Dave does a poor job of making a key point clear in this discussion - that an HSA is NOT an insurance plan - it is a savings account. Contributions to the account are made possible by participation in a particular type of insurance plan - a Qualifying High Deductible Health Plan (QHDHP). Some important things to remember about an HSA are these; (1) The money that goes into an HSA is yours. Forever. Period. You can use it for qualifying medial expenses without paying taxes on it. If you change jobs, change insurance, etc, you still get to keep your HSA. (2) As long as you are covered by a QHDHP, you can contribute up to the IRS allowed maximum ($7,000 for a family in 2019), but you are not REQUIRED to contribute a dime. It's a SAVINGS account! (3) If you are only covered by a QHDHP for part of the year, you can contribute that percentage for which you had QHDP coverage, so for example if you have a QHDP for 6 months you could contribute $3500 in 2019. If you have a QHDP for 3 months in 2019 you can contribute $1750. (4) If you lose your insurance or change jobs and your new employer does not offer a QHDHP, you can still keep your HSA, and use any funds that are in it for QMEs, but you can not CONTRIBUTE to it until you are again covered by a QHDHP. (5) You can contribute to your HSA at any time during the year. You do NOT have to make contributions with each paycheck. You can wait and make one lump-sum contribution at the end of the year (technically, through April 15 of the following year) if you so choose. (6) Contributions made to your HSA are not taxed. They are an "above the line" deduction, meaning that it's like you never earned the money when it comes time to figure your taxes. So, if your gross for the 2019 is $100,000 but you contribute $7,000 to your HSA, your taxes will be figured based on $93,000.
I've already signed up for bronze 4 on the marketplace. Deductible is high. Not sure if i can get an hsa with that plan. I think so. If not, is it too late to change?
Not only that, but it may be difficult to find a bank or credit union that offers HSA accounts. They're so highly regulated that many institutions think it's not worth the necessary due diligence to offer them to the very small portion of people who may qualify for them.
A 3rd benefit of HSA besides the tax deduction from your paycheck and tax free medical expenses that people dont talk about is that at age 65, the HSA becomes a retirement account like a traditional IRA where u can withdraw from it without penalty for non medical expenses. I treat my HSA as a 3rd retirement account where i will try not to use it for minor medical expenses.
Judy Hall well, you could put in only a certain amount each yr so hsa gives additional tax advantage acct similar to traditional ira account and so i guess more money at retirement
Yes - this is a great benefit that many don't see. So if I'm understanding this right, the money you "invest is pretax"....it grows tax free...if I withdraw it for medical purposes - no tax. If after age 65 I withdraw for non medical purposes, I'll be taxed, but no withdrawal penalty...This is huge and is an awesome way to build wealth along with one's portfolio.
I have a employer which pays 2000 into a hsa. I use this to cover some medical expenses, but mainly have this to cover the high deductible. Plus combine with a Wellness plan it gives me another 2000 year to help pay my premiums. All this savings on medical cost goes to help fund house and retirement. One piece of the puzzle.
@@ByMattHart - You need to confirm first that your health care plan qualifies you. For instance, my insurance is too good (I have no deductible) so I can't invest in an HSA.
in addition an HSA acts like a regular 401k after age 65, i.e. you can use it for any purpose after 65 if you are willing to pay the taxes. If you spend it on medical no taxes of course. My suggestion would be to contribute the max so that at a later stage in your life you can pay for medical related expenses with tax free money. It's a great idea.
@@freeagent6203 From what I gather, the money you use for non MEs after 65 is treated like a 401k. Taxes when you take it out. The only distinct benefit is tax free money for medical expenses.
@@freeagent6203 the tax deduction of your contributions are one benefit, but you also have tax free growth if you choose to invest your HSA funds. Also, you can spend it tax free on medical expenses. Even if you don’t, you still could get the other two benefits-not to mention that many employers match HSA contributions, which effectively doubles your money. That’s also a huge benefit.
If I put a minimum amount of money into my HSA, my employer matches it. I saved money in mine for 4.5 years and used some of the money I saved to pay for the bills related to the birth of our son. My husband and I didn't have to use a penny of our emergency fund or try to save enough during my pregnancy to cover medical bills.
