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YouTuber, Money Expert, Educator, Traveler, Rebel, and #1 Book Nerd. My mission is to empower you with the mindset and financial know-how to get more of what you want out of life.

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Healthcare… everybody’s favorite topic! Just kidding – but getting your own health insurance and figuring out how to use HSAs (Health Savings Accounts) is all part of adulting.

HSAs are an amazing way to reduce your healthcare costs AND save for retirement, so if you want to learn how they work and how to open one for yourself, then keep reading or watch the video below!

What is an HSA?

HSA stands for Health Savings Account, and it’s a type of investment account that goes hand in hand with your health insurance. Anyone who has an HSA-qualified health insurance plan can open an HSA.

HSA-qualified plans are generally the ones with high deductibles. Since health insurance can be quite expensive, many people get High-Deductible Health Plans, which have really affordable monthly premiums but also higher out-of-pocket expenses. So HSAs are meant to help you with the out-of-pocket expenses.

Benefits of the HSA

HSAs offer some major tax benefits: all your contributions are tax-free, any growth on your investments are tax-free, and withdrawals are tax-free. You actually get more tax benefits with an HSA than you get with IRAs, because you don’t pay taxes on the money you contribute, and you don’t pay taxes on the money you withdraw either. With IRAs, it’s one or the other.

You use your HSA just like a checking account to pay for health-related expenses. I have an HSA card… it looks just like a debit card, and any time I have to pay a copay for a doctor’s visit, or get new contacts, glasses, or pay for a tooth cleaning, I just swipe my HSA card.

I use my HSA a lot, especially for things that aren’t actually covered by my health insurance. Like my health insurance doesn’t cover acupuncture or chiropractor adjustments, which I get pretty often and I have to pay for those things out-of-pocket. So using my HSA to pay for it helps a lot since at least it’s with tax-free money. I hear that you can even use your HSA for massages, as long as you have a doctor’s note. I’ll have to try that sometime…

HSAs are also a great way to save for retirement because when you turn 65, you can start using the money for whatever you want, not just medical expenses. I mean come on… really?! It’s almost too good to be true, and whenever there’s a chance for tax-free ANYTHING, I’m all over it.

Depending on where you open your HSA, you can also invest your HSA in the stock market. That way, the money in your HSA can work for you and keep growing until you need to spend it.

My HSA is at Fidelity, and I invest half of it into high-growth index funds, and the other half into a money market fund that pays about 2% interest.

And then whenever I’m anticipating a health-related expense, I’ll sell some shares in the money market fund so that I have the cash to pay for the expense. If you’re self-employed like me, getting health insurance on your own can be super expensive, so I think an HDHP (High Deductible Health Plan) with an HSA is a really good workaround to avoid expensive monthly premiums while also having a cost-effective way to pay for any out-of-pocket expenses.

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YouTuber, Money Expert, Educator, Traveler, Rebel, and #1 Book Nerd. My mission is to empower you with the mindset and financial know-how to create a life of TOTAL freedom.

Rose.

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Rose

YouTuber, Money Expert, Educator, Traveler, Rebel, and #1 Book Nerd. My mission is to empower you with the mindset and financial know-how to get more of what you want out of life.

The weekly email that spills all the secrets on what it really takes to create a life of total financial freedom

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