The Real TRUTH About An HSA - Health Savings Account Insane Benefits
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- เผยแพร่เมื่อ 30 ต.ค. 2022
- **Lively has started charging $24 or forces you to hold a minimum of $3,000 in their HSA. Due to this change, I do NOT recommend them any longer. Please do not use this company. A Fidelity HSA is currently free at this time**
Welcome to the guide on how an HSA can change your financial life forever. In this video, we're going to go over everything you need to know about a Health Savings Account so that you can turn it into the ultimate wealth-building machine.
We'll be talking about what an HSA is, the contribution limits for an HSA, how to supercharge your health savings account, how to invest money within your HSA, a comparison of what it looks like if you invest your money vs. not investing your money, triple tax savings on investment income (interest), tips and tricks to maximize a health savings account, mistakes to avoid with an HSA, and much more!
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio. Always remember that incentives determine the type of advice they give you so one that charges an hourly fee is less likely to be problematic.
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Is there a reason you split your HSA between Fidelity and Lively?
Also, what if you get laid off...is it worth paying into it, given you are paying taxes, etc...?
I am with Health Equity, but getting tired of paying them nearly $100 per year. I am self-employed with roughly $33,800 in HSA and contribute the max single rate amount per year. I researched Fidelity, but can’t seem to find the “bottom line” regarding expenses. Hoping you can help: If do self invest, what are the annual fees? And is there a fee for buying investments when I send contribution each month?
Thank you
The only reason I split it between the two is to keep myself educated on how multiple providers work for the sake of being informed when creating content on TH-cam. If I wasn't a content creator then I'd have all my money in 1 HSA provider to simplify my finances.
A Fidelity HSA account does not charge any fees. They also have an account called a "Fidelity Go HSA" where they charge you a fee. The reason they charge you a fee with the "Go" account is because they manage the account for you. I do not recommend using this type of account.
@@JarradMorrow Thank you. I looked at them once upon a time, but wish their disclaimer was worded better - as it scared me away since it implied there were fees. Thank you for sharing your experience, and recommendation, as I am going to transfer funds to them. Thank you.
Small point of clarification: the HSA contribution does on the tax return as an adjustment to income, not a deduction. This means it lowers your "adjusted gross income". It's better than a deduction.
Thank you for correcting me 👍🏻
@@JarradMorrow bro, are you limited on what you can invest in w HSA money? Can you invest in individual stonks, or only things like index funds??
Depends on the HSA provider bc they’re all different. With Health Equity i invested through their front end platform (not sure which brokerage they worked with on the back end) and I was limited to about 15-20 funds. With Fidelity and Lively I don’t see a limited amount of investment options so I guess you’re able to invest in anything
@@johnanon658 My company’s HSA provider has a small list of indexes. It’s not the worst, but could be better. I currently invest my HSA funds is SWPPX, Schwab’s SP500 index.
I was going to owe $600 for the 2021 tax year until I entered my HSA contribution in Turbo Tax. I got $1600 back instead. I max mine out every year.
I had 3400 in my HSA. I invested it, then the market tanked. My daughter then had stomach problems, medical expenses came to a tune to $4800. This was a very tough time for me. I left the money in the HSA and it's still way down. Life sometimes doesn't work as you describe.
This is why you don’t invest money you need within a short period of time. Thanks for the reminder of that lesson 👍🏻
Yeah he nailed it. Have your emergency fund first, then start investing
I’m also sorry to hear about the stomach issue with your daughter. Hopefully she’s well and everything worked out from a health perspective.
Thanks guys, she's doing well. I have recovered and on my way to 3 months of emergency fund.
For that reason I always have enough cash for the deductible. Anything above that gets invested.
Great content. I maxed out my HSA as soon as it was offered at my employer and only dipped into the account once when my daughter had an appendicitis. I kept $3500 in the HSA cash account to avoid any fees and invested the rest in a growth fund. After 14 years of participation, when I retired last year I had $200,000, enough to cover our expected medical expenses for my wife and me for our retirement years without having to take taxable distributions from our IRAs. (We also have a LTC policy to cover possible nursing/home care.)
I'm about to start this now, great to see a real-life example!
@@jnordman86 Jesse, I am a retired CFO who started the HSA at my company. If you can max out your contributions and avoid using the funds as much as possible AND move your excess balance to investments, you will never regret it. I can’t tell you how great it feels to know I’ve saved for all/most of my retirement medical expenses. Good luck.
@@Paul-GrnHilawesome tip. I’ll do the same, thanks.
Hi Jarrad. One other important thing to note is this: If someone is planning on enrolling in Medicare, you must STOP all HSA deductions from your paycheck 6 MONTHS PROR to enrolling in Medicare. It's kind of a stupid rule, but it's important if someone is going to retire in the near future or is 65 or older & wants to switch from their High Deductible plan & wants to switch to Medicare.
Thanks for sharing that additional info 👍🏻
Good explanation for newbees. One other flexible way to use HSA, is to keep ALL the medical receipts (that you pay out of pocket) over the years and when you are in a pinch, you can submit the old receipts to reimburse yourself (even if you are currently not having a medical expense). So if you need extra money for a sudden hawaiian vacation, you can turn in few old receipts and tap into that money. This is perfectly legal.
