One extra tip would be to cash flow your medical cost during the year if you can without using the HSA so that it can continue to grow. Keep track of those transactions with receipts and you can reimburse yourself out of the HSA anytime you need to even years later. Please correct me if I'm wrong, Mark!
This one is massive game changer. Let the HSA investments compound tax free over 5, 10, or more years. If you have spare cash flow, pay for medical bills without drawing on the HSA. Keep every medical receipt you paid with non-hsa dollars. Photograph them and save to a google drive folder, along with a spreadsheet tracking every receipt. In the future, you could then draw on all those saved receipts to pull money from the hsa tax free. If you saved 20K in receipts over 10 years, heck you could buy a car with hsa money tax free!
I am also a big fan of HSA. One item of caution. Unlike a Roth, Life Insurance or a brokerage account (with step up in basis) which goes to your heirs tax free, an HSA is fully taxable to them immediately. It does not turn into a 401k as you indicated. Only a spouse can continue the tax savings. So you do want to make sure you do spend it.
I have a question. Suppose I put my HSA funds towards the purchase of a rental property. Do I have to put any of the rental income back into the HSA. Or when I sell the rental property do I have to put the money back in?
Are you required to have an HDHP for the entire year in order to contribute the maximum dollar amount? In other words; can I contribute the max dollar amount in January if I think I may lose my coverage for the rest of the year? or does it go by percentages; $3600 for 12 months $1800 for 6 months $300 a month?
I have 150k in my IRA and 7k in my HSA. I'm thinking of self-direct both of my funds to one LLC to get a non-recourse loan to buy a rental property. Will that work, Mark? Thanks
Love the HSA. We are lucky enough to have good insurance and are able to pay all medical out-of-pocket (and, yes, we occasionally hit that deductible). But banking that $8+k tax-free (we are over 55) every year, and then letting those funds accumulate . . . wow.
Also, you can have multiple plans within the family and transfer back and forth. You can roll an hsa into roth ira and vice-versa... your medical expenses are also tax-free, so you have a double tax benefit...
An HSA is the best health plan. Period, end of story. Fill your HSA every single year. Start young and invest the overage. Your capital gains will eventually be MORE than your deductible and suddenly you arent paying anything for insurance.
@Mark J Kohler I keep hearing you talking about buying a rental property using the HSA. Wouldn't the HSA be subject to UBIT if a loan was used to purchase the rental? If I buy a rental and have to pay UBIT, it seems that it's going to cost me more in taxes than just buying buying it in my own name.
Another benefit is, that there is no time limit for the reimbursement, so you can collect your medical receipts over decades and turn them in once you pull out the money. So you would just grow your HSA with invested interest, not taking any money out and paying for expenses out of pocket... after 65 (I think) you can use the HSA funds for anything, not just medical expenses. After you reach age 65 or if you become disabled, you can withdraw HSA funds without penalty.
If not used for qualified medical expenses, then money withdrawn from the HSA is taxable. You can use HSA money at any time tax-free for qualified medical expenses that are incurred after the HSA is started. Unlike a traditional IRA, you are not required to withdraw money from an HSA when you reach age 70.5. You can no longer contribute to an HSA once you reach age 65 when you qualify for Medicare.
UFGatorCPA Thanks for the info, I was thinking that you can deduct your claims later so that your account can have a higher compounding accumulation until retirement.
Can I ask you a question.. if a married couple has a rental property since december 31 2017 in the state of california and they move to Nevada Las Vegas and they couple maked $200,000 in wages as lawyer. They been living in Nevada in a whole year 2018.. Their rental income in California is $12000. Im confuse do they need to file taxes on california and in Nevada..I had this question on a quiz and got it wrong..can you please explain. Thanks
Great video. Very easy to understand. This year is my first with a high deductible health plan and an HSA. Only regret is that my employer didn't offer the HDHP sooner.
"No penalty" but is there an tax at that point? Or is it also tax free then? Edit: I've since found where Mark has specifically stated that at 59 1/2, the HSA would act just like a Roth IRA.
Does HSA still make sense for someone 1.) living in California (where it doesn't recognize HSA) and 2.) working for an employer who does not contribute to the HSA? From using several comparison sites of HSA vs HMO, I would only save $50 a year if using HSA. My HMO is HMO Select (Low), only available in Cali, where the monthly premium is only $130.
Q. If my doctor is in the Republic of Panama, can I deduct the airfare and hotel (or ANY travel expenses, for that matter) to go see him or her? How about if I'm in Louisiana but my doctor is in Arizona? Can I deduct the airfare and rental car to go see him/her?