He says he never used his HSA. I'm not from America so I don't understand... Don't you go to the dentist every year? In my country health insurance covers that. If he says he never uses his HSA, does that mean he doesn't go to the dentist?
I have a HDHP with a$5000 deductable and an HSA. It works very well for my family and I. We just paid for our daughters braces upfront, no money out of pocket.
All preventative care visits for children, women, prenatal and adults are included in all health plans that meet the federal guidelines. So even with high deductible plans you get all the routine preventative care visits without a copay or fee. The only time the deductible will matter is when a sickness or injury happens, which is why you must have money saved to pay the deductible. If you are healthy there is no reason to get a high premium plan because you may never use it above the routine checkups. The way I look at it is like this, do you want to pay for the deductible in advance in monthly payments and never end up using your insurance, or do you prefer to pay little now and "if" you ever need to really use it for a large expense then you pay the deductible.
I put the difference between the hsa and top amount for a year and had my deductible amount met for the next year if needed. Always rolls over and it’s your money.
@@hotpepper5037 They don't steal from poor people. 49% of Americans pay zero federal income tax. (Hint they aren't the wealthy). Many poor even get money back from .gov. in the form of the Earned Income Tax Credit.
@@hotpepper5037 i'm not poor but neither am I rich but they steal money from people like me. Not too poor to receive benefits but not rich enough to live a decent life. I have to struggle everyday.
hot pepper you cant steal money from poor people, they have no money.....if you think Washington D.C. should change, start actually taxing poor people, it would change really quickly...
I have an HRA. First time ever. My employer put $$ in it and through very basic tasks, I earned $$ for it too. Only had to go to the Dr once this year. The HRA $ paid for the entire visit ($165) and i paid $4 for a $50 medication with my prescription card they gave me. Still plenty of $$ left over in it too. So thankful for my insurance.
FYI, besides doctor visits, you can also use an HSA to buy tax-free approved things like contact solution and family-planning items. Also also, you can claim mileage & toll reimbursements for medical visits. So now every time I visit the doctor, I can claim mileage and withdraw the pre-tax funds I've contributed as tax-free. Due to these, imo it is definitely worth having at least a small contribution coming out of your paycheck for your HSA even before step 3, not as an investment but as saving money on your budget.
I guess after watching this, that I have good insurance provided by my firm. I have PPO and My PPO picks up 100% of medical costs after a $20 copay for primary care doctor, $33 for specialist doctors and $50 for hospital/ER/Surgery. The cost of my premiums per month for myself and my wife are $137 for both of us to get coverage.
Dave mentioned that he has NEVER used his HSA, which is a big mistake. HSAs should be used instead of cash for regular Qualified Medical Expenses. Common ones are rx, condoms, tampons, sunscreen, etc. You can do a quick google search to find full lists of QMEs, and should be taking advantage of your card for these expenses you're going to make anyway.
Pretty sure he is a multi millionaire and you’re not. It’s used as a retirement savings and triple tax advantage . No need to ever touch a penny compound interest
And I'm pretty sure you are not, either. Im just here to better my understanding on money and share my knowledge as well. No one is ever going to value your opinion or take you seriously if you try to belittle people when educating them btw, so if you are trying to do so with your passive agressive comment, you're wasting your energy.
Not a mistake if you keep your receipts. There's no rule that you have to claim the expenses the same year, they can carry over to future years. This is what a lot of folks do to keep that maximum amounts into a HSA that offers investment into an index fund. That's the real power of the HSA's flexibility that works to the individual's best interest.
The other thing is that if you do not need the money because you are healthy, generally, amounts over $2000 can be invested. In most HSA plans you have to keep $2000 in the cash balance acct but the other amounts over and above $2000 can be invested. If you never need that, all of those invested dollars and earnings that the invested are not taxable when you use them for expenses. Keep records of all of your expenses if you pay it out of pocket, and then down the road, you can take out the money to reimburse yourself and you are not taxed on it. Do that before you turn age 65. Once you turn age 65, You can draw out of it money over and above the amounts that you would reimburse yourself for, and then you are only taxed on those amounts at your ordinary income tax rate. It's a great additional bucket of savings for your retirement.