Good callout. It's something I mentioned in the follow up video to this one: th-cam.com/video/tryBB7b7QTQ/w-d-xo.html
Seriously. yes. We've been maxing out our HSA for 4 years now (yes, I wish I started way earlier . . .).
Each year, we have way over $8k of reimbursable health expenses, that we have NOT taken.
The more the better.
When we retire, if we want, we can hold on to all those receipts and reimburse ourselves $40K or more . . .
Thanks so much! A great video for a noob like me! Just want to confirm I understand this right- you said that even when I am employed with my company, I can move my HSA a money to fidelity. Is this true? Thank you!
What about self employed people? Can we purchase our own HSA account?
I did exactly the same thing some years ago. Transfer from Health Equity to Fidelity. Best move I ever made. Better fund choices and no fees. One thing to note. Even if you are 100% healthy in retirement and have no medical bills, you can still withdraw tax free every month to cover Medicare Part B premiums. For a married couple, that would be about $340 income every month tax free.
Thanks for sharing that additional info 👍🏻
I think you can reimburse yourself for all the out of pocket expenses you e paid as well track them. Fidelity has FidSafe for tracking.
I did the same. Fidelity. Bummed my CPA did not tell me about this years ago. I’m only 3 years in right now. Every Jan I pu the max in.
My employer uses health equity now...lmaooo ugh, but it is what it is.
I’ve had an HSA for years. I’m now starting on Medicare and will reimburse myself for the premiums. So glad I made that decision!
Perfect timing with Open Enrollment happening! I can share this with my friends and fam instead of having to explain it myself 😊 Thank you!!
No problem. Hoping they find it helpful!
I was helping a relative choose an insurance plan. The difference each month between the PPO premium and the HDHP premium was the same as the max HSA contribution. That meant switching from the PPO to the HDHP/HSA meant no change in her take-home pay! She started paying herself each month and when she had a hospitalization a while later she had plenty to cover it with some left over. It has worked out really well for her even with some minor regular medical expenses.
I have an HSA with Fidelity and had been investing a portion of my account balance. The better path for me after talking to an advisor from Fidelity was to have my full deductible available ($1500) as cash for medical expenses as I don't have a ton of disposable income. If/when the balance goes over the $1500, the contributions go to my investment account. I wish I had had one of these accounts when I was younger!
This is a great way to handle it. Thanks for sharing!
Me as well. Discovered late in my career but maxing out whatever years I have left to work. Not a single person in my building knew anything about it. Never heard of it. I learned from TH-cam videos and got started right away.
I retired at 63 3 years ago. I was fortunate that I recognized early on the multiple benefits of an HSA. I contributed the max every year for almost 17 years and invested 100% in diversified mutual funds. The last 12 months hasn't done well obviously but when the need to draw on it or to repay myself hits I'm well ahead of the game with the tax benefits and growth accrued. To me its an additional layer of protection or insurance with a great tax advantage. I never understood why many of my coworkers wouldn't take advantage of it.
Great video. I originally signed up for an HSA but found the reimbursement process confusing and inconvenient compared to traditional insurance. This makes a lot more sense.
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I'm a new subscriber!
Added tip: I also found out i can contribute to the previous year until April of this year, which will lower my tax bill!!
Thanks for spelling everything out for me with so much clarity!
Best HSA video on TH-cam. Truly a game changer for me as a self employed live music industry worker and personal finance nerd. Thanks man.
Great video, lots of good info. I have maxed and invested my HSA for years. My employer just switched to wealthcare investments this past summer. Terrible option, the fees are aweful. I moved it all to fidelity. Keep the videos coming!!
Appreciate the feedback. Happy to hear you moved as much money as you could out of the high fee provider. I’ll make sure to warn people about Wealthcare’s high fees. Thanks for the info 👍🏻
I’ve had an HSA for years, but always fell into category #1 (spending from the HSA). Now I know so much better thanks to this video. Thank you for this!
Good to hear!
Don't spend from the HSA. Build another savings account or your HSA will never grow as intended. Get a 2nd job or budget better
This is the best video on HSA that I have ever seen, that it almost covers every thing that you need to know about HSA, good job!! I think I will forward it to my family.
Glad it was helpful and thank you for the feedback. Believe it or not I have more info I wanted to add, but it would just be too long 😂. That info will be covered in a follow-up video.
@@JarradMorrow looking forward to it!!
Great video! I’m an analyst for a healthcare brokerage. I’ve found that people that know how to use their HSA tend to love their HDHP coverage and the tax incentives!
Jarrad I just started following you and to say you are dope is an understatement. Your delivery is just slow enough for even me to understand, yet makes me feel smarter and all the more empowered for seeing your videos to the end. My Wife and I have compared our insurance policies and have found out that me moving to her policy makes sense. With that said I'm thinking to take what I have in my current HSA (under $10,000) and invest it. Maybe in a 2 fund portfolio (guess who I got that idea from lol). Keep in mind I'm 52 yrs old. While I know your not a fin advisor I'd love to get you thoughts. Keep up the amazing work as you are doing great work with solid videos and a voice of sound doctrine.
