One year, all pumped up to make the most of my HSA I went a bit overboard with contributions, totally unintentional, fast forward to tax season, and bam faced some extra taxes
@@JewishGawk and we both have learnt our lessons now, haven't we? my fund manager helps me avoid tax pitfalls with my assets since that one so i don't have to go through that ordeal anymore they are not playing out here
Best HSA commentary I've ever heard..nailed it.
Thank you so much!!
This guy is so good! Never heard somebody explained HSA or any health/financial related topic so well! Thank you for sharing this knowledge!!!
You are too kind :) Thank you so much for watching, and I'm so glad it was helpful!
He did such a good job compared to a Dave Ramsey vid I just saw 😂😂
Yes. Was also told hsa are not investable. I finally woke up and smelled the coffee and moved it into a fidelity account and did it myself.
Sorry you were told that! Need to send this video to that person :)
They were probably thinking of the fsa
I wish I had started earlier but I've managed to save quite a bit in my HSA. All invested in low cost index funds.
@@SD-co9xe did u try this and got 900,000
ADDED BONUS - You can also withdraw from your HSA without the penalty after age 65 for NON-MEDIAL EXPENSES, but you would be taxed at your regular rate.
Now we need a backdoor Roth conversion for HSAs.
But didn't he say not to use it? I'm lost
I didn't know about being taxed on it then, thx for this info!
He mentioned that in the video, but good to point it out for anyone who missed it.
oooh man, thanks for this vid!! I have HSA but totally forgot to setup my investment acct. missed out on the recent market run but better late than never! thanks again!
Thank you for tuning in!
Tax advantage #4: if you contribute to an HSA through a qualified cafeteria style payroll deduction, that money is not only shielded from state and federal income taxes, but also from payroll taxes like Social Security and Medicare.
In that situation it is a quadruple tax advantage.
So Many Tax Advantages!! :)
Thank you for sharing this!
I went to the comments looking a comment like this. When I do my annual income tax filing I submit how much is in my hsa, is that money taxed then or is it just for documentation?
I did not understand the cafeteria style payroll bit, can you pls explain. Thanks for your time and comment!
Do you have an example of this qualified cafeteria style payroll deduction?
A "cafeteria" benefits plan is one where employees choose their deductions and contributions, usually upon hire or annual open enrollment periods. The "cafeteria" moniker is due to the way the participant "chooses" which plans and contributions to take off of a "menu" of options your employer provides.
If you have such an HSA through a workplace plan and you can elect to contribute to the HSA through payroll deductions, you **probably** have a qualified payroll deduction, but you may need to check the details with the plan administrator.
And even in such a qualified plan, the contributions have to come from payroll deductions to avoid SS and Medicare taxes on the contribution amounts. Many plans allow account holders to add additional funds on their own, but funds contributed that way will *not* avoid payroll taxes.
My parents who were teachers with lifetime employer coverage could give me no guidance about navigating the health insurance market. It wasn’t until the ACA was passed and I was shopping for my plan did I learn about HSAs, and only NOW am I learning there are HSA investment accounts. I am helping my 22 year-old to open one this year!
Thank you for teaching your kid!
The main thing is to apply successfully acquired knowledge in practice)))
Ugh where were you when I started HSA! Thanks for the most powerful information!
I wish we had met sooner!! But, now we have connected and you know all the secrets :)
Agreed!! Lol 😅
@@Theretirementnerds I have only built about 1500 in my HSA. Do I switch it to investing?. Our HSA only lets us invest 100.00 we can't control the amount. Hope that makes sense. Thanks again for all your help!
@@mariad3011 That is why Self-Directed HSA accounts exist. roll it over there and invest as much as you want in almost anything you want (i.e - Rental property (don't payment), Crypto, Any legal, for-profit Businesses, Stock, Bonds, Mutual Funds. That's where the millions are made- gains on these type of investments using whatever funds are in your HSA account- that way you don't need 30 years!)
I'm on a HDHP for the first time this year, mostly because of the HSA and the tax benefits it offers. I did a lot of research, but one thing no one tells you is that you can only invest in the amount that is above a certain minimum threshold, as defined by your provider. For my case, that amount is $2,000. This means at least $2000 will always be sitting in cash and I can only invest in the amount that is above that.