Be careful of the fees - he's only talking about the tax advantage, without mentioning the mandatory annual fees that draw down and may eliminate investment gains. For example, my HSA has administrative fees of 3% to 7% annually depending on the balance. And there's more fees to participate in any of the investment options.
Instead of low deductible high premium, u pay for your own healthcare until u meet the deductible and low premium it seems like the same cost in 1 year?
I'm confused on how the people on RU-vid are talking about "investing" with an HSA. I don't see anything in my insurance that describes HSA and chosing investments once it's in there. I am also not sure about how it rolls over.
HSA are not made equal. Some HSA have fees so high it make sense only if you deposit quite a bit of money every pay period, and to deposit that much you need to make quite a bit of money. Otherwise you hand the money you saved on taxes to the bankers.
My HSA fees are the sole reason why I won't invest a single penny of my own money into it. My employer does so I do have some money in there but still. Having to pay $3/month just to be able to invest any portion of that money and then pay expense ratios on top of that is BS. So I just use it as a 0% interest earning sinking medical fund that I don't put my own money into.
I just spoke with my insurance agent. She recommends an HSA for me. I suggest talking to your agent and seeing if it is a good thing for you. As a single person, I can contribute $5400. I can also contribute $1000 because I'm 58 years old. I will have a tax write off of $6400, meaning that I will lower my income tax by $2000.
Thanks for this great video! People can save a ton on money by thinking outside the box when it comes to healthcare. I really enjoy sharing tips for saving money on health insurance, medicine, doctors visits, etc... Healthcare is the #1 reason for bankruptcy, but should be the #1 way we are saving money! Thanks for all you do!
My net worth is close to 2M. I am 59. If I retire, I will have to pay for health insurance out of pocket. Will my net worth be used to determine my healthcare premiums or will it be my yearly income?
My HSA offers investment into the market. If I invest, but then need the money (since I haven't yet built up much of a savings account), would the funds be locked into the market and unavailable?
Like any other investment you can buy and sell at any point. However, those monies are subject to market prices. If the market crashes 50% and you have a heart attack, you'll only have half of what you put in if you need to cash out and pay those medical bills. Investments in these accounts are generally restricted to investment grade options to limit volatility. I would keep 1 year of MOOP cost as cash in the account before you consider investing HSA funds. That way you have a least a year to let funds recover from a down turn in the market.
I have a deductible of 4k/year so I keep 4k in the HSA cash account and the rest gets invested in the HSA investment funds. If I need to pull from it I can, but that's only if I exhaust my cash portion and need more. So a market downturn won't necessarily hurt too much.
Do not have to worry about this now, On Medicare las year spent 10 days in the hospital bill was 550K, costed me $650 that included the 24/7 ER visit, Ambulance ride and hospital bill
If you use it for non medical purposes before a certain age, you will pay tax and a penalty on those amounts. After that age, it is taxed as regular income, no penalty fee, for non medical purposes.
Dave missed some points on this HSA inquiry. What he mentioned is only half. It's better to research on true financial advisers or experts. HSA is not an insurance. And he didnt dwell clearly how an HSA can compound growth. And obviously, he is always an anti-Obamacare. Well, my point is to do your own diversified research and dont just follow what he advices.
Plus with an HSA I write off 8100 a year on my taxes. Thats a direct writeoff, not a percentage of medical bills. I will slowly build it up over the years.
Maybe one day i can afford health insurance my wife and i make 50k a year. Went to marketplace the most affordable plan was 69 a month premium but with a 12,000 deductible 🤷♂️
At the end of the day, do you value money or your health? He might not have to use his 150K now but a couple of by-pass surgeries would nope that out in no time. Also, he fails to address the health-care providers (doctors/specialists) that comes with HSA vs PPO. Even with the 100% coverage you might not be getting the best cares when you need them.
what? He would reach his 5 or 6k deductable for the year. Also HSA is accepted by pretty much every health care provider. PPO would most likely have the issue
Our insurance has the same network, the only difference is how much we pay vs the insurance company and when. Some doctors I've noticed ask for a certain amount upfront when on an HSA plan. But they work out the difference in the end.
