Speaker 1: Welcome to How the Money. I'm Joel and I'm Matt,
Speaker 1: and today we're talking about h s A s. Are
Speaker 1: they the best retirement account? All right, Joel, I am
Speaker 1: pumped to talk about h s A S, which, by
Speaker 1: the way, stands for health savings accounts. They are relatively
Speaker 1: new on the financial scene. Yeah, I mean like it
Speaker 1: depends on how you classify new, right, like yeah, early
Speaker 1: two thousands, Yeah, that's when they came about. But we
Speaker 1: are going to mostly talk about how they are a
Speaker 1: fantastic retirement accounts. We're going to dive into why that
Speaker 1: is in this episode. And a lot of people don't
Speaker 1: even know what an h s A is or if
Speaker 1: their h s A eligible, So we're gonna get into
Speaker 1: all that. Matt. By the way, you were out of
Speaker 1: town for a week recently and the girls and I
Speaker 1: would come over and we would water your garden. It's
Speaker 1: looking beautiful, dude, and I noticed that you're harvesting a
Speaker 1: lot of stuff. Now, yeah, man, that's right. Well, you
Speaker 1: know what, before you came over, Kate and I had
Speaker 1: a fantastic meal and she made this triple mushroom pattee
Speaker 1: and we ate some of our fresh tomatoes. By the way,
Speaker 1: the kids aren't here with us this week because they're
Speaker 1: at grandparents camp, and so we're enjoying that's married without
Speaker 1: kid's life, where Kay can spend as much time as
Speaker 1: she wants without kids pulling on her leg while she's
Speaker 1: whipping up dishes. Grandparents camp equals adult freedom. It's pretty,
Speaker 1: it's pretty glorious thing. It's amazing. But yeah, I'm glad
Speaker 1: you mentioned the garden. That's something we talked about doing
Speaker 1: just months ago. Even the garden, it's tons of fun,
Speaker 1: it's super cool. The girls love it. Kate herself, she
Speaker 1: actually gets a lot of joy and just kind of
Speaker 1: cultivating the plants. But dude, let me tell you what,
Speaker 1: it is a lot of work. Which is interesting because
Speaker 1: when I first met you, you had a big garden
Speaker 1: in your backyard at yeah, oh yeah, I didn't know
Speaker 1: that you had this big guarden back in the day,
Speaker 1: and it was probably, let me guess, it was probably
Speaker 1: about twenty ft by ten ft. Honestly, it was more
Speaker 1: like thirty by thirty. It was. It was a massive garden.
Speaker 1: And so now you're rolling with a much smaller garden
Speaker 1: in the front yard, which is probably what ten by ten.
Speaker 1: I should know this. It's as square foot garden. Kate's
Speaker 1: really gotten into it. Basically, it's all about gardening in
Speaker 1: a small plot of lane and essentially what you do
Speaker 1: is every square foot you plant something. And what you do, though,
Speaker 1: is you go vertical instead of letting it spread out.
Speaker 1: So if you're limited in space, that's what you do.
Speaker 1: And we've certainly had a lot of veggies. It's been
Speaker 1: fantastic eating fresh, real tasting tomatoes. We've joked before about
Speaker 1: hipster tomatoes like the purple ones, but we got them
Speaker 1: Manrowan and we had some of that before you came
Speaker 1: over for lunch and it was fantastic. Not to mention
Speaker 1: other other awesome stuff like okra. I know you like okra?
Speaker 1: I do? I? Yeah? I made some fried okra at
Speaker 1: home the other day. Was so good. Another favorite of
Speaker 1: ours is shohido peppers. Have you ever had shohidos like
Speaker 1: blistered shochidos? No, but it sounds good. Oh my gosh,
Speaker 1: I think you would love them. I'll try it. It's
Speaker 1: a it's a perfect mix between veggie, but on the
Speaker 1: grill as well, because you get real hot and they
Speaker 1: blister and amazing flavor. Well, I feel like we need
Speaker 1: to do a whole episode on garden ng or like
Speaker 1: kind of outside of the box ways to grow your
Speaker 1: own food, to think about your own food. You actually
Speaker 1: need to do an episode on specifically how to cook
Speaker 1: inexpensively too, And I'm looking forward to taking those topics
Speaker 1: in the future. That's Skates, jam Man. We should, yeah,
Speaker 1: we should do that, but I mean, I wanted to
Speaker 1: mention the garden too. It's very delicious, it's amazing, it's
Speaker 1: a lot of fun. But because it does take a
Speaker 1: lot of work, you need to make sure that you
Speaker 1: enjoy the actual work of weeding and tending to the
Speaker 1: garden if it's going to be worth it, because from
Speaker 1: a dollar to dollar standpoint, I don't know if it
Speaker 1: actually pans out, But if you can also enjoy the work,
Speaker 1: enjoy being outside doing the whole the whole gig, then
Speaker 1: and it could totally be worth it for you. Man,
Speaker 1: There's something I would imagine because I haven't done it,
Speaker 1: so I don't know, but I would imagine that there's
Speaker 1: something really amazing about eating something that you've grown with
Speaker 1: your own hands, that intangible. Like we talked about calculating
Speaker 1: your hourly rate. But that's one of those intangibles. And
Speaker 1: it doesn't even matter if it costs you more to
Speaker 1: grow your own vegetables as long as it provides you
Speaker 1: with kind of a connection to the earth and this
Speaker 1: ability to grow your own food and then eat something delicious.