I don't see any issue with investing that HSA money as long as you're able to afford all of your medical expenses on your wife's health insurance plan. Just make sure you're keeping track of all your medical expenses throughout the years (even if you're not enrolled in a HDHP) so you can cash out that HSA money tax free many years in the future. In case you haven't seen it yet, I lay out my receipt tracking process in this video th-cam.com/video/Tj8MbBWsxzU/w-d-xo.html
Thank you for this amazing video! I just opened up an HSA and now I plan to max it out for next year
Glad it was helpful!
Fantastic content Jarrad, wish I would’ve discovered your channel sooner! I’m working with Health Equity through my employer. I have some nice options with a few low cost target date funds. Already had to opt out of paper statements as it was a $5 per month fee. I will keep tabs on additional fees to see if it’s worth switching my HSA to an alternative investment vehicle. Fidelity would be a great option for me as it houses my other retirement accounts. I look forward to more great videos!
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This popped up on my recommendations page. Thank you!!! I’m going to have my husband look at his as I was the one who insisted on an HSA. Then he was using it for everything that fell under the, as he says ‘ok’d items in the handbook’! 🤦♀️. I have all the HSA cards now. He thought the money was gone at the end of the year and we started all over again. I explained it to him in simpler terms. We can afford our prescriptions. Brilliant video. We use our credit card for the same reason. Win-win! Cheers
Good luck on your channel man! I see great potential in it, and you cover such important topics I think more people should know about with a greater depth and important considerations than other content creators.
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Another great feature of HSAs is that you can reimburse yourself for any out of pocket, qualified expenses made after the account was opened. That means, for example, if you spend $1000 on medical expenses, you can withdraw that money any time in the future to pay yourself back.
Thus, if Investor Ian kept receipts for that $115,000 in medical expenses he had, he could theoretically withdraw all of that money tax-free, after letting it grow for decades.
That's a super valuable point not made in the video! Save all your unreimbursed medical receipts into a gmail folder or google drive. Then in the future if you had to dip into the HSA, you could pull out money tax free up to the amount of your saved receipts.
Most HSA providers have a place for you to upload these receipts, too. Agree that this is a super valuable point and really thought he would highlight it in the video.
Wait what! This info is golden!!
exactly. And that is the biggest benefit of all. Just keep those receipts organized!
Why wouldn't you just pay the $1k with the account at the time of the cost being incurred?
Wow, amazing content. Definitely cleared out my understanding about HSA. From now on definitely going to take advantage of my HSA. Thank you
The work you put in is solid. The info is valuable. The dog is priceless. Thanks
Appreciate it 👍🏻
I used to teach the benefits of the HSA out to my teams. If you’re even remotely healthy, this is the route to go. You will save so much. Our family’s account is huge, and it could’ve been just wasted money on premiums. HSA all the way!
You sound like a great co-worker 👍🏻
hopefully, you don't have any unplanned medical issues requiring emergency care. "healthy" people will appendicitis or Gallbladder issues. your savings will be wiped out from the hospital blll.
@sachinvaikunth this us what I'm afraid of! I don't have any medical issues now but never know what can happen! 😢
@@sachinvaikunth HDHP's have out of pocket maximums.
Good video! Three quick things: Unlike a traditional IRA, there are no required minimum distributions attached to an HSA account. This means you won't be draining the funds if you're healthy. The second thing is after your death your spouse (if named as beneficiary or designated as such in other estate documents) can use your account just as if it were their own HSA account. Third - once you enroll in Medicare, you won't be allowed to continue contributing to your HSA, although you can certainly continue investing and withdrawing. (These tips are subject to change, of course.)
Great callouts. Thanks for sharing 👍🏻
@Tina Lewis , so as a social security recipient and enrolled in Medicare ( still employed , so I have Kaiser Medical Insurance too ) … I can’t sign up for an HSA at open enrollment next month 🤔 ⁉️
One other thing. Upon the death of the account holder and the spouse, the beneficiary of the estate must pay income tax on the value of what remains in the HSA
@@tikimann9300 Per the IRS Publication 969: Qualifying for an HSA Contribution
To be an eligible individual and qualify for an HSA contribution, you must meet the following requirements.
• You are covered under a high deductible health plan
(HDHP), described later, on the first day of the month.
• You have no other health coverage except what is
permitted under Other health coverage, later.
• You aren’t enrolled in Medicare.
• You can’t be claimed as a dependent on someone
else’s 2021 tax return.
@@27ftWhaler Maybe. "Per the IRS Publication 969: If your spouse is the designated beneficiary of your HSA, it will be treated as your spouse’s HSA after your death." This publication doesn't address what happens to the account if original owner and spouse are both deceased.
Can’t Thank you enough. You have done a Marvelous job especially on how to use the HSA set aside funds. Not many have explained this so excellently as you have done.
Glad it was helpful!
