Health Savings Account (HSA)
What is a Health Saving Account (HSA) aka “Stealth IRA”?
Alright, let’s chat about the Ninja in the Room (Haha, I crack myself up) which is the Health Saving Account (HSA). If you are enrolled in a high-deductible health insurance plan, you can open an HSA either outside or via your employer.
For 2019, the maximum contribution is $3,500 for single individual and $7,000 for Family.
Here are 5 great things about HSA:
- Funded with Pre-tax dollars, basically a great tax deduction
- You can use the funds at any time for any health-care expenses, without any tax paid or 10% penalty
- There are no taxes on growth and you can also withdraw Tax-free for medical expenses
- After age 65, you can withdraw from your HSA without penalty after age 65 for anything at all, but you just have to pay income tax rate. Thus acting as “Another retirement account”.
- You don't have to use all the funds by end of the year like a Flexible plan (FSA) or Health reimbursement (HRA). Also, the funds carry over after you leave your old job.
- Able to use money contribution to invests in any mutual funds within the HSA account for maximum return.
The great thing about HSA is TRIPLE TAX ADVANTAGED if you use the money for medical expenses, which will be significantly needed, as you get older.
In addition, HSA acts like an additional retirement vehicle to park your money efficiently from taxes, hence the name “Stealth IRA”.
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