Speaker 1: I mean, there are all these intangibles involved with how
Speaker 1: in your own garden that you can't put on paper,
Speaker 1: You can't put it in a spreadsheet. And man, I
Speaker 1: love that you guys are enjoying the fruits of your labors,
Speaker 1: or vegetables of your labors, as it might be. Yeah,
Speaker 1: most definitely there's some awesome independence that comes from being
Speaker 1: able to grow your own food versus being deepended on
Speaker 1: a grocery store. But you wanna go ahead and introduce
Speaker 1: our beer for this episode. Yeah, Today on the show,
Speaker 1: we're drinking Mirror Universe. It's a Hazy i p a
Speaker 1: by Fair State Brewing Cooperative. And this is another beer
Speaker 1: given to Aspire listener Riley, who donated the beer from
Speaker 1: Monday's episode. That's right, Thanks so much, Riley in Minnesota.
Speaker 1: We're looking forward to discussing this one at the end
Speaker 1: of the show. All right, Matt, So onto the topic
Speaker 1: at hand. We're talking about h s as health savings accounts,
Speaker 1: and it turns out there's a decent chance that hs
Speaker 1: as are actually the best retirement savings account most people
Speaker 1: have never heard of, and we think that most people
Speaker 1: do need to know about health savings accounts. We have
Speaker 1: a friend Brandon, who goes by the name of the
Speaker 1: Mad Scientist, and he's called them the ultimate retirement account
Speaker 1: and I don't think he's wrong. But we need to
Speaker 1: talk about who has access and how to know if
Speaker 1: you're eligible, and then also help people understand how to
Speaker 1: get the most out of their HSA. So let's get
Speaker 1: to it. Another reason too that we're talking about h
Speaker 1: S a S is because if you are getting your
Speaker 1: financial game together, you're looking for ways to to be
Speaker 1: smart with your money. You're looking for the best ways
Speaker 1: to optimize, You're looking for the best vehicles to invest through,
Speaker 1: and not everybody has an employer with a four O
Speaker 1: n K where they match right. And even with RATH
Speaker 1: I R A S, which is one of our favorite
Speaker 1: vehicles to invest within, they still have contribution limits. So
Speaker 1: if you're wanting to save and invest your money for retirement,
Speaker 1: you want to make sure that you're aware of the
Speaker 1: additional vehicles that are also tax advantage and in this case, man,
Speaker 1: this might be one of the most tax advantaged accounts,
Speaker 1: even more than a rath I RA A yeah or
Speaker 1: a four oh one K and h S A S
Speaker 1: I think get overlooked for a couple of reasons. One
Speaker 1: is that the term health is involved, so people automatically
Speaker 1: associated with health insurances healthcare. It's yeah, they assume that
Speaker 1: it's not some sort of retirement account investing vehicle, but
Speaker 1: it is health insurances. Confusing and frustrating. But if you
Speaker 1: have access to an h s A, you neglect it
Speaker 1: at your own financial peril because they're awesome. That's ragual,
Speaker 1: because h s A s are the best. One of
Speaker 1: the reasons that they're the best is because they are
Speaker 1: quite literally the most tax advantaged account out there. There
Speaker 1: are three different ways that it can be a tax
Speaker 1: advantaged account. That's a triple savings That means you pay
Speaker 1: no tax on contributions that you make to an h
Speaker 1: s A, you pay zero taxes on earnings as that
Speaker 1: money grows, and then you also pay zero taxes when
Speaker 1: you spend that money on qualified medical expenses. That's A
Speaker 1: a triple threat. And the reason that we would consider
Speaker 1: an hs A an investment account, even though you only
Speaker 1: get the extra tax advantage if you spend it on
Speaker 1: medical expenses, well, is that you can invest inside of
Speaker 1: an h s A and your money can experience compounding
Speaker 1: growth over the decades, just like you can in a
Speaker 1: four oh one K or an I R A. And
Speaker 1: we'll get into some of the nitty gritty on how
Speaker 1: you spend your h s A in retirement later on,
Speaker 1: but basically, it's important also to acknowledge that even if
Speaker 1: your employer offers an h s A to you, well,
Speaker 1: that h s A is yours and it's not taken
Speaker 1: away from you when or if you leave your job.