My HSA was the same but I had to keep $1000 in before the plan allowed me to invest. I didn't like that so I opened a Fedeity account and moved everything over to a fedelity HSA so I can invest 100% of my HSA funds. I recommend you do the same because $2k is alot to be sitting there doing nothing
@@z14sniperzps43 Thanks for the reply. I didn't know that I could choose any provider I wanted...I thought I was stuck with the one set by my employer. I just checked and it looks like I can switch. But the downside is that I can't use pre-tax deductions and instead must use post-tax dollars to fund my HSA. I would potentially get the difference back via my tax returns.
All good advice. I essentially don’t spend my HSA at all and invest 100%. I use it as a secondary retirement account, but with obviously better tax benefits than a traditional or Roth IRA/401k.
Sincerely, this is one of the best on-line presentations of any subject - informational, clear and concise. Well done.
Thank you so much!
Yes, everything is clear)))
Great video. I’ve had an HSA for 10 years, wish i had the option to have one years earlier. Max it out every year if you can, invest it and watch it grow. 💰💰💰
This tutorial is a nugget of Wisdom! Thank you...
Thank you so much for watching! :)
Never realized how powerful HSA. Starting a new job soon and will max out HSA with the pay increase I'm expecting to receive. Thank you for sharing all of this info
Of course! Thank you for spending some time with us. Congrats on the new job and increase!
I have a debit card for my HSA. When I go to a pharmacy and purchase some items that are medical and some are not, I pay with my HSA card first, and the pharmacy system knows which items are approved, then I pay the balance with my personal debit card. I don't have to figure it out.
WHAT??!!?? You can reimburse yourself? I had no idea! I wish I'd seen this video 20 years ago! I just sent to my kids so at least they can take advantage of this excellent information. Thank you!
Super cool, right!
As long as you didn't already use the HSA to pay for the past reimbursments
Yes useful information)))
Another possibility many people don't know about is that you get a once in a lifetime ability to fund your HSA from your IRA without paying taxes on the IRA withdrawal as long as you move the money directly from the IRA to the HSA. Again this is only once in a lifetime.
Great point, Rick! Thank you for adding that!
Is this per social security number? If my husband does from his IRA can I also?
Wow, I did not know that! Wish I had! Thanks, Rick, for sharing. Obviously, maximum permissable contributions would still apply and this would be pre applying for Medicare @ 65 or when leaving employer high deductible health insurance at a later date. Correct me if I am wrong on this.
@@tinalippincott9823 you must still be covered on the high deductible health insurance plan to do this and you must also not be covered by any form of Medicare. I am a spouse insured on my husband's high deductible health insurance plan and made the once in a lifetime max contribution from my IRA to my HSA last year. Also make sure you have met or will meet the 12 months of coverage on the high deductible plan. Your HSA plan administrator can guide you.
I just did this last month!
I loooove the HSA account! We also do a limited FSA account on top of the HSA so we can pay for dental and vision. Our kiddos braces were from the limited FSA, the max being $3050 in 2023 which covered most of the braces! Best of both worlds and never have to touch the HSA investment account to get that maximized compound interest baby!
What a great combination! Thank you for sharing!
@@Theretirementnerds thanks so much for your channel!! While we’re a bit away from retirement being millennials, you give such great sound content that is super useful for when Medicare considerations have to start! And your guest(s) are so knowledgeable as well!!! Newer to your channel but just fabulous and for some reason fits so much into our FI/FIRE mindset!
I feel lucky any year I don't max our deductible. Seems to be every other year. $400 goes in every month, $400 goes right back out. At least I get one of the tax advantages.
Quite the eye-opener! Thank you so much for this! 🙏🏽
Superb video! Concise, packed with useful information, and very well presented. Nice job, man!
Thank you so much, Robert!
I like the way you explained how to reimburse yourself. I didn't know that about it. We just switched insurance to a high deductible plan with an HSA. I'll divert some funds from solo 401k to start funding HSA.
Thanks
Thank you for watching! One way we handle the receipts is we take a picture and email it to ourselves with the YEAR HSA Family Member in the subject line so we can look them up easy in the future. Other friends will set up a separate email account like FamilyHSA@gmail or something and do a similar idea. Hope that helps!
@@Theretirementnerds love it! Thanks!
