HSA’s are a fantastic account to have. Before I get into the benefits of an HSA, I need to explain one very important thing. You need to first decide which health plan is best for your family. Discuss all of the options and pros and cons with your agent. You want to make sure you and your family are properly covered. If that plan is not HSA eligible, then that is fine. However, if it is an HSA eligible health plan, then make sure you have an HSA.
One thing some people don’t know about HSAs is that you can invest the money in those accounts in mutual funds. It doesn’t have to be in cash like a savings account or something. You probably want to keep enough in cash to pay for more immediate health care costs, but the majority in Mutual funds will help the account grow.
HSAs have a triple tax advantage. 1) You get a deduction for contributions to your HSA. 2) It grows tax free in your mutual funds. 3) If you use the funds for healthcare expenses then you don’t have to pay taxes on the distributions either. It’s an amazing deal. You can also pay cash for your health care expenses and save the receipts and then pull that money out later, even years down the road, totally tax free and use it on whatever you want. As long as you have the health care receipts saved showing you spent that exact amount of money on health care.
Once you are 65 it essentially acts has a traditional IRA. You can pull it out without penalty but you do have to pay taxes on the distributions if you don’t use it on health care. That is the same as a traditional IRA. If you do pull the money out of the HSA before you are 65 and don’t use it on health care then there will be a penalty and you also have to pay taxes on it.
It is an amazing retirement savings account with all of these advantages. However, it is not worth not having the correct healthcare plan for your family. So again, choose the health care plan that is best for you first.
Make sure that you are getting your HSA from a company that offers the ability to invest the money in mutual funds, and a company that doesn’t charge a bunch of fees. Below is my list of such companies that I highly recommend. As I find new companies that offer these benefits I will add them to the list.
Lively: Lively is a fantastic option for your HSA. I know several people who use them and they are all extremely satisfied with them. Here are some advantages that Lively advertises.
- Absolutely no fees: Lively HSAs are free for individuals and families, so you never have to worry about hidden costs.
- Put your money to work with peace of mind: Lively HSAs are FDIC-insured* and use bank-grade security.
- Whether you’re saving, spending, or investing, we’re here when you need us.
Lively has a very intuitive online Dashboard that helps make contributions, distributions, transfers, and investing the funds very easy. Check out Lively here and sign up for your HSA.
*Nothing on my website is professional or legal advice. I am only sharing information that I have learned and it may or may not be accurate. I am not liable for any problems you may have by following this advice. Please do further research and get professional and/or legal advice about any of these topics. This page contains affiliate links. This site could be paid for clicks or purchases made through these links. See my disclosure here.