Great video. Explained with the right amount of detail 👌🏼
Switching over this open season
I’ve had my HSA for quite some time and just increased it to more out of my check beginning Jan 1. This came right on time. Learned about things I could purchase on Amazon with my hsa as well which was nice to learn as it wasn’t really advertised.
Nice job increasing the amount you're contributing 👍🏻. Keep up the good work!
What could you purchase from Amazon on related to HSA ?
Just remember that. High Deductible Health Plan requires all medical procedures, copays and dr’s visits to apply to the deductible. This typically increases the cost of care for the smaller items (Dr. Copays and prescription drugs). HDHP’s are really good for people who never use insurance throughout the year or someone who maxes out their deductible quickly- if you are in between I’d highly recommend talking to your employer or broker for guidance
Im glad you posted this- i was going to as well. Its important to be informed of all advantages and disadvantages before making a financial decision. High deductibles can be a big deal for someone who doesnt have sufficient cash available for annual medical expenses.
However, another thing to remember is that medical insurance premiums are cheaper for HDHPs than other health insurance plans.
I would talk to someone other than your corporate HR drone. They have no idea.
Exactly!
There are a few things that you have forgotten - 1. HDHP plans have significantly lower premiums. Thus, you are saving on fixed costs vs variable costs. 2. Often, not always, the annual out of pocket max is less than with other plans.
As some who has already had 2 operations in 2022 and another one in 2 weeks = the HDHP PPO has saved me $2480 from the Platimum PPO.
HDHP = $408 monthly premium + $7500 out of pocket max = $11896
Platinum PPO = $823 monthly premium + $4500 out of pocket max = $14376
With the same provider network.
@@Chris-hr2uj If you don't have a lot of cash, how are you going to pay the FIXED COST monthly premium???
Great video - explained very well, and better than I can explain to my wife... Have a lot of friends that need this type of information. Unfortunately, many of us are not taught this information... and few of us seek it out. Appreciate it!
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Great video as usual and great advice. I used to keep a minimal amount in my HSA (basically, only the amount of the HDHP deductible/out of pocket) until I realized how much money I was leaving on the table. I’m also in my mid 50s, so I will soon be able to treat this as another form of retirement account (I already max out our 401k’s).
I'm creeping up on 40 and was doing the same thing.
I found the HSA to be far superior to my employer's high premium options. If you and your family are relatively healthy, the HSA is an easy choice, especially when an employer puts in money, too. I'm saving a few thousand every year easily.
Thanks for sharing your experience 👍🏻
This couldn’t have come at a better time. I’m 26, and milked the insurance benefits of my parents until the last possible moment. Now that I’m paying for my own insurance I started an HSA this year. I am putting in about $100 per paycheck and on top of company match I have about 1.6k invested and 1k that they make me hold in case I need it. Going to be contributing more as I earn more but it seems like a great resource to have!
Your lucky u could be on your parents policy till age 26. 😊
Question! If my Employer says they offer a 50% match that means if I request to have $500 added annually then I’d have $750 by the end of the year right?
@@Natasha_4 yes, sometimes they cap how much they contribute annually tho
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@@jdenino6022 everyone with parents who have insurance can be on their parents plan till the age of 26.
I work with a brokers office and have been educating people of the benefits of HSAs for years!! Not many people want to have that HDHP but if you can budget for your emergency fund and medical expenses, it makes sense. Last year, I had an HDHP and HSA with UHC/Optum. They give you a super simple option to invest directly with Betterment. I had no idea I could move to another account if I didn't like the fees. Interesting! This year it made more sense for me to have a PPO but I still have a large chunk in that HSA that I will be investing!!!! Thanks for your videos I will refer to them and share with colleagues.
Hey, big THANKS for this video very useful information.
I favor a hybrid approach to my HSA. I am almost to the point of having my annual out of pocket expense saved up. I should be a little over that at the end of the year (a little over a year of contributions). From there, I plan on investing the next year's contributions. Lather, rinse, repeat until I retire. I like the idea of having a whole year of medical expenses covered, without touching credit lines or regular assets.
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I switched mine to fidelity and have it invested, love it especially with the fractional shares
Nice! The fractional share investing is extremely helpful. Keep up the great work!
Exactly what I was looking for. just gained a sub!
I am learning so much from watching your videos. Thank you so much for sharing this amazing source of information. This one is quite helpful.
Any time 👍🏻
Solid video Jarrad. I opened up an HSA with fidelity two weeks ago (using your prior HSA vids as a guide) as my current employer has no idea what HSA's even are. I deposited $7,300 for my family and did an 80/20 split between a total S&P 500 and Global International. I will now forget about it till January, when I'll do it again.
Smart! Happy to hear you took the extra steps to open and contribute to an HSA even though your employer doesn't offer one. Your financial future is going to be better off for that. Nice work 👍🏻
I thought you need to be in a HDHP plan to be eligible for HSA. Good luck
@@missgui4400 yes, you have to be enrolled in a high deductible health plan
I have Fidelity for both my HSA and 401K, and they charge a fee every quarter on both. Something else to add people need to be careful because HDHP is a health plan designed for people that seldom need to use their health insurance, so you're paying most of your expenses out of pocket. If you're older or have health issues, and you choose HDHP, you'll spend significantly more out of pocket for your medical care than a PPO.
posted just in time for benefit enrollment!! right on the ball!!