The part about the HSA I didn't hear you discuss was the fact that the type of plan you are on is a high deductible which means if something happens to you you have a high amount go out of your pocket. Also means no co-payments you have to pay the difference between the negotiated Network prices for medical expenses outside of a few Wellness checks. I was surprised to find out a routine skin exam is not a wellness check so I had to pay for it out of pocket. I'm not really tracking out-of-pocket expenses I anticipate they will not add up to much. Generally these plans are very low premium from your employer and then you are freed up financially to contribute to the HSA, besides that I wish I knew about HSA a lot sooner!
What are the considerations for choosing between HSA and Roth IRA?
Quite different accounts.
Roth IRAs are specific retirement accounts built to use as income after age 59.5. Roth contributions are taxed. Roth growth and withdrawals have a lot of flexibility and are tax-free.
HSAs are built for healthcare expenses, but have a nice benefit after age 65 of being opened up to use in different ways. Contributions are tax free, growth is tax free, and withdrawals for qualified expenses are tax free. That's where the strategy in the video comes - if you are able to pay for medical costs out of pocket and invest the HSA, later in life, you can reimburse yourself tax free and then use those dollars later however you want.
Very different accounts. Many people have both.
Hope that helps!
@@Theretirementnerds - Thanks for the engagement on this comment. I have annual medical expenses that are approximately equal to my annual contribution limits for the HSA. So, I'm choosing between reimbursing myself (and funding a Roth) or just leaving the funds in the HSA.
Leaving the funds in the HSA will give me some of the same features of Roth (tax free growth, ability to access contributions via medical receipts) while setting me up to efficiently cover health expenses during retirement. The tradeoff for me is (I think) is that I expect to retire before 65 (possibly even before 55) -- so I am thinking that a Roth (with ladders...) gives me more options in that early retirement window.
Does anything else jump out at you that I'm overlooking?
Thank you so Much! You saved me from being penalized on my Medicare supplement premiums being paid out of my HSA account. I had just set up auto pay for my supplemental. I had no idea it was not allowed until I saw your video.
So glad we could help! Thank you for watching!
Could you talk about how to maximize your HSA for those who live in California and New Jersey, because HSAs have no tax advantage there.
Excellent point Casey. California and New Jersey do have state taxes, but your HSA will still be able to grow in those states avoiding Federal taxes. So, there is still an advantage to these accounts, just not as vigorous as in states that do not apply the state tax to the HSA. Thank you for watching and bringing that up!
My employer also contributes to my HSA account, does the six month prior to starting/applying for Medicare count for them also. I am 67 and getting ready to retire in six months. I really appreciate this as I would’ve continued contributing to my HSA account up until I started Medicare. Thanks, Mike.
They contribute $3500 per year
This video will help A LOT with that question.
ua-cam.com/video/xKuXEojvdmA/v-deo.html
Yes, the 6 month lookback applies to your employer
Another detail that many don’t know is that, for a married couple with both covered by an HSA eligible medical plan as a family (both are covered by the plan from one of the spouses), even if they cannot go over the family maximum contribution limit, if they are both 55yo or over, they can both do the $1000 catch-up contribution, Just note that the catch-up contribution is specific to each spouse, not joined, and therefore needs to be done to each spouses separate HSA account, as there are no HSA joint accounts.
Very well said. That is a tricky topic to navigate and you articulated that very well. Thank you for watching and adding this.
@JI-620 so I am trying to learn as much as I am 62 right now. My neighbor sent me this video as he is also trying to learn. So I have an HSA account. We are self employed and have insurance from the marketplace. You say an HSA is not a joint account? I am confused our insurance is both of our names. I have always used our HSA account for both of us? Am I wrong and is he supposed to have a separate HSA?
@@annethomas5662
I had the same concern. I am not an HSA expert but from what I understand your HSA account can be used for your spouse and immediate family members. I don't think anyone other then the account owner can contribute to the HSA.
@@annethomas5662 If you and your spouse are both covered by an HSA-eligible plan, if you don’t count the catch-up contributions, your family HSA contribution limit for 2023 was $7,750. You can allocate this amount to one HSA in your name, or split it between your HSA account and your spouses separate HSA account, in whatever proportion you like. Separately, you and your spouse are 55+yo and therefore each of you can make an additional catchup contribution of $1000 (total $2000), however, you can only add your $1000 to your account, but your spouse would need to add his/her $1000 to his/her own separate HSA account (would have to open one if he/she does not already have one.