Speaker 1: So if your employer has mentioned that you have an
Speaker 1: h s A available to you and you haven't taken
Speaker 1: advantage of it because you one weren't familiar with what
Speaker 1: it was, or two thought that maybe it didn't stick
Speaker 1: with you when you left, well that's not true. And
Speaker 1: so it's really important to know that when you open
Speaker 1: up an h s A, it's with you for life,
Speaker 1: That's right, Joel. And we've talked about f s A
Speaker 1: s before, which are flexible spending accounts, and you know what,
Speaker 1: they're pretty good. But h s A S they are
Speaker 1: They are much much better. The biggest difference is that
Speaker 1: your money rolls over with an h s A, so
Speaker 1: you don't have to spend your contributions all in the
Speaker 1: same year that you put the funds in. It allows
Speaker 1: you to go into thinking about h s A S
Speaker 1: with more of a long term mindset. Yeah, where I'm employed, Matt,
Speaker 1: I only have access to an f s A. I
Speaker 1: don't have an h s A at my disposal. Kind
Speaker 1: of sounds like a humble brig about how great your
Speaker 1: health insurance is. Yeah, so, which means I do have
Speaker 1: access to really good health insurance, which is which is nice.
Speaker 1: But in f s A, I use that to its
Speaker 1: full potential. But if I had a high deductible plan,
Speaker 1: and we're gonna get into that in a second, I
Speaker 1: would most definitely be maxing out my h s A.
Speaker 1: And that is because some of these perks that we've
Speaker 1: talked about, and in particular that you can invest for
Speaker 1: the long term inside of an h s A and
Speaker 1: use it as an additional retirement savings account vehicle. So
Speaker 1: we're gonna talk about eligibility. We're gonna answer a few
Speaker 1: other questions regarding the h s A right after the
Speaker 1: break All right, now, so a lot of people are
Speaker 1: listening to this episode and they're wondering, Well, first I
Speaker 1: didn't know what an h s A was. I didn't
Speaker 1: know it existed. Now that I know, well, Joel just
Speaker 1: mentioned he doesn't have access to one. How do I
Speaker 1: find out if I am eligible for an h s A?
Speaker 1: And I'm glad you asked, Well, the I r S
Speaker 1: has set guidelines for who is eligible, but your healthcare
Speaker 1: plan needs to qualify as a high deductible healthcare plan
Speaker 1: in order for you to be able to contribute to
Speaker 1: an h s A. Matt, do you want to go
Speaker 1: over some of the numbers for us since your resident
Speaker 1: math or the numbers kind of suck. So we will
Speaker 1: put a link to that I r S page that
Speaker 1: has the guidelines there. But for twenty nineteen, in order
Speaker 1: to qualify for an hs A, the minimum annual deductible
Speaker 1: for an individual's health coverage is one thousand, three fifty
Speaker 1: and the number is twenty seven dollars for a family plan,
Speaker 1: and there's also maximum deductibles as well. And so the
Speaker 1: maximum deductible and out of pocket is sixty seven fifty
Speaker 1: for an individual plan and thirteen thousand, five hundred for
Speaker 1: full family healthcare. So basically, if you're deductibles fit within
Speaker 1: that range, you most definitely want to look into this.
Speaker 1: And there's a few other small requirements as well. We're
Speaker 1: not going to bore you to death with with all
Speaker 1: of those requirements, but check out the link will put
Speaker 1: that on our website. What's great though, is that a
Speaker 1: lot of the healthcare plans that are out there are
Speaker 1: labeled as such. They're labeled hs A, and they'll have
Speaker 1: that after the name, right, and so it'll might say
Speaker 1: like Blue Cross, Blue Shield h s A. Yeah, And
Speaker 1: as healthcare costs have ramped up, more and more plan
Speaker 1: and have become hs A eligible because they are just
Speaker 1: more high deductible plans on the market. And so if
Speaker 1: you're in a situation like i am, and you've got
Speaker 1: a day job in an HR department, it's best to
Speaker 1: reach out and ask if your health insurance plan is
Speaker 1: hs A eligible. Usually you can get a pretty quick
Speaker 1: response as to whether it is or isn't, But if
Speaker 1: it is, boom, it's time to start getting that ball
Speaker 1: rolling on investing in your hs A. And on top
Speaker 1: of that, some employers are actually contributing some money to
Speaker 1: an h s A that you begin to fund, which
Speaker 1: is a sweet perk. Yeah, that's that's a huge perk. Man.
Speaker 1: It's basically like a match that you don't have to
Speaker 1: put forth any effort and your employer does it for you. Right,
Speaker 1: that's pretty sick. And so that's if you have that
Speaker 1: steady nine to five like you do, Joel. But if
Speaker 1: you're self employed like I am, you still have access
Speaker 1: to high deductible health plans. Just double check to make
Speaker 1: sure that it's labeled as such or if it's not,
Speaker 1: that you're kind of digging into the details when you
Speaker 1: are picking out your plan. But regardless, if you're geting
Speaker 1: a high deductible plan, either through your employer or on
Speaker 1: your own out in the marketplace, the contribution limits are
Speaker 1: the same, which means that you and invest if you're single,
Speaker 1: and that's seven thousand dollars if you're married filing jointly.
