4 HSA Hacks That Will Supercharge Your Wealth
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- Опубліковано 24 тра 2024
- A Health Savings Account is an incredibly powerful way to supercharge your retirement wealth. The triple tax advantage of HSAs is hard to ignore, and in this video, we'll show you 4 easy ways to put your HSA on steroids. We go over the important tax benefits and investment options. Don't miss out on this smart saving strategy!
Here is a list from Health Equity of Qualified Medical Expenses (QME):
www.healthequity.com/hsa-qme
Need help? Email me!
Erik@TheRetirementNerds.com
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This video is NOT sponsored.
The Retirement Nerds is the no-cost educational platform and serves to offer information around Medicare, Social Security, Financial Planning, and Estate Planning.
⏰ TIME CODES ⏰
0:00 Intro
0:19 HSA Basics
0:49 Triple Tax Advantage
2:13 4 HSA Hacks
9:17 Medicare & HSAs
13:07 Wrapping Up
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#finance #healthsavingsaccount #HSA #90daysfromretirement
Federal Disclaimer:
We do not offer every plan available in your area. Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all your options.
*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.
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.
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
Quite the eye-opener! Thank you so much for this! 🙏🏽
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.
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 "manu" 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.
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!
Thank you. This is exactly the video I was looking for.
So glad it was helpful! Thank you for watching Cody!
Thank you very much! Very clear and informative.
Thank you for watching!
Thank you, I'll be starting with an HSA through my employment soon and this answered a lot of my questions.
This tutorial is a nugget of Wisdom! Thank you...
Thank you so much for watching! :)
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 video I watched on HSA - Kudos!
Thank you!!
Best HSA commentary I've ever heard..nailed it.
Thank you so much!!
After seeing other videos on HSA’s you explained it so well I understand it now!
Thank you so much!
Superb video! Concise, packed with useful information, and very well presented. Nice job, man!
Thank you so much, Robert!
Excellent content and graphics. Thanks
Thank you so much!
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!
Very informative - thanks for sharing!
So glad it was helpful! Thank you!
Great video. Very well done. Thank you.
Thank you so much!!
Thank you!
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!
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.
Thank you for the helpful information
Thank you for watching! 🙂
I’ve always been an avid investor, but sadly, I never knew about an HSA 😪. Now I’m nearing retirement. 😭😭😭
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. 💰💰💰
Wow. Just learning about hsa..
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!
Thanks for great video, just subscribed.
Thank you so much!!
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!)
Great video! Thank you!
Appreciate you 🙏
This video is so great and helpful - you just gained a subscriber 🎉
Thank you! Appreciate this so much!
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 advice 👍
Good video, clear and very easy to follow.
Thank you so much, Stephen!
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
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 😂😂
Great content!
Thank you so much Dr. Brandon!
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!
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!
Dude. @6:00 you're being real. Not many UA-camrs show that anymore.
Thank you!
Nice video. Thank you.
Thank you so much!!
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!
@@Theretirementnerds love it! Thanks!
Moved to the US and didn’t properly understand HSA. Now I need to come back here at 64y old! 😆
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
Great video!
Thank you!!
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.
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.
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 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!
Thank you for the information
Thank you Eddie!!
Great video! 🙏 btw just curious what brand is your shirt.. I like the style 😎
Thank you for watching!
Primo Golf Apparel 🙂
primogolfapparel.com/collections/primo-tops
Have a sports event I run that gets a discount if you want them. Discount code is MANGAMES
You could also contribute to a limited purpose FSA to cover anticipated medical expenses and leave the HSA alone. The only negative is the LFSA is use it or lose it, so don't over contribute.
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.
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.
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.
EXCELLENT!! 👏🔥💪❤💥
Thank you!!
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.
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.
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!
Great content - I was just looking at the issue of proration of the contribution in the year of Medicare eligibility/enrollment (retirement planning). At around 12:20, you mentioned the $1k catch up contribution after referencing the single/family contribution limit being prorated. Just checking, but I believe the $1k catch-up is prorated as well (3/12 in your example) - correct? Stating that the $1k "is thrown in there as well" is prior to determining the prorated amount? Thanks in advance!
Yes, you are correct! The $1,000 is pro-rated as well. Should have made that more clear. We just take the annual max contribution, add $1,000 if catch up applies, and apply the pro-rated amount based on months to get the total year number. That is the more important number rather than the last month of contribution. You can make contributions after the Medicare start date as long as your annual contribution is at or below the prorated amount based on the Medicare start date.