HSA accounts are individual, not joint. If the healthcare plan is through an employer or marketplace, and it already came with an attached HSA account, that account is likely in the name of the subscriber to the plan which is probably you, but you need to check. That is perfectly fine to add your family contributions, and $1000 catchup for yourself, but your spouse would need to open/have a separate HSA account for his/her other $1000 catchup contribution. Even if you keep two separate accounts, since you were covered by the same plan, the funds can be used for eligible medical expenses for both of you.
This is how I understand it. Your tax advisor may be able to provide more info. You are still in time until the filing deadline to make the other $1000 catchup contribution for 2023 if you did not know to do it last year. For reference, see IRS Publication 969, sections for “Contributions to an HSA” and look for “Rules for married people” on Page 7. Hope this helps.
@@annethomas5662 Fromwhat I’ve learned in comments here and elsewhere, the HSA can be a Family account, and that sounds like what you have. When making the additional 1000 catch-up contribution, that can only be used once per account (per year). If you are both 55, one of you might look into getting a separate HSA (or both of you do it and stop funding the Family Account). This way you can each contribute the additional 1000 for the catch-up contribution, whereas otherwise your Family Account could only accept 1000.
THANK YOU! Excellent video.
Thank you so much!
I really need people like you to make videos that help explain all of this to me. This way we can freeze and reverse the video and listen to it when we need to.
All of this seems so overwhelming that it makes my head spin.😵💫
LOL, Thanks for sharing! Btw, I’m hitting the Subscribe button Now!😅
Thank you much for subscribing! Glad this is helpful :) We'll keep trying to put out useful content for you!
You can also use them for qualified expenses out of the country too !
Nice; you missed the fica tax benefit via payroll deductions
Great point! Another benefit :)
Hack#0, if applicable use LPFSA first (some employers provide it for dental and vision expenses) which is pretax and you don't have to spend post-tax/out-of-pocket money.
Most HSA has 100-1000 dollars buffer before investemnt rleased to this buffer. So one can djust this buffer. This buffer comes 2nd when you use your card (example MetLife LPFSA + HSA card) after LPFSA allocated money is used. LPFSA can be adjusted between 0-xxxx based on your familt/tax situation and anticipated usage for dental and visioj out of pocket expenses.
Uninvested cash in a fidelity HSA account earns market interest rate, which is about 5% currently.
What does that have to do with HSA’s?
@@brandon8531 I've edited my comment to clarify that this is for cash in a fidelity HSA account 🙂
That’s great! I don’t think my uninvested cash at HSA Bank earns anything!
Finally got an HSA this year and was shocked (in a good way) to find out it's effectively a pre-tax investment account in a savings account's clothing. I have mine through Fidelity and it's paying close to 5% just having it parked, but once the balance accumulates a bit I'll definitely be investing.
HSAs are amazing! Was it like finding a $20 in your pocket you forgot was there?
Lets get this important information out there. If you plan on working to 67 and the place you work at has 20 or more employees and offers a group health plan you do not need to apply for Medicare at 65. You can wait until your turning 67 and continue to put money in your HSA. So many people are told by friends or family that you must apply for Medicare at 65 and that is not always true. I plan on waiting myself. Now applying for Medicare at 65 could lower your out of pocket cost of insurance depending on what kind of insurance coverage you have at work but if you save those receipts you can reimburse yourself.
Thank you for watching! This video goes over all of that: ua-cam.com/video/jwQKngHS5zI/v-deo.html
Hope that helps!
Thank you, I'll be starting with an HSA through my employment soon and this answered a lot of my questions.
If you qualify, you can open a self-directed HSA with a brokerage firm. You're not out of luck if your employer does not offer one.
Correct!
Best video I watched on HSA - Kudos!
Thank you!!
Thank you. This is exactly the video I was looking for.
So glad it was helpful! Thank you for watching Cody!
when reimbursing our selves for the medical paid out of pocket, how far back can it go?
As far back as you had an HSA. If I've had an HSA for 10 years and paid for qualified expenses out of pocket 10 years ago with non-HSA dollars, I could reimburse myself today for those 10-year-old expenses - tax free.
