Quick summary for me on how I should best utilize an HSA and why. Other's have
already written about what an HSA is and the benefits of an HSA way better than
I can (see the references), and I'd rather not regurgitate what
they've said. Instead, I'll summarize the key lessons/tricks for me here, and
resources I used to learn these lessons.
Disclaimer: This article is not financial or tax advice. It is a reference
for myself, but may not be accurate as tax laws change. Please seek advice from
a financial professional and/or do your research before making any decisions.
- An understanding of basic tax advantaged accounts like a traditional IRA and
roth IRA
- Ensure you meet the requirements to contribute to an HSA 1
- Ensure you have a basic understanding of what an HSA account is 2 3
- Prioritize putting savings/retirement money in an HSA above all other accounts
since it's the most tax advantaged 3
- Invest as much of the HSA funds as you can so they can grow tax free with
compound interest 4
- Don't withdraw any funds (even medical bills) from an HSA until you
absolutely need to in retirement to maximize compound interest growth 6
- Relating to the above, if you spend your HSA funds on non-medical expenses
before age 65, you must pay a 20% penalty, but after age 65 the spending just
counts as ordinary income, making an HSA the equivalent of a traditional IRA
for non-medical expenses! 7
- If you must pay for medical bills using HSA funds, first pay using your credit
card, and then reimburse yourself afterwards so you can collect points 5
- Who can open an HSA
- HSA summary
- HSA Benefits
- Investing HSA Contributions
- Reimburse your HSA credit card expenses
- Don't spend HSA contributions
- HSA FAQs