Found your post interesting to watch. I can't wait to see your new videos soon. Good Luck with the upcoming update. This RU-vid channel is really very informative and effective.
I don't use one because I never go to the hospital really. However some coworkers do have accounts because their family has many medical needs. Smart idea for them to have those funds sitting there when needed. especially when they know they will need it every year or every few years.
If you don't have a lot of medical expenses now, you should definitely get an HSA. The first benefit is the premiums are lower with an HSA qualified plan. You could have the low premium plan and not contribute to the HSA. Then you would miss out on the second point. Second, money put into the HSA is pre-tax, can grow in an investment tax-free, and can be withdrawn for medical expenses at any time in the future tax-free. And finally, those future medical expenses will come eventually. It's best to have money set aside for that. If you're lucky enough to live your whole life without medical issues, then you can consider the HSA to be an extra retirement account.
HSA's are best started when you don't have medical expenses! If you can't contribute the max I'd recommend at least contributing the difference of the PPO and HAS premiums. That way if you lost the HSA option, your budget won't be in for a shock. Instead of the insurance companies having that money you'd have it for medical costs or retirement.
Nobody mentions the BEST reason to get an HSA. Deductible is somewhat higher but max annual out of pocket is like 1/3 that of PPOs. This is good because hitting your deductible isn't going to bankrupt anyone but getting in a car wreck or cancer can. That's what you want protection from, the black swan event. HSAs are amazing. Everyone who has one loves it, myself included. When your balance reaches 2k or 2.5k (depends on your provider) you can invest the money into mutual funds. The HSA should be the 2nd thing you fund, after 401(k) match. It beats Roth IRA and non-matched 401(k) contributions, as well as ESAs/529s, etc., by MILES.
If my employer is paying 100% of my health insurance (so I'm not paying any premiums on a low deductible plan currently), does it make sense for me to go to a HDHP and open an HSA? I guess I'm not sure if the tax savings offsets the out of pocket that I would have to pay.
HDHP really only make sense if you don't.visit the doctor frequently. That is awesome your employer pay 💯 of your health insurance cost! I'd then contribute as much as you can to your 401k -next best thing.
@@StephanieKremic401k is only as good as the maintenance fees attached to it...from my research anyways....allllllot of americans have gotten screwed over in retirement to see their savings depleted by those pesky and unethical fees...there was a whole 60minutes special on it
My question would be is it better to simply try and cover your medical bills and allow the HSA to just grow? I understand the pretax and after tax argument. Use the HSA only if it’s catastrophic and allow HSA to stay invested and grow?
Yes that's the best way to treat an HSA if you can. Save all medical receipts you make and you can use them to reimburse yourself from the HSA tax free
Geniuses in my company make hsa premiums (for us folks making more than 200k ) almost identical to the HMO premiums. If you make 190k, your premium is 700 a year, if you make 200k, it's $4300. Unreal.
K Roddy I checked. They started in 20”3. So he could have invested ($7k * 16=) $112,000. Add compound interest and stock returns to that and you’d get his amount. Probably even less invested as I don’t think he hoped right on board. But whose to say he didn’t.
Didn't explain what a premium is, nor a deductible, nor out of pocket maximum. Great I can invest my money, but I have no idea how my plan works. For such a devout Christian, you ride a high horse. I'm glad you've done well for yourself, but I don't understand why you must boast about it.
boredbeingbored the limit is per year. Also, many HSA providers allow you to invest the $ as well. For a couple you can put in $6,900 for 2018. Maxing it every year, and investing it could easily grow to hundreds of thousands or a million given enough time.
There is a limit every year which is currently about $3400. But once you get above a certain minimum threshold in the account (usually $2k), any additional funds you have in there can be invested.
Hi Dave I had FSA where I worked but I didn’t have access to HSA and have a surgery for my disability every 3 years that costs over $125,000. I was just released ( but not fired ) from my job recently and am looking for a new job and probably can only get one that pays maybe $20.00/ hour. ACA isn’t so stupid when that is all that is available to keep a person alive is it now?
