Sounds kinda like a dumb question since the whole point of the HSA is to use it for health expenses, however it has so many advantages so I don’t really know if I should use it. It’s basically another Roth IRA. I’m just starting my HSA so currently I have nothing in it but I’m maxing it, maxing Roth IRA, maxing the 401k match. I don’t expect to have to use the HSA since I have savings and stuff but I didn’t know if I should use it for the regular health expenses like new glasses, annual physical, eye exam etc or just invest it and let it grow and try not to touch it unless I need to.
Should you use your HSA money?
byu/Airvian94 inpersonalfinance
Posted by Airvian94
20 Comments
Ideally you hold it for retirement whilst saving all your receipts.
Realistically, it provides another tax free source of funds should you need the money (and have sufficient receipts)
It is a hybrid retirement account and emergency fund
If you have the cash flow to pay out of pocket for medical expenses, the best way to use an HSA is:
* Don’t pull from it
* Invest it so that the money can grow entirely tax free
* Save medical receipts and reimburse yourself in the distance future
I think in general, if you can pay for the expenses out-of-pocket, it’s best to do that and let the money in your HSA grow tax free until you actually need it. You can save all receipts as there’s no time limit on when you can claim expenses. So you can use any receipts from today to pull the money out 30 years from now to claim if you want.
I cashflow all medical expenses and scan the receipts to store in OneDrive and keep a spreadsheet tab for the expenses. If I need the money before retirement for a non-medical reason, I can access it.
You can save receipts if you want to maximize it mathematically.
I dont bother. You already get the benefit of the immediate tax deduction.
Financially it’s much better than Roth IRA. Not only does it use pre-tax money that is not taxed on withdrawal, it’s also exempt from FICA.
I use it for all my eligible medical expenses. I also invest some of it and it’s growing. I don’t think too much about it and I like having health costs tied to only one account/payment method. I’m not saving receipts for when I’m 60 that sounds insane to me
It’s honestly up to you.
I personally don’t find it to be worth it to save receipts for the future. I’m already getting around a 30% discount when I use HSA just from tax savings.
Saving smalls receipts isn’t really worth the effort, and it’s easy to just use the hsa card instead and not think about it anymore. Large expenses I would rather have the cash now than save for 25 years.
Plus my HSA keeps growing. I don’t spend the full annual contribution each year. So I can already invest most of it and have it as another retirement account.
In retirement and on Medicare B G D, I’m not having much out of pocket to spend it on. Maybe future dental? Or I think I can pay Part B premiums with it too?
I’ve only used mine once and I kicked myself for paying for a crown out of it.
Mines now to a point where it’s generating enough per year in growth to cover my max deduction on my healthcare if I just absolutely had to use it.
Saving receipts for 30+ years feels like such a hassle that I decided to pay for medical expenses out of the HSA as I incur them.
HSA is basically the equivalent of a pre-tax Roth for healthcare. You contribute pre-tax, after you reach a threshold amount the rest you can invest and then you can spend it tax free.
If you have expenses spend it if you don’t then don’t
I’m saving it for retirement.
I pay regular medical expenses out of pocket – knock on wood that they remain low.
So some numbers to run by you. Not bragging just telling you my situation. I started hsa with my employer back Sept 2 years ago. They give me 1000k towards the contribution. It’s now almost at 2k. Im single and have been maxing out the rest in fidelity and that’s almost 9400. The max last year was 3300. This year is 3400. For single person. All of this is tax savings from my paycheck, grows tax free, and free withdrawals for medical expenses. My most expensive medical purchase was my night guard like $600. Got a mole removed and the place charged me 550. Fidelity health is a separate app that allows you to store receipts so that’s what I do. Im relatively healthy…so far. Like the other comment said, if you dont want to hold onto your receipts, leave your contributions in cash and pay with the hsa card.
If you need the money I would definitely use it.
If you find yourself looking for places to invest money because you are cash rich, don’t use it. Because it doesn’t get better than triple tax free.
If you are anywhere in between, it is use at your discretion. There is no wrong answer.
I will use my HSA if I have to. Haven’t had to yet. I consider it my ‘die in my home account’. My goal is to not touch it until I need regular care, and I intend to use it for in home nursing instead of a nursing home.
If you don’t need the money now, leave it in the HSA but keep your receipts. You can claim those anytime after.
If you need the money now, take it out. It’s already tax free spending.
The biggest benefit of the HSA is during retirement for tax bracket and govt benefits. HSA withdrawals don’t count towards countable income. It can help keep you in a lower tax bracket to quality for government benefits by reducing your countable income.
I think for eye or dental you can have a FSA for it. Usually it’s one or the other but I think they allow it for HSA and a FSA if you’re only using it for those 2 expenses. That’s what I’d do, and will next year!
It’s great if you can let the HSA compound tax free for a long time, but if you can’t then use it.
I am going to use it for medical expenses…in retirement. Either itll get all used in retirement or Ill die with money…either of which I am good with.