If I transfer money from an annuity account which I am able to withdraw up to 10% each year to HSA account, would I be subject to taxable income, even I don't touch the money?
Great Question Todd! I'd be more than happy to answer that for you! Join me for my live broadcast on February 27th, starting at 4pm MST and I'll answer your question live!
Hi Phillip, thanks for the question I am sending you a link over to my blog article where I talk in-depth about the HSA and why it is a great strategy. markjkohler.com/a-critical-health-care-tax-strategy-deadline-is-approaching-before-year-end-and-many-small-business-owners-dont-even-know-it/.
You forgot the best feature of HSAs, which is that you can take distributions from an HSA for ANY reason (not just for healthcare expenses) after age 65 and simply pay income tax on the distribution (no penalty), exactly like a traditional IRA distribution. So if you find yourself running low on funds to cover living expenses, you can legally use HSA funds to live on, but only after age 65.
It's better if you keep your medical receipts and get reimbursement in the future if you find yourself running low on funds so you don't pay tax at all. This will also help you minimize your tax liability.
Hi Mark, If I'm a small business owner but I get Medical Insurance through my domestic partner (W2 employee), can I still qualify to have an HSA account to deduct from the business?
HSA sucks my wifes meds are 14k a month i had to take a 2nd morgage out on my house to pay for them !!! YOU TELL ME HOW THAT CAN SAVE ME MONEY ???? when the PPO plan that i had i only had a 100$ ductable for the meds !!!!
It's not the HSA that sucks. It's the high deductible plan you have that sucks. You need to find a new plan. To clarify, this type of account is better optimized by folks who are generally healthy. Believe he said that multiple times in the video. Most high deductible plans are designed for catastrophic emergencies. If you have ongoing medical expenses, you'll probably need to enroll in a more comprehensive (and probably more expensive) health insurance plan. Good luck!
Roby, thats a very good explanation of it! I'm so sorry about your situation. If you need a consultation, send your email and phone number to my youtube manager at janae@markjkohler.com and she can get someone to get a hold of you to set something up.
I'll have to agree with Roby. Your health plan stinks. I can tell you that once I meet my deductible, the insurance covers me 100%. When I was trying to decide which plan to elect, I sat down and figured out how much I could put in my HSA account if i just took the difference between what I'd pay for the HDHP vs the next tier. With that alone I was about $300 shy of meeting the deductible. So without even spending any more than I would have with the other plan, I could have enough in my HSA account to almost cover ny deductible. AND the money will be all tax free! That's what I elected to do. If I ever actually meet my deductible, my insurance covers me at 100%. But in the 8 years, I've had this plan, I've only met my deductible once. As a result, I have saved a few thousand in my HSA -- money that would otherwise have been paid to the insurance company.
Are you saying you can have both flex and HSA? I thought you had to liquidate your flex in order to have an HSA? I am eligible to participate in 2020. Do I have to use the company's administrator for the plan? I assume so given company will contribute $1k each year. If I can choose my own, I assume there are fees associated with it. I am hoping to cash flow medical expenses in years I can and then submit receipts at age 65 to take full advantage of the tax-free investment option. I also heard you can do a 1x transfer from a retirement account to front-load it - to get it started. I guess this means you forfeit being able to take the deduction on your income for that year. I also understand that at age 65 in addition to using it for qualified medical expenses, you can also use it for nonqualified things. Of course, you will be taxed (at a lower rate if retired) but won't be subject to the additional 20% penalty beginning at age 65.
ronni walsh My employer and carrier confirmed you cannot have an FSA & HSA. It’s one or the other. However, you can have a Limited Purpose FSA with an HSA, which can only be used for dental and vision costs.
You OR any of your dependents on your tax return. Generally that means your spouse or kids still claimed as dependents. Go to IRS Publication 502 for the list. It's freaking awesome! Easy to read and fast to look at the table of contents of what you can write off.
You can contribute as long as you have a health plan that qualifies. But as long as the account has funds, you can continue to use the funds for qualified expenses and/or let the money continue to grow.
@@jimhandler1129 based on my understanding, yes. But I'd suggest running that by your tax advisor just to be sure. I believe you can co contribute as much as you want to 1) as long as you only contribute while you have the eligible HDHP & 2) as long as you do not contribute more on the year than you're allowed. Keep in mind that once it goes in, it can't come out except for qualified medical expenses without incurring penalties and taxes. I mention this since you talked about the possibility of losing your job. You may be needing that money later.
HSA does has good tax advantages but this sounds like a promotion video. Who will prefer HDHP if one has a choice? If you know you will be healthy then you don't need to buy an insurance at all. That saves you a lot more money! what a genius! an insurance is for the unexpected. you will never know when bad things happen to you.