@@jimhandler1129 True But my question concerned the Affordable Care Act. Earning a very low wage salary with extremely expensive healthcare insurance costs while ( because I have a disability but I am not disabled ) how am I supposed to pay for the insurance bill
@@daveicc495lies by the government, all the "affordable care act" did was expand completely rediculous insurance coverage to people who still cant afford it 😅😅😅..HSA accounts are solid
I'm not sure he fully understands how great HSA's are. It probably doesn't mean much to someone as wealthy as him so he never really paid much attention, but for us regular folks, an HSA can be one of the best savings tools out there for many reasons. I regret not really looking into them earlier in my career. I'm starting late, but better than nothing. If used strictly for medical expenses, it is a triple tax advantage (tax deferred, tax sheltered, and tax free withdrawal). That's like an IRA and Roth IRA combined. If withdrawn for other things, after 65, it is taxed, so then it would just act like a 401k/IRA, so better to use it for medical expenses, but even if you don't you are still getting the benefits of a tax sheltered account. If you're eligible I would highly recommend them.
I regret not educating myself years ago when my company announced we could start investing our HSA funds. I only put in my annual deductible. 10 years from retirement and I decide to start planning and realize my out of pocket health care coverage will be a hefty monthly bill. I’m now maxing out my HSA contributions and investing in an index fund.
I disagree here. One visit to the hospital and your HSA is gone. A simple visit to the doctor could cost you hundreds with an HSA until you meet your deductible. You don't get sick until you do.
Soooo we pay taxes for healthcare, separate for health insurance but we should still pay for HSA…..are you serious. You shouldn’t have to do this to get medical care period.
Dave, or anyone else. If you contribute to a HSA outside your employer deducting from your paycheck, then can you get the advantage (pre tax) at the end of the year with your tax return?
Mostly yes. If you contribute to your HSA through your employer, this is often exempt from Income tax AND Social Security & Medicare taxes. If you contribute to an HSA directly, you can claim it as a tax deduction to recover the income taxes paid, but there's no getting back the money you paid on Social Security & Medicare taxes.
There's rules against having both an HSA and an FSA, unless the FSA is only for dependent care, dental and vision. You can't use FSA for health expenses if you have an HSA.
It rolls over every year, after retirement you can use it for anything, before it has to be medical. During deductible period, you get the insurance covered negotiated rate. Employer pays half of deductible. Triple tax break. Bills show up online on your HSA account to pay. You also get card to use in person. There’s a yearly cap you can contribute to over your deductible. Same list of doctors as BCBS. Earns interest or can put in market after benchmark.
Key thing is you need to have that 5k in your account every year, so if you have one emergency it’s gone. And most plans don’t cover 100%, you still of out of pocket maximums. This guy is a snake oil salesman
i LOVE the HSA account. The brilliant thing about it is you can invest it and let it grow completely tax free for anything medical, and if you pay for any medical stuff out of pocket you can take that amount out of the HSA any time in the future even decades down the road at no penalty or tax as long as you can provide proof of the medical expense you paid for with your own money. By that time the account will have grown as long as you invest it wisely. Bonus is if you lead a healthy life and dont need to dip into your HSA funds, at age 65 the assets can be used as another retirement account, can use the expenses for non medical and just pay the taxes on it. We will all have medical expenses near end of life, im definitely taking advantage of the HSA and should have a few hundred thousand by retirement age
if you had a ppo instead you would pay about a third of what youa re paying now for regular doctors visits and medicines. when i had HSA insurance my doctor cost me 120 a visit now i pay 40 with a ppo plan through the market place. you can not tell me you are being taxed at %60 on that money to make making it pre tax save you money. and as it is through the market place i pay 50 a month through an employer my ppo cost 120 a month.
Just curious. So what are you going to do with your 150k HSA nest egg? Get a heart transplant? Put it towards old-age health expenses? It’s not like you can buy a home with it.
And HSA can also be used for your qualified dependents (aka direct family members), or for nursing home etc. And those costs can be very high. Also, if you die, your HSA goes to your beneficiaries (stipulated by you). If God forbid your spouse gets a very bad illness, you can use your HSA for her. That's a comforting thought, isn't it? Medical bills can be ridiculous, even with insurance
do you get offered an HSA? I thought you make your own HSA account which is blessed by our masters as being tax free? I think he means they are offering a HDHP?
government health insurance would solve this problem . you dont put something as important as health in the hands of the private sector. they will think of every excuse in the book not to pay , and well that is happening you could be dying.