Speaker 1: And so it's worth noting that those contribution limits they're
Speaker 1: not quite as high as a standard traditional IRA or
Speaker 1: a roth ira A. But you know what, if you
Speaker 1: couple this additional amount that you can invest in an
Speaker 1: h s A on top of what you can contribute
Speaker 1: to an IRA A. Dude, that gets to be a
Speaker 1: pretty healthy amount of money towards your retirement. That's like,
Speaker 1: instead of facing just Batman, you're facing Batman and Robin,
Speaker 1: right like this tag team Robins. Just like the little
Speaker 1: half point h s A off to the side a
Speaker 1: little bit, he both in tandem. Right, Well, maybe that
Speaker 1: begs a bigger question. Maybe the h s A is
Speaker 1: actually Batman. All right, Well, we'll tackle that. Might make
Speaker 1: that argument here in a little bit. All right, So
Speaker 1: another question that might come up for people who are
Speaker 1: just now kind of familiarizing themselves with hs A S
Speaker 1: is what if I no longer have a high deductible
Speaker 1: health plan in the future. Let's see yourself employed now
Speaker 1: with the high deductible health plan, and you start investing
Speaker 1: in an hs A and then you go back and
Speaker 1: get a traditional job with great health insurance, and this
Speaker 1: new plan has a really low deductible which is great. Well,
Speaker 1: the h s A that you invested in is still yours.
Speaker 1: You can't contribute anymore, uh, during the years in which
Speaker 1: you don't have high deductible health plans, but that money
Speaker 1: is still growing for you, and you'll still have access
Speaker 1: to that money tax free if you use it. Like
Speaker 1: we mentioned earlier on qualified medical expenses later on in life, yea, Joel,
Speaker 1: and you mentioned the year. It's it's even down to
Speaker 1: the month you might switch healthcare plans. And as soon
Speaker 1: as you start with a health care plan that does
Speaker 1: not have that high deductible plan, that month you can
Speaker 1: no longer make contributions to your hs A. So that's
Speaker 1: another way that it differs a little bit from an
Speaker 1: ira A where you kind of have an entire year
Speaker 1: to to make contributions or to not. It comes down
Speaker 1: to the month even that you have or don't have
Speaker 1: a high deductible health plan. Alright, mat So here is
Speaker 1: the question, is the h s A Batman or is
Speaker 1: it robin? Is if someone has an HSA available to them,
Speaker 1: should they invest in one and should they invest in
Speaker 1: one before maxing out the other retirement accounts that they
Speaker 1: have access to? Yeah, Juel, I mean that's the big question, right,
Speaker 1: That's what we're talking about here. And I would argue
Speaker 1: that an h s A should be fully funded before
Speaker 1: your roth IRA, before traditional IRA, and before any contributions
Speaker 1: beyond a match with your four O one K. I
Speaker 1: think the four one K with a match that comes first,
Speaker 1: because you can never beat that basically on your money,
Speaker 1: right like you can never beat that one for one
Speaker 1: dollar up to the percentage that they're willing to match.
Speaker 1: But after that, after you've reached your four O one
Speaker 1: k match, should you look at investing in a traditional IRA,
Speaker 1: should you look at investing in a roth ira, or
Speaker 1: should you look at an H S A? And I
Speaker 1: think it should be an h S A first, the
Speaker 1: reason being because it is triple tax advantage. That money
Speaker 1: is contributed tax free, it grows tax free, and it
Speaker 1: leaves that account without being taxed. It's spent on qualified
Speaker 1: medical expensive exactly exactly, and so there's a chance that
Speaker 1: that money never gets taxed or as with a roth
Speaker 1: IRA or with the traditional IRA, you're guaranteed that money
Speaker 1: is going to get taxed once at least once on
Speaker 1: the front end or the back end in some way
Speaker 1: for or fashion. Exactly. By the way, I realized that
Speaker 1: qualified medical expenses sounds like a ridiculous, stupid term, and
Speaker 1: it sounds like something the I R S would say
Speaker 1: and it is actually the I R S terminology for this.
Speaker 1: We will post a link in the show notes to
Speaker 1: a great website that kind of details what qualified medical
Speaker 1: expenses are, and we'll kind of also discuss in plain
Speaker 1: English terms what that means towards the end of the
Speaker 1: show too. But Matt, I completely understand where you're coming from.
Speaker 1: I think whether or not the h s A is
Speaker 1: Batman or Robin partially depends on people's goals. And we've
Speaker 1: talked about the roth ira A in detail, and I
Speaker 1: think the flexibility of having a roth ira A it
Speaker 1: adds to its appeal and maybe and and the fact
Speaker 1: that you can contribute a little bit more than to
Speaker 1: a wrath than you can to an h s A
Speaker 1: actually kind of, in my mind, tips the scales a
Speaker 1: little bit in favor of contributing to a wrath before
Speaker 1: you start fully funding that hs A. But the great
Speaker 1: thing is, if you are truly a dedicated saver, and
Speaker 1: you've placed a high priority on investing for your future,
Speaker 1: taking that four oh one K match if you have
Speaker 1: that available to you, and then focusing on maybe simultaneously
Speaker 1: even but focusing on the rath and then the hs A.
