Harness Money

An HSA is a Health Savings Account. The HSA is a bank account that a person can use to save money to be used for future qualified medical expenses. The individual must be enrolled in a high deductible health plan (HDHP) in order to qualify for contributing to the HSA account.

The contributions made to a Health Savings Accounts are tax-deductible. If the individual uses the HSA for qualified medical expenses the individual does not have to pay tax when the money is spent.

Everyone should have health emergency fund. We are all going to need health care at some point in our lives.

Just recently I had my appendix removed. I spent 2.5 days in the hospital and the total bill was over $30,000.

Luckily, I have health insurance through my employer so I will not have to pay the full amount, but I will have to pay a good portion of that amount. The cost of health care goes up every year. The cost of prescription drugs continues to go up.

This is why I also have an HSA. In 2022, an HSA allows an individual to contribute $3,3650 or $7,300 for a family. This amount may contributed all at once or by contributing over time. If your employer allows, a specified amount can also be withheld from an employees check.

Why do I love my HSA?

You can leave the money in your bank account in cash. Or you may also invest this money into the stock market. You money can grow or decrease with the market and you can receive dividends from your investments.

My preference is to keep a minimum amount of money, lets say $5,000, in cash and then anything about that amount I choose to invest in the market in order to grow the balance over time.

The U.S. government sets the amount of money that an individual is allowed to contribute yearly to the HSA. As this account becomes more popular with the general public the amount a person can contribute increases over time. It is likely this will continue, but that is not a guarantee.

Do I need to save medical receipts?

Many accounts have an HSA debit card that you may choose to use to pay medical expenses. Or you are allowed to pay cash, debit or credit based on your current payment method and then be reimbursed from your HSA account.

But, in order to be reimbursed from your HSA account you need to show that you made the medical purchase. Which means that you need to save your medical receipts today in order to be reimbursed from your account tomorrow.

There is no time limit on how long you can wait to be reimbursed. You can make a medical purchase today and then 2 years or 10 years from now choose to be reimbursed from your HSA account.

An HSA is a great tool to prepare for retirement or a health emergency.

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