• Why I Don’t Want You to Spend the Money in Your HSA, Ep #255

  • Dec 13 2024
  • Length: 20 mins
  • Podcast

Why I Don’t Want You to Spend the Money in Your HSA, Ep #255

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  • Summary

  • What is an HSA? Who can invest in one? What can you use the money for? Why do I love them? Why shouldn’t you spend the money you save in an HSA? I’ll unravel all of these questions in this episode of Best in Wealth. [bctt tweet="Why don’t I want you to spend the money you’ve saved in your #HSA? I share the surprising truth in this episode of Best in Wealth! #retirement #Investing #RetirementPlanning #FinancialPlanning " username=""] Outline of This Episode
    • [1:08] It’s time to plan your 2025 goals
    • [3:14] What is an HSA?
    • [4:48] How can I invest in an HSA?
    • [6:43] Why I like HSA accounts
    • [7:43] How much can you save in an HSA?
    • [9:13] What can I spend the money on?
    • [11:11] What if you can’t afford to save in an HSA?
    • [12:13] Don’t spend the money in your HSA

    The basics of an HSA An HSA is a health savings account. Don’t confuse it with a flexible savings account, or FSA. An FSA allows you to save money—taken out of your paycheck with a tax deduction—that can be used for healthcare expenses. The money must be used within a certain timeframe. If you leave your employer, that money is gone. However, an HSA doesn’t require you to spend the money if you don’t want to. If you leave your employer, that HSA account is yours for life. To qualify for an HSA, you must have a high-deductible insurance plan with a minimum annual deductible of $1,650 and an out-of-pocket maximum of $8,300 or more in 2025 (for families, it’s $3,350 and $16,600). [bctt tweet="What are the basics of HSAs? Why do I love them? Learn the amazing details in this episode of Best in Wealth. #WealthManagement #Retire #Investments" username=""] Why I like HSA accounts Some of the benefits I’ve stated already: You get a tax deduction for every dollar you put in. Secondly, there are no income limit caps on who’s allowed to have an HSA. HSA accounts allow you to take that money with you wherever you go and you don’t have to spend it. Secondly, an HSA allows you to save quite a bit of money. An individual is allowed to contribute $4,300 in 2025. Families can contribute up to $8,550. If you turn 55 in 2025, you can contribute an extra $1,000. If you’re in the 24% tax bracket, you’ll save $2,300 in taxes in 2025 by putting that money away in an HSA. Your deduction will change based on the tax bracket you’re in. What can you spend the money on? Healthcare-related expenses (except the monthly premium). It can go toward copays, out-of-pocket expenses, coinsurance, medicines, etc. Medical expenses add up quickly. Why I don’t want you to spend the money in your HSA The simple answer? Because you can invest the money. Many HSA accounts allow you to invest the money once you’ve saved $1,000. If you start saving $8,000+ a year for the next 20 years, think of how much it will grow by the time you retire. It’s a great way to fund your healthcare in retirement. The next best part? Let’s say you contributed $250,000 and it grew to $500,000. When that money is used on healthcare expenses, you don’t have to pay taxes on that growth. Once you retire, and go on Medicare, HSA money can be used to pay for Part B and D expenses. In 2025, the starting cost of Medicare is $185 a month. If your Modified Adjusted Gross Income is high, you may be paying a lot more for Medicare. If you don’t end up spending the money on healthcare, once you turn 65, you can use the money on whatever you want—with one caveat. You will have to pay taxes on those dollars (just like a traditional IRA or 401K). Listen to the whole episode for all of the details! [bctt tweet="HSAs offer amazing tax benefits. But why else do I love them? I cover the details in this episode. #retirement #Investing #RetirementPlanning #FinancialPlanning " username=""] Connect With Scott Wellens
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