Speaker 1: I think is kind of a good way to think
Speaker 1: about it, and part of where you come down is
Speaker 1: going to depend on how you how much you value flexibility,
Speaker 1: and what age you're planning on quitting work. Those are
Speaker 1: some of the questions you're gonna want to ask yourself
Speaker 1: to determine which one is more valuable for you as
Speaker 1: an investment vehicle. But more than anything, what we want
Speaker 1: to communicate in this episode is that an hs A
Speaker 1: can and is truly an investment vehicle. Most of the
Speaker 1: times when people talk about in hs A, it's talked
Speaker 1: about as a current savings vehicle for medical expenses that
Speaker 1: you incur year of and based on what you can
Speaker 1: do inside of an h s A, that's the absolute
Speaker 1: wrong way to be using it. Yeah, that takes a
Speaker 1: very limited mindset and how you're approaching this amazing vehicle.
Speaker 1: It's it's kind of like if you have that brand
Speaker 1: new Tesla and you only take it to the al
Speaker 1: Di down the street and then you come back home,
Speaker 1: like that's it. There's so much more that that car
Speaker 1: can do, but you're just taking it to the grocery
Speaker 1: store and go zero to thirty and twenty seconds. You know,
Speaker 1: like that's not what you want to hear about your tesla, man,
Speaker 1: because they can go way faster, much quicker. Yeah, bottom line,
Speaker 1: the h s A is a fantastic retirement vehicle. And
Speaker 1: we're gonna talk more about how to get the most
Speaker 1: out of your h s A. We'll get to that
Speaker 1: right after the break, all right, Matt. So, we mentioned
Speaker 1: just a second ago how most people the way they
Speaker 1: talk about h s A s it's as a current
Speaker 1: savings vehicle for this year's medical expenses. And that's not
Speaker 1: the worst thing that could happen. You're still essentially using
Speaker 1: tax free money to pay for current medical expenses. But
Speaker 1: if you use an h s A in that manner,
Speaker 1: you're not really taking advantage of what it's able to
Speaker 1: do for you. All Right, So if you do want
Speaker 1: to go ahead and open an h s A, which
Speaker 1: we would recommend if you are eligible, you of course
Speaker 1: want to make sure that you are putting it to work,
Speaker 1: you're getting the most out of it. The first thing
Speaker 1: to consider is to contribute as much as you can
Speaker 1: every single year. We mentioned the annual limits, the annual
Speaker 1: contribution limits, that's singles seven thousand dollars if you're married,
Speaker 1: filing jointly try to hit those limits every single year,
Speaker 1: because you can't go back in time and contribute for
Speaker 1: prior years where you didn't aim. If you are contributing
Speaker 1: through automated payroll deductions, you are saving on fight attacks,
Speaker 1: so you're not having to pay additional payroll taxes on
Speaker 1: the money that you're contributing to your h s A. Yes,
Speaker 1: so that's an additional tax savings. Instead of just saving
Speaker 1: on the income taxes that you would have paid on
Speaker 1: that money, you're also in addition, saving extra tax that
Speaker 1: you would have paid on that income Social Security Medicare. Yeah,
Speaker 1: it's a sweet deal. Another way to get the most
Speaker 1: out of your h s A is to begin investing
Speaker 1: inside of your hs A. So treating it like a
Speaker 1: retirement account is crucial in this whole process. If you
Speaker 1: don't invest inside of your hs A, well it's really
Speaker 1: just not nearly as good of a vehicle. Thinking of
Speaker 1: your hs A like a rath IIRA or a four
Speaker 1: O one K and choosing investments inside of your hs
Speaker 1: A that will put your money in the market to
Speaker 1: grow over the long term. That's where you're going to
Speaker 1: see the biggest benefit, and that's where the h s
Speaker 1: A really really shines, and most people in effectively use
Speaker 1: their hs A by treating it like a savings account
Speaker 1: for medical expenses as opposed to treating it like an
Speaker 1: investment account to be used further on down the road.
Speaker 1: And when you're investing within your h s A, just
Speaker 1: like with regular retirement accounts, low fees are critical. They're crucial,
Speaker 1: just like with any other investment accounts. You want to
Speaker 1: make sure that you're minimizing the expenses that are going
Speaker 1: towards that account management as well as costs and expenses
Speaker 1: associated with those different fees. Yeah, we talked about this recently.
Speaker 1: Lower fees equal better for you. So a couple of
Speaker 1: places to consider lively infidelity, those are going to be
Speaker 1: your best bets for where you should have your hs
Speaker 1: A account. Yeah, those are the two leaders in low
Speaker 1: cost h s A accounts, and so those are honestly
Speaker 1: the only two places I would in all likelihood consider
Speaker 1: having my h s A. Basically, if you have a
Speaker 1: choice over the company you do business with when it
Speaker 1: comes to your hs A, lively infidelity are going to
Speaker 1: be your best bets because low fees rock and that's
Speaker 1: what they priority us, all right, matt Onto. The major
Speaker 1: sticking point of how to get the most out of
Speaker 1: your h s A, well, that lies in not tapping
Speaker 1: your hs A funds. That is how you maximize this account.
