The Benefits and Rules of the Health Savings Account (HSA)

Retired-ish

Whether you’re self-employed or an employee, a Health Savings Account or HSA can provide you with a triple tax benefit! Therefore, if you’re serious about saving taxes and building wealth, it’s critical to understand the benefits and rules of the Health Savings Account.

If an HSA makes sense for your situation, you can benefit by receiving tax deductions based on money contributed into the account, tax-deferred growth on any interest or gains earned on the investments inside the account, and potentially tax-free distributions from the account that you take for medical expenses.

The HSA is the only tax-advantaged account that has the ability to give you both a tax deduction for the money you put in, and tax-free withdrawals on the way out. Even better than the Roth IRA!

You can also invest the money inside an HSA in a wide variety of investments! In some people’s opinion, it is seen as the ultimate retirement savings vehicle, so don’t let the name fool you!

More specifically, I discuss:

• What is a Health Savings Account (HSA)?
• The triple tax benefits of an HSA
• The rules and eligibility requirements when utilizing an HSA
• Who should consider an HSA?
• The “13-month” or “last month” rule when contributing to an HSA
• The 3 methods of using an HSA
• Other unique strategies and other opportunities unique to HSAs
• BONUS: HSA strategy for adult children under age 26 with high earnings such as professional and college athletes, entertainers, business owners, and young professionals
• LISTENER QUESTION: HSA contributions and Medicare!

Resources:

• Access Show Notes and Sign Up for the Retired·ish Newsletter HERE
• Free Retirement Jump-Start Analysis
• Ask Cameron A Question!

Key moments:

00:00 HSA for healthcare savings provides a triple-tax advantage.

03:38 HSA offers triple tax benefits for saving.

09:02 Eligibility for HSA: high deductible health plan.

11:04 Consider plan's deductible, out-of-pocket expenses. HSA criteria.

16:41 HSA contributions and potential penalties explained.

18:08 At 65, take money out - no penalty.

23:00 Be careful of double dipping with taxes.

28:42 Maximize HSA contributions for long-term tax benefits.

30:20 Listener Question from Diane