Hi- Next year will be the first year I began having an HSA account. I am SO EXCITED! I plan on retiring around 67 (God Willing.) Do you have to apply for Medicare at 65 or can I wait until I retire? And, if so, can I continue to contribute to my HSA up to the date I retire?
Thank you so much for watching!
Your questions are more complicated than we can cover efficiently in a comment, so we have a video on it :)
ua-cam.com/video/L2goGwp4Co8/v-deo.html
Yes, there is useful information here)))
This was so helpful! Thank you, do you have any videos about whole life insurance policy and tax benefits for those? I’d love to know more about that as well. Thanks!
Thank you for watching!
This one touches on it a bit:
ua-cam.com/video/8uC1lgkZUWE/v-deo.html
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
I have thought about it, but haven't figured out how to get consultation, I don’t live in a big city.
Stop voting for democrats.
9:17 going the other direction: how does _having_ a healthy, existing, already-funded HSA affect the payouts/benefits?
Hello. I am not really understanding this video. I currently have an HSA account. I have to set the amount in advance through my employer the year prior through our open enrollment period. I charge my medical expenses, doctor visits, etc to the HSA account, but at the end of the calendar year any excess funds up to around $570, I was told, would carry over. Nothing over that amount. So how do you save/invest to these large amounts that you are noting in this video when they are capping me at a $570 rollover? Thank you.
Hi there, what you are describing is an FSA, not an HSA. FSAs work differently and, typically, have the use-it-or-lose-it concept you are describing.
Another account type you could have is an HRA. Works similarly to what you described.
FSA - you and your employer can contribute.
HRA - just your employer contributes.
Hope that helps!
Yes, its HSA account. I was told that only certain amount will be carry forward to next year. FSA also similar in my company. I need to check with my HR is it possible to invest the money from HSA account.
The abbreviation for ETCetera is "etc."
I think these types of videos convinced me to switch from a PPO to a HDHP for next year.
We've been investing in an HSA since 2018 and not using it for any medical expenses. Investing has helped reach $75K. I hadn't heard about reimbursement for pre-retirement expenses. I need to start a folder to save the receipts.
Congratulations on your HSA! That's an awesome number!
Noice ;) ... I do exactly everything as you mentioned. I am on year 1 at 52 years old and am excited to see where the next 15 years of it go till I retire.
Awesome! Is that a Brooklyn 99 reference with Noice? 🙂
I'm 49 and wish I would've known about HSA a LONG time ago - I don't know if it's too late for me but I started using an HSA about 3 years ago through my employer and I invest my money heavily and I hand-pick the more aggressive stocks - hope I can build a decent amount before I retire. (I don't want to include or think about inheritance dollars which I will get a large amount, I want this to be like an added bonus).
For sure. Same way here. I hope I never need my HSA, but over time, I'm hoping that the balance is nice and healthy once retirement hits. Thank you for watching and sharing your thoughts!
I wish I knew about it much earlier as well. Discovered it by accident. Absolutely no one in my workplace had ever heard of it. I believe could’ve had as early as 2004. A huge missed opportunity for thousands of workers. Sad.
Moved to the US and didn’t properly understand HSA. Now I need to come back here at 64y old! 😆
After seeing other videos on HSA’s you explained it so well I understand it now!
Thank you so much!
Thank you very much! Very clear and informative.
Thank you for watching!
Hope you would cover the case that you have to apply for Medicare because of retirement, but you did not stop HSA contributions for last six months. There should be a way you can fill a form and withdraw the contributions so they become taxable income. Correct?
The sharpest healthcare and financial UA-camr and all-around nice guy, Erik is his name.🎯🎯🎯
You are too kind David. Too kind. Appreciate you!
@@Theretirementnerds Right back at you.
Also if this helps anyone - couples counseling IS NOT a qualified medical expense unless you have a note from a medical provider and the counseling is addressing an existing mental health illness/issue. Made this mistake and had to pay tax on my distributions from my HSA. Won’t let that happen again!
Thank you for sharing this!
Considering the rising healthcare costs, exploring strategic ways to maximize HSA benefits can significantly impact one's financial health.
HSA provides a triple tax advantage, allowing tax-free contributions, growth, and withdrawals for qualified medical expenses. Implementing smart HSA hacks can supercharge your wealth.
