On Sale Now! Why Does The Stock Market Go Up? by Brian Feroldi

ChooseFI Logo

102R | The Triple Tax Savings of Health Savings Account

Insurance
Brad and Jonathan explain the long-term tax benefits of using a Health Savings Account to pay for medical expenses, discuss the benefits of new index fund investing options, review Monday’s episode with Timika Downes.
  • Brad and Jonathan are getting back to traditional health insurance, and excited about the Health Savings Account (HSA).
  • Most companies offer health insurance options, typically including:
    • Low monthly premium + high deductible
    • High(er) monthly premium + low(er) deductible.
  • The IRS defines a high deductible plan as anything higher than $1,350 for an individual, or $2,700 for a family.
  • Employees with high deductible plans have access to an HSA (eligible accounts).
  • An FSA (Flex Savings Account) is a reloadable account, that is primarily use-it or lose-it
  • Putting money in an HSA is tax free, and rolls over to future years, and drawing it out for medical purposes is tax free.
  • 2018 HSA contribution limits:
    • $3,450 for individuals
    • $6,900 for families
  • After 65, if you have unused money in your HSA, you can draw it out like a traditional IRA and just pay your normal tax. Here’s how an HSA can fit with your FI plans.
  • Brad intends to save his receipts and wait to be reimbursed until later, as HSAs will earn interest the same as any investment account.
  • ChooseFI community members recommend Lively Full Disclosure: We earn a commission if you click this link and make a purchase, at no additional cost to you. or Fidelity. Check out our related article: Investing Inside Your HSA: Healthcare’s Best Kept Secret
  • Review of Monday’s episode with Timika – similar concepts and action points as the recommendations from Alan in the Side Hustle Coaching Series.
  • You don’t need permission: just take action.
  • Dan writes in to report that he’s reached FI!
  • ChooseFI has listeners across the globe – although not all the tax and investment information are relevant to international listeners, the lifestyle conversations are.
  • Brad and Jonathan highly recommend Vanguard because they have low fees, which means investors keep more of their returns.
  • In last few months, Fidelity began offering zero-fee funds and Vanguard has lowered its minimum investment from $10k to $3k for several funds.
  • Investments abroad can have very high fees.
  • Zero fees are not the only thing to consider when picking accounts: tax efficiency is very important as well.
  Links: Vanguard Ratchets Up Index-Fund Price Battle
Subscribe To The FI Weekly

Action, accountability, inspiration, and community. Join the movement. Get started on your Path to FI

More To Explore
Find The Simple Path to Financial Independence

You could cobble together your own FI plan from a whole constellation of blogs, podcasts, and YouTube videos.

Or you could let FI Pathfinder email you the content you want, in the format you prefer, to be consumed at a time of your choosing.

ChooseFI Logo

Our community helps people discover and accelerate their path to Financial Independence with the goal of earning more, spending less and enjoying the journey.