Speaker 1: If you pay your healthcare bills out of pocket and
Speaker 1: let your h s A continue to grow over the years,
Speaker 1: that is how you're going to build wealth inside of
Speaker 1: an h s A. Instead of taking the funds that
Speaker 1: you contribute to an h s A and tapping them
Speaker 1: for current medical expenses, you want to wait as long
Speaker 1: as you can and access those hs A funds after
Speaker 1: decades of growth. And that only makes sense with the
Speaker 1: way that we're talking about investing within an h s A. Right.
Speaker 1: If you are going to put your money in low
Speaker 1: cost index funds within your h s A, well, that's
Speaker 1: not money that you're gonna want to touch. Because the
Speaker 1: market goes up, the market goes down. You don't want
Speaker 1: to be in a position where you have to withdraw
Speaker 1: some money for medical expenses because you don't know where
Speaker 1: the market is going to be. And so it kind
Speaker 1: of makes sense that someone who isn't using an h
Speaker 1: s A to its full potential, right, they're using the
Speaker 1: h s A to literally pay their medical bills like
Speaker 1: they thought they were supposed to that it's sitting there
Speaker 1: in cash because they want availability to it. They want
Speaker 1: that access and it needs to be liquid. That makes sense,
Speaker 1: It only makes sense if that's how you're using your HSA,
Speaker 1: but we are recommending that you don't use your h
Speaker 1: AY that way. Pay those medical bills out of pocket,
Speaker 1: contribute funds to your h s A, put them in
Speaker 1: low cost index funds, and allow them to grow for
Speaker 1: decades to come. However, a key component to getting that
Speaker 1: third tax advantage right, Like we know that you can
Speaker 1: contribute tax free, we know that the earnings grow within
Speaker 1: an h s A tax free. But the third way
Speaker 1: to get that tax advantage is being able to take
Speaker 1: those distributions. But you want them to be qualified. And
Speaker 1: the way to make sure that your distributions are qualified
Speaker 1: is that you want to make sure that you hold
Speaker 1: on to your receipts. You want to keep those receipts forever.
Speaker 1: It's probably a good idea to digitize those receipts. Make
Speaker 1: sure that you have a digital record because there's no
Speaker 1: time stipulation for when you can reimburse your health expenses.
Speaker 1: I think that's the coolest thing in this whole thing.
Speaker 1: It's nuts. It's it's like this crazy loophole right right,
Speaker 1: It's like, you can incur a medical expense today in
Speaker 1: two thousand nineteen, Matt. That is, let's say it's two
Speaker 1: hundred dollars, and you can take a picture of that receipt,
Speaker 1: you can keep a digital file of it. And in
Speaker 1: two thousand and fifty nine, when you're forty years older
Speaker 1: and your money has had time to grow in this
Speaker 1: hs A, you're able to basically tap your hs A
Speaker 1: for those funds and it doesn't matter that that expense
Speaker 1: occurred forty years ago. You can withdraw the funds. Then.
Speaker 1: That's the most interesting part of the h s A
Speaker 1: as a vehicle is that you can wait a long
Speaker 1: long time from your actual medical procedure or the medical
Speaker 1: device that you purchased and tap the funds way down
Speaker 1: the road. Yeah, man, just think about the potential expenses,
Speaker 1: the potential medical expenses that you could have accrued over
Speaker 1: a forty year period. I mean, who knows, Like we're
Speaker 1: talking possibly even hundreds of thousands of dollars at least
Speaker 1: maybe fifty two hundred, right, And that is how you
Speaker 1: can reimburse yourself when you're forty years older and you
Speaker 1: have proof, and so you're able to withdraw those funds
Speaker 1: without being taxed. And what's incredible too, is that you
Speaker 1: don't actually have to wait that forty years. Like Joel mentioned,
Speaker 1: one of the benefits we've talked before about AIRA is
Speaker 1: that you have flexibility to withdraw your contributions tax and
Speaker 1: penalty free. Let's say it's only been ten years worth
Speaker 1: of accruing your medical expenses. Well, as long as you
Speaker 1: have those receipts, say you are in a bind and
Speaker 1: you're in a position where you need access to that money, well,
Speaker 1: you can reimburse yourself for ten years worth of medical expenses.
Speaker 1: And maybe that's not a hundred thousand dollars, but gosh,
Speaker 1: it might be ten or twenty maybe ten or twenty dollars,
Speaker 1: And that's money that you can kind of tap just
Speaker 1: like you would with a roth ira A. And so
Speaker 1: what I'm saying though here is that the h S
Speaker 1: A has almost the same flexibility that a roth ira has.