Interesting you say promo video. I dont sell HSA's or Insurance. I just am trying to help you save on your taxes and make sure you have money for the future. Some day you will get sick... trust me. Be prepared.
I for one have had HSA/HDHP through my W2 employer for almost 7 years now (plus my prrvious employer for 2 years before that). The premiums on the HDHP are considerably lower than the regular plan. I put the difference between what I would have paid for the regular plan vs what I pay for the HDHP into my HSA account. Having done that, my HSA account has almost enough to cover the entire deductible. Ince the deductible is paid (using those funds), the health plan covers everything else 100%. I love it.
I'm sorry! I try and keep up with comments, but with that being said, it can be very difficult to provide quality answers to complex questions in a TH-cam comment. If you have some questions about HSAs I would check out some of my newer videos or check out this article I wrote: markjkohler.com/the-power-of-the-health-savings-account-hsa/
One extra tip would be to cash flow your medical cost during the year if you can without using the HSA so that it can continue to grow. Keep track of those transactions with receipts and you can reimburse yourself out of the HSA anytime you need to even years later. Please correct me if I'm wrong, Mark!
This one is massive game changer. Let the HSA investments compound tax free over 5, 10, or more years. If you have spare cash flow, pay for medical bills without drawing on the HSA. Keep every medical receipt you paid with non-hsa dollars. Photograph them and save to a google drive folder, along with a spreadsheet tracking every receipt. In the future, you could then draw on all those saved receipts to pull money from the hsa tax free. If you saved 20K in receipts over 10 years, heck you could buy a car with hsa money tax free!
I am also a big fan of HSA. One item of caution. Unlike a Roth, Life Insurance or a brokerage account (with step up in basis) which goes to your heirs tax free, an HSA is fully taxable to them immediately. It does not turn into a 401k as you indicated. Only a spouse can continue the tax savings. So you do want to make sure you do spend it.
I have a question. Suppose I put my HSA funds towards the purchase of a rental property. Do I have to put any of the rental income back into the HSA. Or when I sell the rental property do I have to put the money back in?
Are you required to have an HDHP for the entire year in order to contribute the maximum dollar amount?
In other words; can I contribute the max dollar amount in January if I think I may lose my coverage for the rest of the year? or does it go by percentages; $3600 for 12 months $1800 for 6 months $300 a month?
My HSA has gone up 4x this year, made some good stock picks
I have 150k in my IRA and 7k in my HSA. I'm thinking of self-direct both of my funds to one LLC to get a non-recourse loan to buy a rental property. Will that work, Mark? Thanks
Yea i didn’t know you could invest the money that’s in the HSA
Love the HSA. We are lucky enough to have good insurance and are able to pay all medical out-of-pocket (and, yes, we occasionally hit that deductible). But banking that $8+k tax-free (we are over 55) every year, and then letting those funds accumulate . . . wow.
It's you that makes learning awesome! Thank you for all you do 😎
I appreciate that!
Also, you can have multiple plans within the family and transfer back and forth. You can roll an hsa into roth ira and vice-versa... your medical expenses are also tax-free, so you have a double tax benefit...
The tax deduction is tied to whether your HDHP plan is self or family, not whether you are married.
Are there any strategies like the back door Roth IRA to get more money into the HSA than the allowable limits?
An HSA is the best health plan. Period, end of story. Fill your HSA every single year. Start young and invest the overage. Your capital gains will eventually be MORE than your deductible and suddenly you arent paying anything for insurance.
Can you contribute to HSA, Roth IRA and SEP IRA all in the same year?
Is the account protected from your creditors, like in the case of bankruptcy?
Mark, to withdraw from the HSA TAX/PENALTY free for NON MEDICAL reasons, you have to be 65 yrs of age, not 59.5 yrs of age.
Does HSA protect your money from lawsuits? What about SEP?
@Mark J Kohler I keep hearing you talking about buying a rental property using the HSA. Wouldn't the HSA be subject to UBIT if a loan was used to purchase the rental? If I buy a rental and have to pay UBIT, it seems that it's going to cost me more in taxes than just buying buying it in my own name.
Another benefit is, that there is no time limit for the reimbursement, so you can collect your medical receipts over decades and turn them in once you pull out the money. So you would just grow your HSA with invested interest, not taking any money out and paying for expenses out of pocket... after 65 (I think) you can use the HSA funds for anything, not just medical expenses. After you reach age 65 or if you become disabled, you can withdraw HSA funds without penalty.