For me, involves strategically timing your HSA withdrawals. By covering current medical expenses with out-of-pocket funds and letting the HSA funds grow, I'm building a robust tax-free savings pool for future needs.
Same here, even for retirement strategies !
Very helpful video thank you so much for sharing your knowledge with the rest of us ❤
Appreciate you watching!
One final tax benefit that took me by suprise: your withdrawls in retirement dont get factored into your social security tax calculation.
Excellent point!
QUESTION: When investing the HSA, are the returns received from the investment considered a 'contribution' creating a tax issue with Medicare's 6month look back? If you stop contributing funds for the 6 month look back, but the HSA continues to grow, due to investment, is the growth considered a contribution?
No, growth is not a contribution. The 6 month rule is a tricky one that gets misunderstood quite often. If you haven't seen this video, it clarifies:
ua-cam.com/video/xKuXEojvdmA/v-deo.html
@@Theretirementnerds Thank you!
Also, something that was sort of mentioned, but not too clearly….
HSA contributions, assuming they are funded with deferrals through an employer plan, are not subject to payroll tax. Which is an additional layer of tax savings.
This differs from 401(k) Pre-tax contributions which will lower your taxable income, however you still pay payroll tax on the these deferrals.
7:30 hint hint, if your doctor recommends something, even just an OTC supplement, to help with some _specific_ medical condition you have, get that recommendation _in writing_ and keep that “doctor's note” with the receipts for said item.
Keep in mind that HSAs are tax inefficient at death. Consider submitting qualified medical expenses immediate instead of letting it grow and use those reimbursements for Roth contributions or conversions which also enjoy tax free growth. You still get the triple tax advantage but in a way that is more advantageous for your heirs. Alternatively, consider listing your favorite charity as the HSA beneficiary at your death.
If there is no spouse, correct. The spouse still gets the tax advantages, but children or a trust do not. Great comment!
Excellent video! Very informative, but two questions:
1. Once you're on Medicare, does the money already invested in the HSA remain invested and continue to make more money?
2. Is the restriction on front-loading your HSA right before you get Medicare only for that specific situation, or can you not front-load it at all, no matter your age?
Thank you for watching!
1. You can keep the money invested and growing once on Medicare. You just can't contribute more to it.
2. You can only contribute an amount equal to the number of months you were covered by a qualified High Deductible Health Plan (HDHP) and not Medicare.
So... if you know you will be on a HDHP all year, you can make your full, max contributions in January.
If you lose the HDHP after 6 months though, you are only allowed to have made 6/12ths of the max contributions for that year.
Does that make sense?
@@Theretirementnerds Yes, thanks so much!
Great content!
Thank you so much Dr. Brandon!
I am retiring next yr at 57, I don't have HSA, I have steady income stream from my $2 Million dividend portfolio total $450,000 a yr to live comfortably, and its all because of my Fee only Advisor who handles activities in my Portfolio.🌹✅
Thank you for sharing your experience. do you mind also sharing your How to find your Fee Only Advisor?
Essmildaa Morgan is well known, just look her up.
I did quick research on her, I found this very helpful, Thank you!
I work with Essmildaa too! transferred all of my IRA from managing it myself, to making her my advisor. BEST decision ever! I truly enjoy the trades. I found exactly what I was looking for.
Wow, I know Essmildaa too! She’s helped grow my reserve, despite inflation, from $200k to $440k as of today.
Unfortunately I have a chronic illness that costs significant amounts of money out of pocket. My understanding was also that you get higher deductibles if using an HSA. Which seemed to be a wash when considering how much I regularly spend on medical bills. But seeing it as just an extra investment account makes me more enthusiastic about getting one.
Thank you for the information
Thank you Eddie!!
I have to say, while the idea of maximizing the benefits of an HSA is intriguing, it feels a bit like exploiting loopholes in the system. Shouldn't healthcare be about taking care of people, not finding ways to manipulate tax systems?
Ffs 🤦
This should not have 66 likes. Consumers and taxpayers are not the problem. Educate yourself or continue to get steamrolled by the rich and greedy!
Lol do some research into how the healthcare system actually works in the USA and how bad you're being overcharged. If anything hsa advantages don't even come close to making our healthcare system affordable for people that don't qualify for subsidies.