Yes sir. Working in corporate america for many years made me realize the time of year I need to release this video for the highest impact and benefit to viewers 👍🏻
Great video I love the way you broke everything down definitely have a new subscriber here!
Awesome! Thank you!
The HSA is the best thing I could have ever come across! It's my money which is saved before it gets taxed. So it lowers my taxes at the end of the year. I then can you that money to invest or use it to spend on medical expenses. I used it to buy myself a pair of eyeglasses that cost $600. It never even touched my day to day money. The HSA single handedly removed the idea of me having to pay for medical expenses cause there is always money saved for it!
Now I'm going to be using it to finally get my orthodontics done
This is great! Thanks for sharing your success story!
I am super mad at the 7%. I think 6.99% is a much more realistic number.
😂 you would be mad about that. I need that extra .01% return so I don't go broke trying to feed all these damn birds I now have in my back yard
@@JarradMorrow 😂
I'm blaming you for showing me your bird feeder set up 😂. Expect a phone call from my future wife when she's pissed I'm spending more time on my birds than her.
Glad I came across your account! Just started one for the new year.
Happy to hear the video helped! If you have any more questions then don't hesitate to ask.
First vid I’ve watched but damn that was good. So clear, well edited, great pace…will watch more
Glad it was helpful. Thank you for the feedback.
Great video. HSA is one of the best financial investments available. I max out my HSA out every year and pay all medical expenses out of pocket. I have moved the funds to an investment account and will use the funds later for Medicare premiums.
Thanks for sharing your feedback 👍🏻
I hope your not saying you don’t have insurance? If so, that Hsa will be gone a day into an accident or health issue.
@@krehbein He has insurance. Contributing to an HSA requires being enrolled in a high deductible health insurance plan.
HSA benefits are amazing! Child day care FSA is the bees knees too! One thing I learned about it is to let your benefit accrue and then file after you’ve had $X amount spent to file for the claims.
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I don’t understand the Child day care fsa hack. Can you expand?
17:30 honesty+transparency by Jarrad.. i knew about this so i was waiting to see if Jarrad covers this and he did. Kudos for that. This is super important as you can see Jarrad highlighting with a big red warning sign! So pay attention and understand this.
Wow I can’t believe I followed all of this thank you great job
Great information Jarrad. I'm the investor type contributing the max every year and just leave it to grow.
So smart! Just make sure you're tracking all of your medical receipts throughout the years so you can cash out that HSA money tax free in the future 👍🏻
@@JarradMorrow thank you. My goal is not to touch it paying my medical expenses outside HSA. I want it grow and be able to use it after retirement
I use to pay for the best plan, but I realized I never use my medical but always have issues with my dental. Went with the cheapest plan and did the math on the difference and put that amount away in my HSA. I have $10k sitting in my HSA instead of giving it away to the health insurance industry. Best investment is knowing that when I retire I have an account that's going to help me from having to choose between my medical care vs eating.
Amazing info!!!! Thank you so much!!!!
This an absolute gem of a video. Thank you TH-cam algorithm for leading me here. Thanks Jarrad for the content. Amazing!
Glad you enjoyed it! And thanks for spelling me name right because not many people do 😂👍🏻
Great video! Just a minor note for CA, NJ residents: Because these states do not recognize HSAs, your HSA contributions are not tax deductible for California/New Jersey state income tax.
Thank you for calling that out 👍🏻
Your talking about state taxes but not federal. I live in Virginia and am in low tax bracket so my federal income tax rate is 12% and state is 5%.
Yeah I was really surprised the video didnt bring up the fact that HSAs arent really beneficial in some states
@@Kay-kg6ny without a group of tax lawyers to search every state, it's almost impossible to check every law in every state.
I have open enrollment deadline this Friday and have been going back and forth if I should do HSA because I’m not looking forward to higher medical bills in the mail. But this video helped me decide to go for the HSA, the tax benefit with investment returns seems like a no brainer benefit to me in the long run. Thank you!
Glad to hear it was helpful! The good news is that next enrollment period you can switch back if you realize an HDHP/HSA doesn't work for your particular situation. Even a 1 year contribution of $3,850 invested for 30 years at a 7% annual return would turn into $29k. Think of this next year as a "test run" then re-evaluate. Do this every year and if life circumstances change then don't hesitate to ditch the HDHP.
In my experience the medical bills are much less painful when you have money in your HSA to pay for them rather than out of pocket.
Do what works best for you 👍🏻
Companies and insurers are now pricing them almost on parity (when you factor in company matches) so there’s very few situations where the cheaper premium plan is worth it. Maybe 4-7% of the population
Exactly. When I was comparing the numbers they almost looked the same so it was making it hard to decide especially not knowing what the higher deductible will look like until I start going for my checkups, lab test, etc and see the bills in the mail. This year will be a test run.
Lovely you answered a big question for me. What a relief.
Glad it was helpful!
