Why Health Savings Accounts Are Misunderstood and Underused | WSJ Your Money Briefing
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- The amount Americans can contribute to a health savings account will rise to the largest-ever increase on record next year. WSJ personal-finance reporter Ashlea Ebeling joins host J.R. Whalen to discuss what you should know about HSAs.
0:00 Health savings account, explained
1:34 Why the IRS is increasing HSA contribution limits
2:20 Medical expenses paid by an HSA
2:53 HSA vs. 401K
4:40 HSA vs. FSA
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#HSA #HealthCare #WSJ
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I fell in this boat where I didn't know that HSA can be invested so that accounts can grow. My company deposits a contribution in the account but I could have contributed money myself (or i thought i was). It's really important that people who work in companies check their enrollment plans and verify EVERY YEAR, they don't education enough people on this and i found out through the internet.
That's on your HR department. My company's HR department goes over and explains our benefits every year. We're free to ask questions during that meeting too.
VTSAX for your HSA if you’re young. Don’t touch it, keep all your healthcare receipts to withdrawal the money any time after the expense. But it’s best to leave the money in to grow tax free and keep the receipts for a rainy day expense.
High deductible plan is pretty much what you need to weigh. If you expect to use more than a few visits there are some plan choice considerations. Although nobody plans to get injured or sick.
A health savings account (HSA) is a tax-advantaged medical savings account available to taxpayers in the United States who are enrolled in a high-deductible health plan (HDHP). The funds contributed to an account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), HSA funds roll over and accumulate year to year if they are not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds paired with either high-deductible health plans or standard health plans.
HSA funds may be used to pay for qualified medical expenses at any time without federal tax liability or penalty. Beginning in early 2011, over-the-counter medications could not be paid with an HSA without a doctor's prescription, although that requirement was lifted as of January 1, 2020. Withdrawals for non-medical expenses are treated very similarly to those in an individual retirement account (IRA) in that they may provide tax advantages if taken after retirement age, and they incur penalties if taken earlier. The accounts are a component of consumer-driven health care.
Proponents of HSAs believe that they are an important reform that will help reduce the growth of health care costs and increase the efficiency of the health care system. According to proponents, HSAs encourage saving for future health care expenses, allow the patient to receive needed care without a gatekeeper to determine what benefits are allowed, and make consumers more responsible for their own health care choices through the required high-deductible health plan. Opponents observe that the structure of HSAs complicates the decision of whether to obtain medical treatment, by setting it against tax liability and retirement-saving goals. There is also debate about consumer satisfaction with these plans.
This is an excellent explanation!
Thank you for this explanation
If you don’t mind me asking what’s your profession? Did you look this up or are you intimate with this information.
HSA is dope. A good tool to your overall financial success
I prefer HDHPs. When I use healthcare, I pay for it. When I don’t use healthcare, I don’t want to be paying for it with monthly premiums.
But every employer is different. Maybe your company has awful HDHP options with some low quality provider and high premiums on top of high deductible. Again, my experience has been good HDHP choices that I found to be a better deal than PPOs.
By having the HSA, I don’t mind paying $5K for medical in years when I use it. The only “scary” bit is when you are building your HSA balance up.
Is that really the scary part? I find it exciting that I can max out & invest in the HSA every year for the tax deduction, to then be able to make tax-free withdrawals when I have more medical expenses in my later years into retirement.
Let’s say I have you always had a traditional healthcare plan. Every paycheck $200 withheld for your healthcare and every time you use healthcare it is free.
2024 is coming. You heard HDHP/HSAs are better. So you enroll in that plan. It’s February and you slip on ice and fracture your wrist. You go to the hospital, they patch it up, put you in a brace, and then in March, you get a bill for $5000, your max deductible.
We’ll darn it. You don’t have any savings. You haven’t built up your HSA yet. Healthcare was always near-free before. How in the heck can people think HDHPs are good. Now you need to go on a payment plan and you probably need to lower your HSA contributions to afford that.
That’s the scary part. Building up your HSA if you don’t already have other savings.
@@BFleming57 that's actually the entire point of having an emergency fund, and you shouldn't be contributing to an illiquid vehicle like an HSA if you don't have a sizable emergency fund anyhow.
Not all employer groups are able to use the pretax contributions to an HSA. Make sure you find out which one applies to you.
Alway max my HSA, each year. Invest in funds and watch it grow. HDHP not the best, but i will switch when i have around 50k to a better plan
Yup, that's my plan too. When younger, try and grow the account, so when older and needing more Healthcare, use a HMO plan, but fund it through the HSA account.
i still dont understand why the limits are still tied to the household type.. HoH, single... married... im single... its crazy
It's not. The IRS states "For 2023, if you have self-only HDHP coverage, you can contribute up to $3,850. If you have family HDHP coverage, you can contribute up to $7,750". Not unlike an IRA where a working individual may contribute up to $6,500 (with some restrictions). Together that's $10,350 that isn't taxed that year and may be invested.
Thanks for the information. It’s almost too good to be true.
Getting near $7K in my HSA. If only you could use it for vet bills.
Thanks for the info. In the video, it said that a couple both over 55 years old, they can put a max of $10300 in 2024 (=$8300+$1000*2 for catch up). Can they open one HSA account and put $10300 in the account, instead of opening two HSA accounts to get the benefit of $1000 pp catch up? Typically, a couple would sign up one HDHP.
But the biggest caveat is you need an HDHP. As a result, I don’t use.
Exactly. These videos always seem to ignore that risk.
@@edhcb9359 they did quite clearly acknowledge that a HDHP was required within the first minute of the video
@@MrBrooksV They acknowledged it’s required but didn’t dive into the risks
@@edhcb9359 right, but this video isn’t about the pro’s and con’s and cost comparison of health plans. I totally understand what you’re saying and would caution anyone to do additional research before choosing say a HDHP over a PPO but for the sake of this video it isn’t a big deal that they didn’t go far in depth. I think the point of the YMB playlist is to give short “updates” to already established investors and people with a modest financial knowledge base.
@@MrBrooksV You really think that established investors need the advice given in this video? 🤣
I so agree
What are good HSA brokers besides Fidelity?
Mines is HealthEquity. They pretty good and I'm happy with them. Their investment options mirror vanguard low cost index funds, so if you want individual securities, may have to look elsewhere.
Livelyme. Self directed brokers give you better investment options imho.
Schwab and Vanguard come to mind.
2:29 aren’t we ALREADY over paying with or with out it‽!?‽
I tend to disagree. HSA plans have the same monthly premium for a plan with significant out of pocket cost (typically pays nothing until you meet a $7k deductible). Best case scenario you break even with the tax benefit.
All you want is Money?
Health?
Whose?
🤑🤮
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These are fantastic takes, I was really hopeful of my investments this year, but all my plans have been disoriented, I've been studying the market crashes and I realized some investors made millions from the recent recession and I was wondering if such success rate could be achieved in this present market. I'm open to ideas about investing for retirement.
Cryptocurrency crashed the last couple years, so it should be starting a new run to a new high.
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@@CliffWarrensmith Did a quick web search, she has a pretty decent bio, I wrote her and I'm waiting on her reply.
Its still misunderstood. I still do t understand
why? so you can invest in new new military and surveillance technologies