I would like to do a IRA to HSA rollover but as of now my employer health plan doesn't qualify me to open one. I will be able to open an HSA in the month i retire if I get a high deductible plan
Investing HSA has too many restriction, minimum, & fees before any money is invested. Its more optimal to use HSA on qualified expense right away & invest savings on Brokerage, T-ira, roth, or 401K.
HSA investing is only optimal for people who can max out 401K & IRA accounts. Because they need more tax breaks.
How does the reimbursement work? Example: I pay dental cleanings out of pocket as I go to an out of network dentist. I submit a claim to my insurance to get reimbursement. I am not fully reimbursed. Will the HSA know I already received a partial reimbursement and will only allow me to reimburse myself the difference?
You'd be checked on the receipt from what you paid out of pocket, so hold onto receipts or take a picture and email it to yourself with HSA Reimbursement Receipt in the subject line (or whatever works for you) so you can easily search for it later.
@@Theretirementnerds thank you
I don't understand how paying for medical expenses out of pocket are supposed to save money. It's basically a wash. I did a 25 year simulation of maxing out HSA contributions and paying $5k/yr in medical expenses and either:
A) Save all money in HSA and pay expenses with taxable income
B) Pay for all medical expenses with HSA and save the taxed income money that would have paid for expenses in A in the same high yield account.
After 25 years the total net worth is a wash. The tax man taketh either way.
As someone has started a HSA, I love the concept. However, medical costs have skyrocketed. In the case of an emergency, nevermind if you have kids, one feels a bit exposed with a high deductible health plan.
First time watching ur videos and must say im super impressed and have subscribed. Will follow ur channel now. Just started getting financially literate myself.
Quick question, when an employer contributes to your HSA, is it in addition to the family max of $8350 or just to make up the family yearly match?
Thank you.
Thank you so much!
It is not an addition to the max. The employer contributions plus your contributions cannot exceed the annual max. Those who are 55+ do get an additional $1000 in catchup contributions.
Hope that helps!
Yes it does. Thanks
@jodidoz5927 As @90DaysFromRetirement mentioned, your contribution + employer's should not exceed the annual limit. If you exceed that limit you need to call your brokerage where HSA is and withdraw the excess amount before IRS penalizes you.
My husband and I file taxes jointly but we have separate HSA eligible health insurance plans for 2024. His is an individual policy and mine is a parent plus children policy because I have the kids on my policy. For some reason the premiums were slightly cheaper doing it this way. My question is can my husband contribute the individual max into his own Fidelity HSA account AND me contribute the family max to my own HSA account.
Thank you for watching!
No, I wish that's how it worked!
You and your husband combined can contribute the family max for the year.
I’m new to HSAs and this may be a simple question - say I’m “Eric the Investor” and use an HSA to invest in funds. How is an HSA beneficial compared to a 401(k) where employer matched contributions are common?
Asking this without any potential awareness that employers also match contributions to an HSA… so I’m not sure
Great question. Yes, employers can also contribute to HSAs. The big benefit is tax deductible contributions, tax free growth, and tax free distributions for qualified expenses. In a perfect world, you and your employer are contributing to both 🙂
The cool part is that you can roll over the HSA to long term plan and choice a reimbursement plan that you can get cash.
Turned 65 in Feb and applied for Medicare in Jan. Contributed 1 month (1/12) to HSA in Feb....so according to you I was one month too late or should not have contributed at all this year... how will I be penalized and is there anything I should do to correct this?
Nope, you are OK. You can make 1/12 of your max contributions in 2024 with your birthday being in Feb. It's less about timing, more a put the pro-rated amount for the year.
Theoretically, you could've made that 1/12th contribution in December and been fine. They are looking at amounts.
Very informative ! I've heard something about transferring 401k money into HSA...If true, Where might I find info on that.. limits timeframe etc? Would that still make sense as a retiring reserve military vet closing in at 60? Happy Easter BTW.
You said after 65 you can use HSA dollars on anything, like a traditional retirement account. But later you said you can use them on Medicare premiums,etc but not on Medicare supplement plans. I'm confused. Can you clarify? TIA!
