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Health Savings Account

Contribute

Defer HSA contributions from your income.

Invest

Invest in alternatives as you would with an IRA.

Distribute

Distribute tax-free, regardless of age, for QMEs.

HSA Benefits

A Health Savings Account (HSA) is a tax-advantaged savings account for current and/or future medical expenses. Unlike a flex spending account, it is not "use it or lose it". HSAs are self-directed savings vehicles that allow you to cover medical expenses that almost everyone encounters eventually. The list of qualified medical expenses (QMEs) is very comprehensive and includes your deductible. You can grow your account with the same alternative IRA investments you've come to know and trust (real estate, private lending, etc.) NEVER PAY TAXES on a sizable portion of your income through tax-deferred contributions and tax-free distributions.

As with a Traditional IRA, up to your full HSA contribution amount may be deducted from your income for tax purposes. You must be enrolled in a high-deductible health plan (HDHP) to make HSA contributions.

As with a Roth IRA, distributions can be completely tax-free. To qualify, HSA withdrawals must cover QMEs or reimburse you for a QME you personally covered at a prior time.

High Deductible Health Plan

Unlike PPOs and HMOs, HDHPs charge lower monthly or annual premiums but come with higher deductibles. This means plan holders would have to pay more out of pocket for medical expenses before insurance kicks in to cover the rest. Per the IRS, insurance plans qualify as HDHPs if they feature a minimum deductible of $1,350 and a maximum deductible of $6,650 for individuals. Deductibles on family plans must fall within the $2,700 minimum and the $13,300 maximum.

Higher deductibles may not seem appealing, but always remember that deductibles are qualified medical expenses under current HSA rules. This allows you to pay lower monthly premiums for your HDHP, defer out-of-pocket expenses to your HSA, and pay zero taxes along the way!

Other HSA Rules

You Can:

  • Invest and grow your HSA without ever having to pay required minimum distributions.
  • Distribute HSA funds for non-QMEs at age 65. Such distributions would be taxed as income in the same manner as Traditional IRA distributions.
  • Transfer an HSA account between employers without liquidating, rolling, or consolidating your holdings.
  • Seek additional coverage for tort liabilities, liabilities related to workers' compensation or use/ownership of property, particular illnesses or diseases, or per diem stipends for hospital stays.
  • Seek additional coverage for vision or dental care, accidents, disabilities, or long-term care needs.

You Cannot:

  • Hold a self-directed HSA without a qualified administrator (i.e. New Direction Trust Company). Your HSA administrator will likely differ from your insurance provider.
  • Receive employer contributions to your HSA if said employer already contributes to a similar tax-advantaged health-based plan such as a flexible spending account (FSA) or health reimbursement arrangement (HRA).
  • Pursue additional non-HDHP coverage apart from that which covers the aforementioned conditions or circumstances.
  • Contribute to an HSA if you're enrolled in Medicare.
  • Be reported as a dependent on somebody else's tax return.

HSA Education

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