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HSA Plans – A Deep Dive with Todd Berkley and John Young

Health insurance is so complicated.  We deep dive into HSA plans so you can get the most out of your health care dollars.

What is an HSA?  Simply put, it’s a health savings account that usually has an investment option and is tied to a high deductible plan.  The money goes in tax free, it grows, and when you withdraw it to spend on out of pocket health care, it remains tax free!  And it’s flexible.

If you take it out to spend on non-health care purchases, it is taxed and there is a penalty but you do have that option.  And once you reach age 65, you can use it without penalty and at the prevailing tax rate which should be lower than it was during your prime earning years.  Not to be confused with an FSA (flexible spending account) which must be emptied by the end of the year or you lose the money.

The numbers change year to year but currently, a single person can put $3300 into an HSA and a family can contribute $6550.  Our guests advise first funding the matching portion of your 401K, then fully funding the HSA, and finally going back to the 401K.  Your HSA is portable too, you can take it with you when you leave your job.

If you’re self employed you can set up an HSA for yourself.  Just buy a plan that is HSA qualified and you can reap the rewards available to the rest of us wage slaves.  About 20% of the offerings on the HCE are HSA qualified so you’ll have several to choose from.

Once you put money into the HSA, you can spend it on medical expenses for yourself, a spouse, or any tax dependents, for the rest of your life tax free.  You’ll generally receive a debit type card to spend the money with.

Should you leave your job, get fired or laid off, you can use your HSA to pay for Cobra premiums and once you reach 65 you can use it to pay Medicare premiums.

We spend our own money differently than we spend other people's money.

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There are some unexpected benefits to this system aside from just the financial.  When your insurance covered everything but your $10 co-pay, you didn’t ask to many questions.  Now that it’s your money, you suddenly want to know the justification behind your doctor ordering you and MRI.

You want the generic prescription at a fraction of the price rather than the name brand.  You might even start looking after your health a bit more carefully.  Insulin is expensive, maybe I should cut down on the carbs.  This has forced transparency is what has traditionally been a very murky world and sunlight benefits us all.

Speak to your HR department and see if a high deductible plan with an attached HSA is available to you.  Take control of your health and your money.

Show Notes

Allagash Tripel:  an ale with a long, smooth finish.

Ask MR HSA:  Todd’s site to answer all your HSA questions.

Consumer Driven:  John helps break down the barriers for health care consumers.

HSA Administrators: Awesome HSA side recommended by a listener that allows you to put your HSA contributions into Vanguard funds.

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10 responses to “HSA Plans – A Deep Dive with Todd Berkley and John Young”

  1. Billiam says:

    Great interview. Learned lots. Enjoyed the guests.

    Question 1. So if our employer only offers the FSA, is there a benefit to that? It just seems like something I don’t bother using.

    Question 2. Not trying to be the Negative Nathan here, but if this is the direction toward which healthcare insurance is trending, it seems like there’s a lot of self education needed to keep up with best practices in tax advantaged account usage, and knowing how and when to use them. Does that leave a good portion of society in the dust, with little to no guidance? (Think of the proportion of American working class folks who don’t have access to good information like this, or don’t listen to super awesome podcasts.) Just thinking . . . .

    As always, keep up the good work.

    • Thanks Billiam, we had a blast with them – super cool guys!

      1. There is absolutely a benefit to an FSA in that it’s pretax money and reduces your overall taxable income. The downside is of course that at the end of each year your FSA will not rollover your balance and instead set it to zero. So, if you do use an FSA you must be very diligent in planning your contributions so that you don’t waste any cash.

      2. You have a very good point, often things like 401ks, IRAs, HSAs, 529s, etc… tilt more towards benefiting the wealthier and more educated crowd. As you suggested, the only real barrier is education and we feel it’s our responsibility to help push the needle forward in that area. Expect many more health/finance breakdowns in episodes and articles as we attempt to cut through the bullshit. We figure that if our message is detailed and honest, all we need to do from there is share those resources. Will we reach everyone? Probably not. However, it won’t be from a lack of trying :)

  2. HSASearch says:

    Great interview, lots of fun and informative! Thanks for mentioning!

  3. HSAs can be such a great tool if you have one available to you! It definitely makes you watch those expenses all the more closely!

  4. David Mathias says:

    Just listened to this podcast this morning on my way to work. Great piece. Todd mentioned he has a book on HSA. Where might one find a copy of that and is there a digital version?

  5. jb1907 says:

    HSA money can be used to pay Long Term Health Insurance Premiums.

  6. DancingStina says:

    This has been one of the most educational episodes for me. I’ve been wondering about the benefits of my HSA and how much I should be contributing. This episode answered pretty much all of my questions, and helped me realize how much I don’e know about how health insurance works. When I went to look in detail at my own account, I could see all the things I was charged for this year, including xrays that I would have forgone if I’d realized I would actually be paying for each one. I agree with you that this system will help people see where their health dollars are going, but it’s very confusing at first because nobody actually asks you for money. You have to go into your account and look for yourself; so it will take a lot more effort, but I think that’s for the better! We should know where our money is going.

    • I absolutely agree that – health care is a mine field. If you go high deductible and hold on to your own savings via a tax deductible HSA then you’ll be forced to know where all your expenses are going.

      Ultra tax benefits, lower health care costs and retire with the money you’ve contributed when you were young? Hell yea! I’ve already got a pretty beefy HSA account through work, just gotta stay focused on continually building it up.

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