Great question! Yes, you can use HSA dollars tax-free for qualified medical expenses. Medicare Supplement plan premiums do not count as qualified medical expenses. So... if you technically want to take out HSA money, have it taxed, they there's a theoretical way for you to use it for Supplement premiums. Does that help, or make it more confusing?
Let's check my comprehension. 😊 To keep the triple tax advantage it ALWAYS must be used for qualified health expenses. However, after you reach your FRA, you can use the HSA dollars for anything without penalty.. you just have to pay tax on it, similar to a traditional IRA?@@Theretirementnerds
What is the difference between a FSA and HSA? Are those two the same? Because I max contribute to it to lower my tax liabilities. And there where years that I didn’t use it. I’ve been contributing to my fsa since I was 24 and I’m already 45. You mean to say that I could invest in it? How?
@@edwinvencioful they are different. Here is a video on the differences:
ua-cam.com/video/2uOxuDCbmuk/v-deo.html
What happens to this account and money in it after I die? can my spouse and kids use them ?
Spouse can use it with all the same benefits (triple tax advantages). Kids can inherit it and money is taxed as income.
This video is so great and helpful - you just gained a subscriber 🎉
Thank you! Appreciate this so much!
Can I still contribute to my HSA? if it’s my husband that is retired 68 and just started collecting ss 5 months ago. I am still working and 64. I know my company stopped adding his portion of their contribution to my HSA but I am still adding money but not my husband
Yes, as long as you are still covered by a qualified high deductible health plan, you can make contributions. If it is just you on the plan, you have the single max plus $1,000 catch up contributions.
If you have you and a dependent (spouse or child) on the plan, you can contribute the family max.
Thank you for that second paragraph because I forgot to put that information in that my husband is on my plan and he has Medicare A. It doesn’t use it at all. Second question, if I may, I’ll be 65 in Oct so do I need to apply for A ? I’ll be working to 67
@Paulsapartment no, you do not need to apply for Part A, in fact, from what you've shared, you should not apply for Part A. If you did, you would have to stop HSA contributions. Now, if your company plan is very expensive, that changes things. But if it is a solid plan with good costs, don't take Part A
Thank you thank you thank you I will not apply for part a now because of your information. Just thank you so much because all I’ve ever heard is about how I have to apply for part A no matter what otherwise I’ll get a penalty.
@@Paulsapartment this video will help 🙂
ua-cam.com/video/jwQKngHS5zI/v-deo.html
You are not required to do minimal 401k distributions anymore after Secure 2.0 act
Besides the medical expenses payment benefit, how is the 65 yrs. old hack any different than investing that money in a traditional IRA?
I wish I would have seen this video prior to open enrollment closing.
This is a very good video, but there is a slight issue from my side at least. My company offers FSA dependent care and regular FSA but I cannot enroll in it if i do HSA.
I use FSA for my family medical expenses. So what to do?
Does your company offer a Qualified High Deductible Health Plan (QHDHP)?
If it does not offer that kind of plan, you can't get an HSA :(
@@Theretirementnerdsyes
Questions for a newbie. How do I invest the HSA money? Also, if I do invest the HSA money, does any money I make go back into the HSA automatically, or do I need to ensure it each time?
Your HSA Custodian - the company holding the HSA dollars - will be where you invest it. They should have investment options for you. If they don't, you may want to look into moving to a custodian that does.
As the money grows, it all stays in the HSA.
@@Theretirementnerds Thank you. This just became available to me and enrollment is this week.
@Grenn1471 ya most custodians will have you keep a minimum balance not invested and then you can invest anything over that balance. HSAs are great!
Great part is not only do you save our marginal tax rate on the way in, but FICA taxes as well. So, if you were to eventually use it in retirement for non-medical expenses it would still be better than a traditional IRA, bc you wouldnt have to repay those 7.6% of FICA taxes!
Also, if you dont have the money to max out or significantly contribute to an HSA, just open 1 and put in like $100, bc I believe that would start the date form which you can at least start saving your medical bills, so then in later years if you max it, you will have more bills saved up then
Thank you!! Great points!
I have an HSA, and invest with it. I divorced in 2022 but my daughter is still on my medical/vision/dental insurance. Does that qualify me for the family contribution limits or am I stuck at the individual contributions limit? Thank you in advance.
Yes it does 🙂 family max is for you plus dependent(s)