Excellent clarifying question!
@@Theretirementnerds Thank you for the quick (and confirming) response! Keep up the great work - really enjoy your channel.
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!
When paying self back at let's say age 62 for earlier medical expenses can you do it all at once or there's a limitation? Great video btw, I've shared it with relatives.
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.
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!
This was a fantastic video thank you so much.
Quick question: do you have any recommendations for CPAs to answer specific questions or consult to set up a future tax journey (I live in Arizona). I’m in my early 30s and want to start planning for the future.
Thank you for watching! We are working on building a CPA network, but we don't have contacts in Arizona... yet... a good CPA is important, so if you have friends/coworkers/family that have a good one, that's a good way to find someone.
I'm in Arizona. CPA's I know that could help - David McBride in Mesa and Tom Udall in Gilbert.
@@toddhatch6826 thank you!!
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!
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!
Last year was the first time I had an HSA. I came upon an older video of yours about HSAs and WOW! I'll be cutting a check (before I file my taxes) for the remainder of my eligible contribution for 2023 and I've already moved the max allowable from my IRA for 2024. Do you have a list of low load investment companies (I've heard Fidelity is one).
Don't forget to max out your funding for 2023 as you have until tax day to do so.
Thank you for watching! To your question, are you asking specifically for HSA investments or for investments in general?
@michaelb.8953 Yes, I forgot to specify for 2023. Sending funds this week!
@90DaysFromRetirement For HSA specifically. I think the employer fund is pricy so, I'm looking for a less expensive option to move the account to.
Yep pretty common knowledge
HSA bank or Mercier maintains $1000 saving after you reach a $1000 it will be invested. I used to pay the $500 contribution by my employer to any qualified co-pay expenses within a year for my dental, medical or medicine.
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!
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.
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.
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.
I think these types of videos convinced me to switch from a PPO to a HDHP for next year.
Nice; you missed the fica tax benefit via payroll deductions
Great point! Another benefit :)
Also not to mention that some HDHP tend to be upwards of $4500 deductible in network like UHC. Before healthcare pays anything which sucks especially if ya make the average income ($50-$70k).
I would love to retire early and use my HSA funds to pay for health insurance premiums, but the IRS doesn't allow this. Makes zero sense other than trying to force people to work until 65.
Glad to see you are back! Hope you're holding up okay. Yeah, the HSA is da bomb! I didn't contribute for ~ 4 yrs while I was getting by on my savings, but since last year when I turned 59.5 and then 60, I've max'd '23 and '24 and plan to do so thru my 64th birthday year. But that is too squirrelly those months prior to turning 65/applying for Medicare, it would only be a couple of months for me at most anyway. The one other thing to know about HSA's is, you can indeed take distributions for non-healthcare-approved costs, just, for that, the amount will be treated as a traditional IRA distribution 'regular income' and that will be taxed...So it's best to just use it for healthcare...
Glad to be back 🙂 doing well, thank you so much!
Don't be afraid of your 65th birthday year! If you're going on Medicare at 65, it is super easy. Your last contribution month is the month before your 65th birthday. Yes, it is pro-rated, but shoot me an email to erik@90daysfromretirement.com with your birthday month and I'll do that math for you 🙂
We have this video too:
ua-cam.com/video/xKuXEojvdmA/v-deo.html
Can someone post the 4 TLDR tips? Thank you fam
Sure thing!
1. Invest your HSA dollars
2. Pay for Qualified Expenses out of pocket to allow HSA dollars to grow
3. Reimburse for past expenses - in retirement
4. At or after age 65, HSA dollars can be used for anything with no penalty. If it is for non-qualified expenses, it is treated as regular income and taxed.
Bonus Hack #5 - To document healthcare expenses over the years, send yourself an email with the receipt and consistent subject lines "YEAR_HSA_Expense Description_Amount"
Or, create an email specifically for receipts Name.HSA@gmail... and send all emails there.
Hope that helps!
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?
You could also invest your HSA money and run into the big stock crash that happens every 10 or so years that pretty much reset all your gains if not put you into negative territory, and what if you need to withdraw money for a major medical expense at that time. You have to be really lucky to have compounded growth. No one can time the market
One final tax benefit that took me by suprise: your withdrawls in retirement dont get factored into your social security tax calculation.