Speaker 1: It just has the added step of a little bit
Speaker 1: of paperwork making sure that you maintain those receipts. If
Speaker 1: the I R S comes knocking and they want to
Speaker 1: make you prove it. You have that. One thing that
Speaker 1: people ask is, well, what if I have too much
Speaker 1: money in my h s A. When I get to
Speaker 1: retirement and I don't have that many qualified medical expenses
Speaker 1: to have made investing in an hs A life, I've
Speaker 1: got too much money s exside. I know that that
Speaker 1: is like truly the best case scenario where you can
Speaker 1: have too much money set aside in your HSA. But
Speaker 1: what would you tell someone that asked that question, Well, Joel,
Speaker 1: first of all, we are going to have a ton
Speaker 1: of medical expenses by the time we're older. I can't
Speaker 1: say exactly how much, but that's just that's just how
Speaker 1: life goes. We spend money on healthcare. It costs a lot.
Speaker 1: And the fact is, though there are a lot of
Speaker 1: eligible expenses, the list of eligible items it runs the gamut.
Speaker 1: It ranges from eyeglasses, two X rays, to prescriptions even
Speaker 1: to long term care. And even if the sect to
Speaker 1: me is I look that up, that's all. Well, that's
Speaker 1: good to know. And make sure you're keeping your receipts
Speaker 1: for those any optical glasses, buddy, Okay, that's twenty dollars
Speaker 1: a pop, I want to get reimbursed for that junk. Well,
Speaker 1: on not note, I'm actually not eligible myself for an
Speaker 1: h s A because I am not on a high
Speaker 1: deductible plan. Yeah, you're actually not on an actual health
Speaker 1: insurance plan. You have health sharing coverage. Yeah, and that's
Speaker 1: something we might talk about one of these days. Yeah,
Speaker 1: you've written about it on the website too. If people
Speaker 1: want to know more about that, you can check out
Speaker 1: Matt's article on why he's a part of a health
Speaker 1: sharing plan as opposed to something like a high deductible
Speaker 1: health plan on our website how to money dot com
Speaker 1: And Matt, I think another thing I would say, besides
Speaker 1: it being a larger list of eligible expenses than most
Speaker 1: people might think, there is well, in the worst case scenario,
Speaker 1: which is still a good case scenario, in hs A
Speaker 1: functions like a traditional IRA in many ways. So you'll
Speaker 1: pay tax on the money that you withdraw that isn't
Speaker 1: spent on qualified healthcare expenses. But that's exactly what you
Speaker 1: do with a traditional IRA, exactly. But you hit a
Speaker 1: certain age, and in this case, the age is a
Speaker 1: little bit older. We're talking age sixty five that you
Speaker 1: have to wait until versus fifty nine and a half,
Speaker 1: which is what it is for a traditional IRA. But
Speaker 1: what you're saying is the worst case scenario is that, oh,
Speaker 1: by the way, you have an extra traditional IRA account,
Speaker 1: right boo? Who I know. It's a beautiful thing. Yeah,
Speaker 1: And that's why I think there aren't really many objections
Speaker 1: that can be raised to investing in an h s A.
Speaker 1: I think it act, it makes a lot of sense.
Speaker 1: And if you have the desire and the ability to
Speaker 1: contribute more money to retirement than just investing in a
Speaker 1: regular four oh one k or IRA account, well I
Speaker 1: think the h s A is at minimum the slay
Speaker 1: him dunge next move and maybe makes sense, as you
Speaker 1: mentioned earlier, to be the batman in the scenario and
Speaker 1: potentially becoming like your go to retirement account at the
Speaker 1: same time. Yeah, the h s A literally could take
Speaker 1: that lead role when it comes to setting money aside
Speaker 1: for retirements. I mean, the only downside that I see
Speaker 1: with that is the fact that it requires a little
Speaker 1: more bookkeeping, like you have to keep those receipts. But
Speaker 1: that being said, if you're like me and you take
Speaker 1: a picture of every single receipt with a little digital
Speaker 1: point and shoot, of course you do, because that's how
Speaker 1: I roll. Then you're already doing that and there's really
Speaker 1: no additional work. The only additional work that I could
Speaker 1: think of that might be handy is if you kept
Speaker 1: maybe an Excel file, which I also do, and you
Speaker 1: lift out all of your medical expenses. That way you
Speaker 1: have a running total, and that way you know the
Speaker 1: exact amounts of the medical expenses that you can be
Speaker 1: reimbursed for down the road. Yeah, it is really nice
Speaker 1: to have that running total for when you already to
Speaker 1: actually access those funds. Right, Yeah, that's right. But yeah,
Speaker 1: other than the bookkeeping, I really see no other reason
Speaker 1: why someone shouldn't open and fund and hs A before
Speaker 1: a rath or traditional ira A strong words, my friend words.
Speaker 1: How I feel about it. I still really like the roth.