If not used for qualified medical expenses, then money withdrawn from the HSA is taxable. You can use HSA money at any time tax-free for qualified medical expenses that are incurred after the HSA is started. Unlike a traditional IRA, you are not required to withdraw money from an HSA when you reach age 70.5. You can no longer contribute to an HSA once you reach age 65 when you qualify for Medicare.
UFGatorCPA Thanks for the info, I was thinking that you can deduct your claims later so that your account can have a higher compounding accumulation until retirement.
Can I ask you a question.. if a married couple has a rental property since december 31 2017 in the state of california and they move to Nevada Las Vegas and they couple maked $200,000 in wages as lawyer. They been living in Nevada in a whole year 2018.. Their rental income in California is $12000. Im confuse do they need to file taxes on california and in Nevada..I had this question on a quiz and got it wrong..can you please explain. Thanks
Great video. Very easy to understand. This year is my first with a high deductible health plan and an HSA. Only regret is that my employer didn't offer the HDHP sooner.
Also, I believe it can be withdrawn at age 65 without penalty
It basically turns into a 401K at that point.
"No penalty" but is there an tax at that point? Or is it also tax free then?
Edit: I've since found where Mark has specifically stated that at 59 1/2, the HSA would act just like a Roth IRA.
Does HSA still make sense for someone 1.) living in California (where it doesn't recognize HSA) and 2.) working for an employer who does not contribute to the HSA?
From using several comparison sites of HSA vs HMO, I would only save $50 a year if using HSA.
My HMO is HMO Select (Low), only available in Cali, where the monthly premium is only $130.
Amazing! Setting up the Roth today and the HSA next mo. Using LLC.
Can you take out a personal loan from the HSA account that you would pay back with interest?
Great video thank you
Can you please send me the video you talk about the Tax Now, Tax Later, Tax Never Buckets, please
Q. If my doctor is in the Republic of Panama, can I deduct the airfare and hotel (or ANY travel expenses, for that matter) to go see him or her? How about if I'm in Louisiana but my doctor is in Arizona? Can I deduct the airfare and rental car to go see him/her?
If I transfer money from an annuity account which I am able to withdraw up to 10% each year to HSA account, would I be subject to taxable income, even I don't touch the money?
What about if your employer matches your contributions to the HSA? Can you self-direct and invest those funds as well?
Great Question Todd! I'd be more than happy to answer that for you! Join me for my live broadcast on February 27th, starting at 4pm MST and I'll answer your question live!
@@MarkJKohler Are you still doing the live video today?
What are the requirements to setting up an HSA. I am a small business owner. I was told that you cannot set up an HSA if you are a sole proprietor.
Hi Phillip, thanks for the question I am sending you a link over to my blog article where I talk in-depth about the HSA and why it is a great strategy. markjkohler.com/a-critical-health-care-tax-strategy-deadline-is-approaching-before-year-end-and-many-small-business-owners-dont-even-know-it/.
You forgot the best feature of HSAs, which is that you can take distributions from an HSA for ANY reason (not just for healthcare expenses) after age 65 and simply pay income tax on the distribution (no penalty), exactly like a traditional IRA distribution. So if you find yourself running low on funds to cover living expenses, you can legally use HSA funds to live on, but only after age 65.
It's better if you keep your medical receipts and get reimbursement in the future if you find yourself running low on funds so you don't pay tax at all. This will also help you minimize your tax liability.
Hi Mark, If I'm a small business owner but I get Medical Insurance through my domestic partner (W2 employee), can I still qualify to have an HSA account to deduct from the business?
Thanks.
How does one set up an HSA as a small business owner?
HSA sucks my wifes meds are 14k a month i had to take a 2nd morgage out on my house to pay for them !!!
YOU TELL ME HOW THAT CAN SAVE ME MONEY ???? when the PPO plan that i had i only had a 100$ ductable for
the meds !!!!
It's not the HSA that sucks. It's the high deductible plan you have that sucks. You need to find a new plan. To clarify, this type of account is better optimized by folks who are generally healthy. Believe he said that multiple times in the video. Most high deductible plans are designed for catastrophic emergencies. If you have ongoing medical expenses, you'll probably need to enroll in a more comprehensive (and probably more expensive) health insurance plan. Good luck!
Roby, thats a very good explanation of it! I'm so sorry about your situation. If you need a consultation, send your email and phone number to my youtube manager at janae@markjkohler.com and she can get someone to get a hold of you to set something up.
I'll have to agree with Roby. Your health plan stinks. I can tell you that once I meet my deductible, the insurance covers me 100%.
