馃攳
Health Savings Accounts: Part 3 - The Power of Delayed Reimbursement - YouTube
Channel: Java Wealth - Personal Finance for Tech Employees
[0]
In my last video, I talked about how
an HSA can be used
[3]
as another retirement account.
[5]
But what's one of the cardinal rules whenever
you're saving for retirement?
[10]
That is "you don't want to take money out before
you need it in retirement!"
[14]
So today I'm going to talk about a tax rule
[17]
that can allow you to keep the money
in your HSA,
[21]
let it grow, and still withdraw tax free!
[32]
In order to take full advantage of the
tax benefits of an HSA
[37]
so we're all we're already getting the advantage
[41]
of not being taxed on the way in
[45]
But in order to take full advantage
then you want the money to stay in this
[49]
account as long as possible
so that the investments can do their thing
[53]
So that you're not taxed on the
gains or the dividends
[58]
and then that you have the most amount
[60]
of money that you can whenever you
withdraw.
[62]
So here is the rule that a lot of people
don't know about
[66]
and it can really help out from this tax
perspective.
[72]
Just cleaning this up a little bit,
got rid of some of the parts that don't
[75]
actually matter
in this part of the discussion
[78]
Here's how this goes: So you're putting
money into your HSA
[81]
and that is your account to save up for
medical expenses.
[85]
Let's say that you do get a medical expense.
[88]
you go to the hospital and then you have
a $2000 medical bill.
[93]
Whenever you have that medical bill then
[94]
you essentially have two options of how
you pay that.
[97]
The first option and the most obvious
one is that you can
[100]
take money out of the HSA,
[102]
you can pay that medical bill that's a
[104]
qualified withdrawal, and you're not
taxed on it and then that's taken care of
[108]
but another thing that you could do,
[111]
and that's if you have the means to do it,
is not touch the money that is
[116]
inside of your HSA and allow it to
stay invested and to keep growing and
[122]
instead pay this medical bill out of pocket.
[126]
Then after, you pay that medical bill
(and this is a really important piece of it)
[129]
is that you get a receipt for paying that bill.
[134]
This receipt is really important.
[137]
So if we said that this
medical bill was $2000
[140]
and so we have a receipt here for $2000
[143]
What we've done, rather than
taking that $2000
[147]
out of our HSA we've allowed that money
to stay invested and to continue to grow
[154]
and let compound interest take effect.
[158]
Then whenever we are in the future,
whether it's one year down the line
[162]
or whether it's 30 years down the line,
you can use this receipt for $2000
[167]
to take money out of the HSA
[172]
and that money will be considered
a qualified medical expense
[177]
because you have proof here
[179]
and then you can use that money
and not have any taxes on it.
[184]
I have to stress that in order for this
to work
[187]
you need to be able to keep good records
and have this receipt
[192]
because in the case of you getting audited
[195]
then you need to be able to show that
that distribution,
[199]
that withdrawal, was qualified based
on that receipt.
[203]
So that's the strategy. I'll leave it up
to you as far as whether you think
[207]
that is worth the headache of keeping
these records
[211]
or if you just want to pay
the medical bill
[214]
straight from the HSA and not have to
worry about it.
[216]
So there's pros and cons to each
[218]
but I wanted to give you
that background and that option
[223]
so I'll leave it up to you as far as
whether you feel like that's right for
[227]
you and your family.
[230]
Again, I really appreciate you guys
watching.
[233]
Please feel free to subscribe to my YouTube channel
[235]
or follow me at javawealth.com
[237]
and I will talk to you guys later. Thanks!
Most Recent Videos:
You can go back to the homepage right here: Homepage