Great video! You mentioned something about how if you self fund each year instead of having the money taken out of your paycheck by your employer, then that does something SS and Medicare? Can you go into more detail here? I wonder how much better off I’d be if I had my employer take HSA funds out of my paycheck rather than self funding like I’m currently doing.
ALSO: Congrats on this video blowing up on your channel! :)
I'm glad you mentioned near the end of the video the use of a cc to pay your medical expenses. I do this for the cc sign up bonuses. Just pay it off before you pay any interest!
Also, check the list of what is an allowable medical expense, it's more than you might think.
Good info 👍
Great points. Thanks for sharing the additional commentary 👍🏻
Hi Jared,
I work for the Federal Government. Open season is November 12-December 14. We have HDHP as options. Thanks for the information.
No problem 👍🏻
This is a great run down of HSA's. Thanks for putting your content out there.
Best explanation I've seen yet. Thank you
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Thank you for the great videos! I was wondering how it works if your employer offers two insurance plans, but both can be considered high deductible under the IRS criteria you listed.
For example "regular plan" has 2000 deductable and 5500 OoPM. While the one listed as "HSA plan" has 3000 deductable and 5000 OoPM. Both qualify for the IRS minimums for being a HDHP.
I'd personally stick with the one listed as an "HSA plan" just to be safe, but it could be worth doing the extra work to verify that the other plan works as well
I did the math on this many times for my circumstances. I'm sick and I hit the out of pocket max every year which is 6550. While my employer adds to my HSA I calculated without that. I calculated by summing the out of pocket max, premium, and hsa contributions vs summing the Premium and out of pocket max on the copay insurance. I then calculated the left over money on the copay plan at different returns. Same with money in the HSA. Assuming a 20% tax burden on the non-high deductible left over then over the course of 20 years the HSA wins out at all rates of return. Of course this is unique to my situation as I will always hit the out of pocket max and will have the tax free return(or my heirs will)
Sounds good! An HSA isn't for everyone. Good luck out there 👍🏻
This was awesome! Thank you!
Just subscribed!!!! Such a high quality vid.
Thanks!
I've only had companies offer an HSA since 2018 so I still need to build up my accounts, but I am doing far better than I was in my 20's so I'm hoping I can find a few new incomes streams to build out the investment accounts I have outside my employer related ones.
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I’ve been doing it wrong this whole time , gonna start using this method
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Great videon something I do in addition to what you are saying:
1. Pay medical bills with a credit card, get reward points then pay off with your bank account.
2. If able, enable options on your account, once you get 100 shares of your investment you can write covered calls on your investments.
I think the HSA is great for single people or young people with no major health complications. If you have serious health issues that require constant treatment or occasional hospitalizations you may end up spending more than what the HSA has or are still paying through the nose for healthcare depending on the plan.
I max out OOP every year... HSA is still the way to go.
Having an HSA is a no-brainer. It’s like free money! And we’re all going to have healthcare expenses sooner or later.
Very true! Although you’d be surprised how many people in the comments section of this video think they’re Superman and don’t believe they’re going to have any medical costs as they age 😂
You made this so clear thank you!
Glad it was helpful!
I want to shout about the financial benefits of HSAs from the mountain tops. I'm so thrilled you're doing it for me!
Sounds like we both share the same love for an HSA 😂
@@JarradMorrow
Preach!
I may have missed this in the video. Did you mention that distributions are tax free (at any age) up to the total amount of past unreimbursed medical expenses, as long as those expenses are recorded with your HSA provider?
So one could build up their non-reimbursed expenses, and say, and be able to use up to that amount tax free, for any purpose, in retirement. Or, if any emergency comes up between now and then, one can have an emergency fund in their HSA worth up to the amount of unreimbursed medical expenses they've accumulated.
My provider uses Optum and requires $2k before being able to invest. The charge a small fee to invest but they charge a flat $40 to transfer money to another HSA. Also Although I am in CA where the gains are taxable, it’s still worth while for the tax deduction
$2,000?!??! Oh my gosh that would annoy me so much. AND they charge you to transfer money out?!?! Wow. Well if you ever leave that job then transfer all of your money to a new HSA provider to be done with Optum. Thanks for sharing your experience with this provider 👍🏻
Yeah, I have Optum as well. What I found is that I could open a Fidelity HSA and have Fidelity initiate a partial transfer from Optum (no fees charged when Fidelity pulls from Optum!!). For me, the first step was to cash out the funds in the Optum brokerage account and move that cash back to the general HSA account to stop the $3/month brokerage account fee… but then Optum has another fee if your HSA account drops below $500. Now I can do future partial transfers initiated from Fidelity pulling funds from Optum HSA. Also, just keep track of OOP medical expenses in a spreadsheet and saving receipts electronically. If you need cash in the future for some unforeseen issue, you can “pay yourself back” for past OOP expenses
im in the same boat with optum health. I have to leave 500 due to minimum they require and also thats where company contributes. The rest I move to Fidelity
@@wanderlust7020 How has this process been working for you? I'm in the same position with my employer/provider dealing with Optum and I'm glad to come across your post. I'm definitely going to look into this as well.