When I was trying to decide which plan to elect, I sat down and figured out how much I could put in my HSA account if i just took the difference between what I'd pay for the HDHP vs the next tier. With that alone I was about $300 shy of meeting the deductible. So without even spending any more than I would have with the other plan, I could have enough in my HSA account to almost cover ny deductible. AND the money will be all tax free! That's what I elected to do.
If I ever actually meet my deductible, my insurance covers me at 100%. But in the 8 years, I've had this plan, I've only met my deductible once. As a result, I have saved a few thousand in my HSA -- money that would otherwise have been paid to the insurance company.
Great video!
Thank you Elijah!
How do you close your hsa with limited loss
Are you saying you can have both flex and HSA? I thought you had to liquidate your flex in order to have an HSA? I am eligible to participate in 2020. Do I have to use the company's administrator for the plan? I assume so given company will contribute $1k each year. If I can choose my own, I assume there are fees associated with it. I am hoping to cash flow medical expenses in years I can and then submit receipts at age 65 to take full advantage of the tax-free investment option. I also heard you can do a 1x transfer from a retirement account to front-load it - to get it started. I guess this means you forfeit being able to take the deduction on your income for that year. I also understand that at age 65 in addition to using it for qualified medical expenses, you can also use it for nonqualified things. Of course, you will be taxed (at a lower rate if retired) but won't be subject to the additional 20% penalty beginning at age 65.
ronni walsh My employer and carrier confirmed you cannot have an FSA & HSA. It’s one or the other. However, you can have a Limited Purpose FSA with an HSA, which can only be used for dental and vision costs.
If your employer doesn’t offer HSA, the dollars your putting in the HSA you open up yourself would be funded with taxed money then, right?
Who do you recommend for HSA? Thank you
Hi Mark, what if I need to visit doctor once every 2 months for medicine refills? Is this a good plan for me?
You pay the deductible from your own pocket. For example, my deductible is 4K dollars. After that if there are expenditures, insurance pays.
Hi Mark. Thank you for your videos. What are the books you have written? I want to buy them. Thanks.
I do have a few. Follow this link markjkohler.com/products/bookcombo/ Thanks!
Can you use an HSA account as collateral?
Can you use the funds in the HSA to pay any medical expenses or does it have to be medical expenses for yourself?
You OR any of your dependents on your tax return. Generally that means your spouse or kids still claimed as dependents. Go to IRS Publication 502 for the list. It's freaking awesome! Easy to read and fast to look at the table of contents of what you can write off.
What happens if I lose my HDHP with my employer? Can I still contribute?
You can contribute as long as you have a health plan that qualifies. But as long as the account has funds, you can continue to use the funds for qualified expenses and/or let the money continue to grow.
@@donireland6218 Can I max out my contributions in January if I anticipate losing my job and coverage the rest of the year?
@@jimhandler1129 based on my understanding, yes. But I'd suggest running that by your tax advisor just to be sure. I believe you can co contribute as much as you want to 1) as long as you only contribute while you have the eligible HDHP & 2) as long as you do not contribute more on the year than you're allowed.
Keep in mind that once it goes in, it can't come out except for qualified medical expenses without incurring penalties and taxes. I mention this since you talked about the possibility of losing your job. You may be needing that money later.
How do I buy real estate with my self directed HSA if I’m limited $6900/yr (2018) $7k/yr (2019) contribution?
I wouldn't do it. Keep growing that HSA and find the money for RE somewhere else.
Mark meant REITs too just to clarify.
HSA does has good tax advantages but this sounds like a promotion video. Who will prefer HDHP if one has a choice? If you know you will be healthy then you don't need to buy an insurance at all. That saves you a lot more money! what a genius! an insurance is for the unexpected. you will never know when bad things happen to you.
Interesting you say promo video. I dont sell HSA's or Insurance. I just am trying to help you save on your taxes and make sure you have money for the future. Some day you will get sick... trust me. Be prepared.
I for one have had HSA/HDHP through my W2 employer for almost 7 years now (plus my prrvious employer for 2 years before that).
The premiums on the HDHP are considerably lower than the regular plan. I put the difference between what I would have paid for the regular plan vs what I pay for the HDHP into my HSA account. Having done that, my HSA account has almost enough to cover the entire deductible. Ince the deductible is paid (using those funds), the health plan covers everything else 100%. I love it.
Pretty ridiculous to make an informational video and not respond to any questions in the comments
I'm sorry! I try and keep up with comments, but with that being said, it can be very difficult to provide quality answers to complex questions in a TH-cam comment. If you have some questions about HSAs I would check out some of my newer videos or check out this article I wrote: markjkohler.com/the-power-of-the-health-savings-account-hsa/