Health Savings Account (HSA)

Today’s lesson is on Health Savings Accounts, or HSAs.

Please note that before you are allowed to fund an HSA, you first need to have a “HSA-qualified health insurance plan.” These plans are generally characterized by a higher deductible. To be clear, I am not dictating your family’s health insurance needs—that is for you and your family to decide.

So getting an HSA goes like this:

• Step 1: Select the appropriate health insurance coverage for your family.
• Step 2: If that coverage is (or can be) an HSA-qualified plan, then get an HSA.

We recommend you talk to your financial planner before pulling the trigger on this. Every financial decision is like a “financial procedure,” and you’ll want to ensure that the procedure is right for you. But if you move forward, here is the best strategy for an HSA:

1. Set up the HSA at Health Equity (https://www.healthequity.com/).
2. Fund the full amount
3. If you can afford it, DO NOT use the money for medical expenses; rather, keep the money invested and the HSA turns into another legal tax shelter!

When will you use the money? Remember that you get the tax deduction when you make the contribution to the HSA, not when you spend the money. Also, the money invested in the HSA will grow tax free! You will use the money when you’re older, likely when you’re retired. At that point you won’t be working, and if you’re like most humans who get old, your medical costs will be much higher at that point in your life.

Check out the video here: Health Savings Account (HSA)