How your HSA could change your life (or at least lower your taxes)...

Your HSA could be a workhorse of your financial life

Here at the Human Matters, we want to cover stuff you can actually use, the “matters of being human” in our name. So, this is squarely a matters email, on a seemingly boring (but actually amazing) topic.

So tune in, put your seat upright, and lock in that tray table, because we’re gonna take off…on HSAs!!! Hold your applause to the end please…

Your workplace offers it every year, but you’ve never pulled the trigger. OR, you have one, and you only use it when you hit the ER or Doc in a box, but beyond that…what IS an HSA?

It’s not an overstatement to say that the Health Savings Account (HSA) could be the greatest financial account you’ve never heard of. And what’s cool, is you can touch the funds now, long before retirement, when other accounts won’t let you access them before age 60 (okay, it’s actually 59 1/2 according to the IRS, but let’s not be persnickety on who counts as “retired”).

The purpose of HSAs was to enable Americans to deduct qualified medical expenses that aren’t reimbursed through health insurance (deductibles, drugs, etc).

But there’s some aspects that make them game-changers:

• Every dollar contributed lowers your taxable income. And if done through a workplace plan, it is THE most tax savings—could avoid both income tax and even FICA tax on most work plans. That’s 7.65% for FICA, plus your tax bracket. A person in the 32% bracket would save 39.65% in taxes by just contributing to their account…now are you interested?

• Your HSA is a like a Roth IRA, but better. If all the rules are followed, a Roth is never taxable in retirement. To that, the HSA retorts “hold my beer”: your HSA could lower your taxes now, and if followed correctly, would also have no taxes in retirement. BOOM. There is no other account that lowers your taxes TODAY and could be 0% in retirement. Get you some…

• Unlike an FSA (another workplace account), the funds in an HSA roll over year to year. No “use it or lose it” rules here. And that means you can invest it for high growth…is your mind blown yet?

• It’s possible for your HSA to cover every day expenses…and then some, including:

  • Your gym membership

  • AG1

  • A Bidet

  • Sleep 8

  • Red light Therapy mask

  • Gym equipment.