Excellent point!
Sounds great if you have the means to pay for medical expenses from non HSA sources. I think most people dont
Title of tip 3 is leaving the benefit covered a bit since dollars saved in an HSA do not have to be used on medical expenses incurred while in an HSA plan. Important detail that is seems the majority of people misunderstand.
Nice, thanks! Can you please answer what about Veterans whose medical bills are covered by VA? They don't have any other health insurance. Can they also have HSA, or not?
To have an HSA, you must have a Qualified High Deductible Health Plan. VA benefits are not a qualifying high deductible health plan 😕
@@Theretirementnerds OK, thank you! I wish we veterans also have something like HSA. Thanks
@@shoppersdream I agree with you!
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 !
Like whatta good guy
Great info. I have a couple of questions. When paying out of pocket am I still permitted to use my insurance and just cover what was not covered by the insurance or am I to completely pay out of pocket? If when I go to reimburse my self am I able to pay for medical bills incurred by my wife (her having her own insurance account)
Thank you for watching.
Yes, you are still permitted to use your insurance and just cover what was not covered by insurance. That's definitely recommended. They will ask for a card or some form of payment and, if you are not using your HSA, you just use your regular credit/debit card.
Does your wife have her own HSA?
Currently she does not due to us planning on having trying to have a kid soon. Afterwards assuming all goes well the plan is for her to get an HSA plan as well.
So I guess then to clarify my question is can I reimburse myself for any out of pocket that we still incur until she gets her own HSA?
@@jasonperez0 Yeah, so this is the answer to this comment as well as the other - the answer is yes, you can use your HSA dollars to pay for her expenses, as well as any dependents you may have now (or in the future). She doesn't need her own account.
Contribution limits are different based on the insurance coverage.
If you have an HSA, and she is covered on your plan - or a dependent is - you can make the family max contribution for the year.
Or, if you have an HSA and she is covered through her own work and they have an HSA, you can each make the individual max contribution. Does that makes sense?
@@jasonperez0 Yes, you can :) Any expenses you have while you have the HSA for you or your family.
Hello ,
Question if I am moving from hdhp to low deductible can I contribute whole 4100 for that year and then move to high deductible?
Hello! It'll be based on the number of months you are in the HDHP.
If you are in the HDHP for 3 months of the year, you can make 3/12ths of the max HSA contributions for that year. Does that make sense?
Great stuff! I am starting an exciting and new executive position at age 62, am I too late to reap these benefits?
Not too late! If your company has a qualified plan, you can have an HSA. Work with your HR team to figure out what would be the best arrangement for you. Thank you for watching and congratulations on your new position!
You’ll have 3 years before you are forced to stop when you sign up for Medicare :(
I recently realized that my HSA money was all sitting in a low-yield .01 savings account by default at Optum Bank. These companies must make a lot of money of people not knowing they need to actively invest that money.
One other scenario: I plan on retiring early, and my family's medical expenses are going to average much less than the contribution limit. Since I can't touch the HSA money until I'm 65 for non-medical expenses, I plan on paying for all medical expenses from my HSA immediately, and possibly contributing less than the limit if the account grows more than we'll need in retirement. Does this make sense?
What do you do if you swipe your HSA card on a recurring medical expense for, say, a year, thinking it qualified because the purchase went through, only to find out later that you may have needed a LMN for the recurring expense, and it may not have been a qualifying medical expense the whole time... hypothetically...asking for a friend. 😵
Essentially, anyone contributing to HSA in their 60s should make the year they turn 64 their FINAL year of contributions.
Not quite... not is still working and on a qualified plan.
@@Theretirementnerds ijs, better safe than sorry. If a professional is handling it for/with them ok, those are the exceptions but as a general rule they should stop they year they turn 64. People don’t folllow rules as it is and tax and Medicare rules are already challenging enough and penalties for getting it wrong outweigh benefits of trying to get it right (again, unless they’re working with someone like you).
I had no idea. My HSA has been sitting there for 5 years.
Now you know :) Get that workin' for you!
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?
Imagine and add the savings on Taxes upfront. Assume you are on the 20%+ bracket and you maxed your HSA contribution of $4,000 (conservative), you just saved (made) $800 in return.
It's hard to think of an HSA as an investment account when I don't generally have access to it, other than for medical expenses.