@@dennisr5673 initial process worked great! Just make sure your funds are in the Optum HSA (not Optum Brokerage). Then open a Fidelity HSA account (probably would work with Lively too, but I didn’t try that) and from Fidelity, initiate a PARTIAL transfer (not a full) and put the details of you Optum HSA account. Make sure to leave at least $500 in the Optum HSA to avoid being hit with a fee from Optum. That way your Optum HSA remains open to receive future deposits from your paychecks. I haven’t done additional partial transfers yet, but don’t expect any issues.
I'm proud to have been part of the 6% since I got my first salaried job at age 25. My wife and I are both on VA healthcare, so most emergencies (hospitals, specialists, medicine, etc) are free for us. We keep cash as part of our emergency fund to cover the deductible if it ever comes up. We're planning on maxing this out during our working years and letting it grow until we need it for end of life care and to cover the gaps during retirement.
The one thing I got out of this, as a self-employed person, is that I wasn't taking advantage of paying into my HSA with pre-tax dollars. Next year I'll fix that. Good vid.
Glad to hear it helped!
Very informative video. Thank you very much!!
Glad it was helpful!
Very helpful video! One quick question though: is it possible to only invest say half of the funds in your HSA to allow those to grow, then save the remainder of it to use for medical bills in the meantime? Or is it an all or nothing situation? Thanks again!
Great question. Yes, you can only choose to invest a portion of your money and leave the rest available in "cash". It's not an all or nothing type of deal
Yes, we don’t have the means to keep spare cash to pay for medical expenses, so at the end of the year we invest whatever HSA Money is left into index funds.
You missed another key tactic for using an HSA. If you pay medical bills out of pocket, keep a picture of ALL receipts for everything you have paid. At any point in time you can reimburse yourself from your HSA.
For instance, let's say you paid $30K of medical bills out of pocket over the past 15 years. You can transfer $30K from your HSA (which has been growing tax deferred) to your bank account at any point in time later in life (if you have a the documentation of the medical bills).
So make a google drive folder immediately and just take pictures each year of medical expenses you pay out of pocket for documentation
Good callout. I showed my process for doing this in the video I linked up at the end of this one 👍🏻
Ive been pretty diligent with the HSA. After retiring, I moved it to Fidelity. This has proved far better than the few investment opportunities offered by my former employer. After retirement, Ive continued to fully fund the HSA and plan to do a partial contribution pn my last half-year of eligibility.
This video was great. I would add one critique. Assuming that most people don’t understand health insurance and for that matter health investment accounts. It would’ve been great to include a little bit about how the insurance side works. I think the biggest fear most people have with choosing a high deductible option is that they will spend so much more on healthcare. Fundamentally it’s just a misunderstanding of what premiums, co-pays, coinsurance, and deductibles are.
Thanks for sharing your opinion 👍🏻
Dave Ramsey's been teaching this for years. But has never taken the time to break it down in depth like this.
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A few things you didn’t touch on ( unless this has changed) is you can only move money between HSAa once a year without incurring fees. Also you might want to touch on strategies for keeping up with receipts for future reimbursements. Took me a while to assemble a plan that works well.
I also advise when paying out of pocket to use a cash back card for even better savings.
I moved money multiple times (at least 12 times in 2021) from Health Equity to Lively and Fidelity in 1 year without incurring any fees. I also mentioned in the video to pay with a cash back credit card when paying out of pocket. I broke down my receipt tracking process in this video: th-cam.com/video/tryBB7b7QTQ/w-d-xo.html
@@JarradMorrow thanks! Must be based on financial institution. My last job had our HSA with a bank that didn’t allow any investing at all. I had to pay a fee to move money to another HSA so ended up doing a yearly transfer (which was free). Hated it. LOL
@@barmanvarn I think what you’re talking about is a rollover. That’s the one where you are only allowed to do once a year. Different than a transfer.
Rollover is where the money goes to you directly in order for you to manually put it into a different HSA account within 60 days I think.
The transfer one is where it’s directly transferred from one broker to another. That can be done unlimited times.
This video is super helpful. Thanks so much! Signed, almost 26 year old!
Glad it helped!
Nice. I was surprised that, of the various Financial Institutions I contacted about opening an HSA on my own, none asked me if I qualified according to the IRS rules.
I have Fidelity and I prefer it. I have a Fidelity debit card "checking account" and so I can transfer money into the HSA whenever I want...
None of them did? Wow. When I opened an HSA with Lively and Fidelity they checked to make sure I was qualified.
@@JarradMorrow How did they check? What did they ask for?
They had me go through a multiple choice questionnaire and I had to give them some additional info. It's been a minute since I did it so I can't remember the exact details beyond that. Either way, it's probably not a good idea to attempt to open an HSA if you're not enrolled in a HDHP. You're just asking to get caught and audited by the IRS.
Not all HSAs are the same. The company that runs the HSA can determine whether there are costs to you once you leave the company that you work for you. This was the case for me. The company charged $5/mo fee to handle the account. This means that just having the money sit there would cost me $5/mo. If you had $1000 in an HSA that would be a 20% fee. Higher than the average tax bracket if I had taken the money after tax. AND eventually all my money would be gone if I never spent a dime for a service that was supported under the HSA.