Access to health care is a right not a privilege. You shouldn't have to pay that amount to begin with. Yesss I know nothing is free but that's what taxes are for
Uh no. PLans cover 80-90% after your deductible not 100%. You need to meet your out of pocket max to get 100% coverage. The two things are very different. Basic stuff Dave, wake up and educate yourself before you give people financial advice, it is your job after all.
what happens if you leave your job. then what do you do with that hsa? can you roll it into a different account ? can you roll it into the new job if they offer HSA ? or do you let it sit there?
Yes to all of the above. You can do any of those things. I'd suggest rolling it to a no-fee provider with good investment options. You can also have more than one HSA (e.g. a personal one and one through your employer), though your contribution limit applies to both accounts together (not separately).
How do you move your money from your HSA account into an investment account? Sorry this is my first year having an HSA and I don’t understand all the details.
Question: I have an HSA account from my previous HSA plan which is no longer active as I moved to my spouse's HSA plan. Can I put my own after tax money directly to HSA bank account and invest? Would the limit be same of $3650? and would there be a tax on gain?
All the plans that have HSA in my state are more expensive then the ones without it. Otherwise I would get one. I think everyone should have the option to get an HSA with any insurance plan, deductibles are way too high.
If I have medical bills in a previous year (2019) and open an HSA now (2021) can I pay into the HSA and use those tax advantages and then use those funds for those medical expenses?
HSA makes no sense to me. Please prove me wrong if I am missing something. 1. It is a savings account without interest... meaning that when I am 65 and it turns into a retirement account it will mean very little due to the inflation over the years. This only makes sense if you are in a much higher tax bracket because you could be saving 30% or more per dollar. If you are in a lower tax bracket it will not make much of a difference over time considering inflation, and may be worse than just investing post-tax dollars. 2. I can write off all medical expenses, meaning that there is no tax benefit in using an HSA over out of pocket because they are both tax-free in the end (out of pocket just gets deducted when you file your taxes) 3. Once in the HSA, it can't come back out. Since this is a savings instead of an investment account it makes no sense to save money that you have zero control over with zero benefits in doing do (considering the points above) which will most likely depreciate in overall value/gains over time considering inflation - once again, unless you are in a high tax bracket but I am not even sure that would work out considering it would not be compounding interest over time.
Once you put money into an HSA most(probably all just not 100% sure) require you to build and maintain a minimum balance (normally something like $2-3000) and then you are allowed to invest anything extra. The investment options vary but most have 10-30 investment options similar to your company 401K plan. In my situation the min. balance is funded so every paycheck the money I'm putting towards my HSA immediately goes into my min balance fund and then a day or two later gets auto-transferred into my HSA investment fund which immediately auto-transfers it into an S&P500 index fund. Regarding #2: Standard healthcare plans take money out of your paycheck whether you're healthy or sick and you'll never see it again. If you are using an HSA and are healthy one year then that money is still yours and can then be: invested, used to pay for other medical expenses later on down the road, or in most situations both... Does that help any?
1. HSA money can be invested in the stock market. 2. Contributing money to an HSA through payroll can save on social security and Medicare taxes, not just income tax. 3. HSAs are triple tax advantaged for medical expenses (tax-free contributions, growth and withdrawals). For non-medical expenses, it's functionality like a Traditional IRA.
My new job I started recently emailed me information about benefits enrollment and they have a some blue cross plans where one of them is the premiers blue cross health savings plan (high deductible with HSA) and the other one I’m debating is the shared deductible plan but that one doesn’t come with the HSA of course. I don’t know which one is the best one
If you are healthy with no medical conditions, the HSA is a great way to invest because of the triple tax savings. As such, I would highly recommend it, if your annual medical costs are low.
@@modernmoney0 I ended up signed up for Shared deductible plan and that didn’t come with HSA or FSA but then signed up for the FSA separately which came in handy cause with the Texas winter I used to buy hands warmer and a leg massager
