Why Should I Use a Health Savings Account (HSA)?

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[bradfanshier]

Dave does a poor job of making a key point clear in this discussion - that an HSA is NOT an insurance plan - it is a savings account. Contributions to the account are made possible by participation in a particular type of insurance plan - a Qualifying High Deductible Health Plan (QHDHP). Some important things to remember about an HSA are these; (1) The money that goes into an HSA is yours. Forever. Period. You can use it for qualifying medial expenses without paying taxes on it. If you change jobs, change insurance, etc, you still get to keep your HSA. (2) As long as you are covered by a QHDHP, you can contribute up to the IRS allowed maximum ($7, 000 for a family in 2019), but you are not REQUIRED to contribute a dime. It's a SAVINGS account! (3) If you are only covered by a QHDHP for part of the year, you can contribute that percentage for which you had QHDP coverage, so for example if you have a QHDP for 6 months you could contribute $3500 in 2019. If you have a QHDP for 3 months in 2019 you can contribute $1750. (4) If you lose your insurance or change jobs and your new employer does not offer a QHDHP, you can still keep your HSA, and use any funds that are in it for QMEs, but you can not CONTRIBUTE to it until you are again covered by a QHDHP. (5) You can contribute to your HSA at any time during the year. You do NOT have to make contributions with each paycheck. You can wait and make one lump-sum contribution at the end of the year (technically, through April 15 of the following year) if you so choose. (6) Contributions made to your HSA are not taxed. They are an "above the line" deduction, meaning that it's like you never earned the money when it comes time to figure your taxes. So, if your gross for the 2019 is $100, 000 but you contribute $7, 000 to your HSA, your taxes will be figured based on $93, 000.

[erichchan]

A 3rd benefit of HSA besides the tax deduction from your paycheck and tax free medical expenses that people dont talk about is that at age 65, the HSA becomes a retirement account like a traditional IRA where u can withdraw from it without penalty for non medical expenses.

I treat my HSA as a 3rd retirement account where i will try not to use it for minor medical expenses.

[JS-wlgi]

I have a employer which pays 2000 into a hsa. I use this to cover some medical expenses, but mainly have this to cover the high deductible. Plus combine with a Wellness plan it gives me another 2000 year to help pay my premiums. All this savings on medical cost goes to help fund house and retirement. One piece of the puzzle.

[CityGirlLivingonaBudget]

I love my H.S.A. It's a medical sinking fund that comes out of my paycheck pre-tax. I definitely recommend it.

[sbkpilot]

in addition an HSA acts like a regular 401k after age 65, i.e. you can use it for any purpose after 65 if you are willing to pay the taxes. If you spend it on medical no taxes of course. My suggestion would be to contribute the max so that at a later stage in your life you can pay for medical related expenses with tax free money. It's a great idea.

[CeCe]

In CA, we have to pay state taxes on HSA contributions, but they are tax free federally. I max out my HSA every year.

[javiles]

Thank you, I had more information with you that my HR from the company that I work for...

[CarolBennettGA]

I have an HRA. First time ever. My employer put $$ in it and through very basic tasks, I earned $$ for it too. Only had to go to the Dr once this year. The HRA $ paid for the entire visit ($165) and i paid $4 for a $50 medication with my prescription card they gave me. Still plenty of $$ left over in it too. So thankful for my insurance.

[diegolara]

All preventative care visits for children, women, prenatal and adults are included in all health plans that meet the federal guidelines. So even with high deductible plans you get all the routine preventative care visits without a copay or fee. The only time the deductible will matter is when a sickness or injury happens, which is why you must have money saved to pay the deductible. If you are healthy there is no reason to get a high premium plan because you may never use it above the routine checkups. The way I look at it is like this, do you want to pay for the deductible in advance in monthly payments and never end up using your insurance, or do you prefer to pay little now and "if" you ever need to really use it for a large expense then you pay the deductible.

[jimknapp]

I have a HDHP with a$5000 deductable and an HSA. It works very well for my family and I. We just paid for our daughters braces upfront, no money out of pocket.

[Jason-uwwn]

I put the difference between the hsa and top amount for a year and had my deductible amount met for the next year if needed. Always rolls over and it’s your money.

[TheDecoCottage]

If I put a minimum amount of money into my HSA, my employer matches it. I saved money in mine for 4.5 years and used some of the money I saved to pay for the bills related to the birth of our son. My husband and I didn't have to use a penny of our emergency fund or try to save enough during my pregnancy to cover medical bills.

[hesohit]

With the taxes i pay every month my health care should be free man.

[JiisTube]

FYI, besides doctor visits, you can also use an HSA to buy tax-free approved things like contact solution and family-planning items.
Also also, you can claim mileage & toll reimbursements for medical visits. So now every time I visit the doctor, I can claim mileage and withdraw the pre-tax funds I've contributed as tax-free.
Due to these, imo it is definitely worth having at least a small contribution coming out of your paycheck for your HSA even before step 3, not as an investment but as saving money on your budget.

[Judeable]

It works for him because he makes a lot of money but it doesn't work good for people who don't make a lot of money or go to the doctor often.

[tkid]

My job puts in $500 a year in my hsa account. My deductible is $1, 000, no co pay. Pay about $160 a month out of my check

[GunninWizard]

Gonna be full time rv living and this was suggested to us. Now that Dave Ramsey conformed it. We for sure going that route

[DanJNigro]

I guess after watching this, that I have good insurance provided by my firm.
I have PPO and My PPO picks up 100% of medical costs after a $20 copay for primary care doctor, $33 for specialist doctors and $50 for hospital/ER/Surgery.
The cost of my premiums per month for myself and my wife are $137 for both of us to get coverage.

[WiCapitalco]

After learning how to manage my income by listening to Dave I've finally reached the point I'm trading markets and building my own business

[seanbarnes]

Man, I wish I would've started my HSA earlier. Kicking myself. We paid wayyy more with our ppo plan