Thanks for sharing your experience. As I mentioned in the video, you can change HSA providers or move some of your money to avoid as much of the fee as possible 👍🏻
Excellent video Jarrad! Thanks for putting it together. My wife and I maxed out our 401k contributions last year and was still pissed off to find out we still owed $7,000 at the end of the year! That got me to look for more tax savings and on to HSA's. I had set up my HSA for strictly medical expenses, but after watching your video, I understand much more clearly what you are saying about paying out of pocket for expenses, while letting your money grow in the HSA. My question is....I'm not quite maxing out my HSA. Can I adjust my contributions at any time or only during open enrollment? I'd really like to get on maxing this out this year. Also, I only contributed $2,000 in 2022. Can I contribute up to the max for 2022 even though we are now in 2023? Thanks so much!!!
Oh also, I liked and subscribed!
I just opened an HSA and they allow me to change the contribution at anytime.
You can contribute to 2022 year until mid-April.2023. When I started in the HSA program for 2022, in March.2022 I went to my HSA account and deposited the max for the 2021 year (the HSA account asks what year you are contributing for). Since I did my 2021 taxes after that move, I also saved a ton in taxes.
thanks for the great info! just subbed!
Awesome, thank you!
Thanks for explaining this I did not know FSA’s and HSA’s were different
Happy to hear it helped. A lot of people accidentally mix the two up so you’re not alone
I used my HSA account to pay for dental , medical and vision care. Money I will not be tax on but I use the money to pay for medical bills. A very smart program .
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Hi Jarrad, I was completely sold on HSAs until I learned that 100% of HSA balance that is inherited by a non spouse beneficiary (ie my kids one day) is taxable immediately in the year of inheritance. What are your thoughts on this?
Doesn't concern me at all. An HSA is for YOU while YOU'RE alive so avoiding it just because your beneficiaries are going to have to pay taxes probably isn't the best way to look at it. If my beneficiaries want to bitch and moan about having to pay taxes on the buttloads of money I'm leaving them then I'll just donate it all to charity so no one will pay taxes and give them nothing 😂. Trust me, our heirs are going to be perfectly fine.
Lol well that’s one way to approach it. Definitely still a home run when combined with other investment vehicles like traditional 401k/Roth, just something to consider for those planning for their kids future’s in mind. Love the content.
You can also use HSA funds to pay for previous medical expenses if you saved all your receipts. I don't know the time limitations linked to it but it will help ensure you consume it
@@willburton2051 I definitely think about that. People could still benefit from a high deductible health plan with a HSA with lower premiums than a higher premium paying PPO plan. Especially when you find out that a lot of private practices file claims out of Network regardless of how platinum status your plan is.
I don’t contribute to my HSA anymore but my company still does. I mainly use the HSA as a tool rather than a savings for the reason you have mentioned.
@@moeck14 no time limits, currently
Great content. Subscribed 👍
Awesome, thank you!
Thanks for the video, I found it just in time for us to rework our benefits at work. That last 10 seconds of this video really has me sold on this idea. Makes it sound like a Roth IRA Also, my daughter says we look the same.
Do we log into the site of whoever has our HSA to identify how to invest it?
Can you apply these concepts to investing in an HSA post-taxes? I do not have an HSA available through my employer, but opened one that I'm contributing to after payroll taxes.
Yes you can! I mention this in the video, but if you have to contribute on your own then you will get a federal tax deduction when you file your taxes for the year. But you will not get a tax deduction for SSI and medicare like you would be able to if your employer was contributing from your paycheck. With just the federal tax savings an HSA is still beneficial so it's not necessarily a deal breaker.
Well dang. Wish I had come across this video earlier. The HSAs I had charged a fee but as long as I worked for the company - they paid for it. I left and was stuck with the fees. Had no idea I could transfer. 😢 Good to know going forward. Thanks!
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Great freakin Video! Liked and Subscribed!!
I maxxed mine for a few years and 100% invested in SP500. I switched companies and no longer have a HDHP. I can't use it now for medical expenses but I've always considered it a retirement account.
You can still use the money for medical expenses whenever you want even though you're not enrolled in a HDHP! The only time being enrolled in an HDHP matters is when you're contributing money to the account. After that you can use it whenever.
@@JarradMorrow I did not know that. I have no intentions of using it , but it's good to know that's an option.
Yep. So make sure you're keeping track of all your receipts because if the money you have invested grows to 5x (making up a number) then you can cash in all those medical receipts from over the years to pull out the money tax free at any point in time in the future. Not sure if you've seen the video, but I break down my receipt tracking process in this one th-cam.com/video/Tj8MbBWsxzU/w-d-xo.html I start talking about my process around 7
How can you take out the money sometime in future if the receipts were years old. Eg. I am withdrawing today1k of my expenses made 4 years ago?
There is no time limit on when you can cash in receipts to pull money from your HSA. This is why in the video I gave the example of paying for medical expenses out of pocket so the $ in your HSA can stay invested to grow beyond the original amount. Then later down the line withdrawing money for that expense in the past.