Speaker 1: Like I mentioned earlier, I think there's a lot of
Speaker 1: current flexibility. There's some beauty in a simplicity, I'll say that,
Speaker 1: And there's also just the beauty that a lot more
Speaker 1: people are eligible to contribute to a rath than are
Speaker 1: eligible to contribute to an h s A exactly. And
Speaker 1: so I think you know, that's a reason we're gonna
Speaker 1: just mention the Rath more often on the show. But
Speaker 1: if you have access to an hs A, don't let
Speaker 1: it fall by the wayside, don't forget about it. And
Speaker 1: now that you know what it is, you're gonna want
Speaker 1: to strongly consider putting some money aside inside of that account.
Speaker 1: All right, let's get it back to the beer we
Speaker 1: had Mirror Universe. Uh, this is a hazy I p
Speaker 1: a by Fair State Brewing co Op. Hey, so, are
Speaker 1: you a true Southerner? Do you say a mirror or
Speaker 1: do you see a mirror mirror? Do you say it properly? No,
Speaker 1: I'm not a I'm kind of a Southerner, but I'm
Speaker 1: mostly a transplant from the Northwest, so it doesn't really count. Yeah,
Speaker 1: not really from the South either. I grew up here
Speaker 1: in the South, but my dad's from the Midwest and
Speaker 1: my mom's Korean. So there's very few sort of Southern
Speaker 1: sayings that I've lashed onto. That being said about folks
Speaker 1: listening are like, no, you guys are totally Southern. Well,
Speaker 1: and honestly, people who live in Atlanta it's a completely
Speaker 1: different world from the majority of the South because it's
Speaker 1: this big metropolitan city, and so I think people think
Speaker 1: of Atlanta as the South, and rightly so, there are
Speaker 1: a lot of Southern sensibilities. There's a lot of Southern
Speaker 1: nous to Atlanta. Southern a city, right, maybe that's probably
Speaker 1: what I'll call it, but truly, Atlanta has a lot
Speaker 1: of differences from a lot of the rest of the Southeast.
Speaker 1: So yeah, that's why I love Atlanta. It's just kind
Speaker 1: of this unique hybrid and I feel like I belong
Speaker 1: here because I feel like I'm a unique hybrid myself,
Speaker 1: and you are too, buddy. But enough about that. What
Speaker 1: did you think of this beer? Well, first off, I'll
Speaker 1: mention that the cane is really hard to read because
Speaker 1: with it being Mirror Universe, everything is is kind of
Speaker 1: written backwards or upside down. But I kind of dig
Speaker 1: it because it makes me think of stranger things, and
Speaker 1: I just got a niche in for some stranger things. Man.
Speaker 1: Regardless of this beer, I really enjoyed a man, it's
Speaker 1: really tasty, have that new classic i PA flavor, juicy,
Speaker 1: kind of smooth drinking with a little bit of that
Speaker 1: hot bite. I really enjoyed it. Yeah. On the label
Speaker 1: it says that they used quote unquote too many hops,
Speaker 1: and uh, yeah, I love that because honestly, in my opinion,
Speaker 1: I'm kind of a hophead. You really can't put too
Speaker 1: many hops in a beer for me. I thought they've
Speaker 1: had an awesome hop a roma, nice hop notes in
Speaker 1: the flavor profile, and so I hate to disagree with
Speaker 1: you Fair State Brewing co Op. But but no, not
Speaker 1: too many hops because I can take it. Yeah, this
Speaker 1: was a really good beer, So give us more hops. Yeah,
Speaker 1: major thanks to Riley for sending this one into us.
Speaker 1: We appreciate it. Thank you Riley in Minnesota, and if
Speaker 1: you're ever in Minneapolis, be sure to check out Fair
Speaker 1: State Brewing Cooperative. Yeah, do it all right, Matt. So
Speaker 1: let's give our final thoughts on the subject. R hs
Speaker 1: A is actually the best retirement account out there. Well, Joel,
Speaker 1: it's up to the individual, but if you qualify, I
Speaker 1: think you seriously need to consider an h s A
Speaker 1: for the reasons being it is triple tax advantage. It's
Speaker 1: completely free money. You don't have to pay taxes on
Speaker 1: your contributions on earnings and for qualified medical distributions. But
Speaker 1: worst case scenario, if you no longer have any qualified
Speaker 1: medical expenses, well, essentially it converts into a traditional IRA A.
Speaker 1: The only difference is is that instead of being able
Speaker 1: to make the withdrawals at age fifty nine and a half,
Speaker 1: you have to wait five and a half more years
Speaker 1: until you hit age sixty five. That is a great
Speaker 1: worst case scenario to have. Yeah, no doubt, Yeah, I
Speaker 1: think more than anything, this episode was a primer for
Speaker 1: people who maybe don't know what they are. And maybe
Speaker 1: you don't have access to an h s A where
Speaker 1: you work right now, but you will in the future.
Speaker 1: Or maybe you have access to an hs A currently
Speaker 1: and you didn't really know what it was so you
Speaker 1: just kind of bypassed it, And hopefully this episode made
Speaker 1: you realize the amazing benefits that an hs A has
Speaker 1: to offer if you use it properly. So if you
Speaker 1: think of your h s A as an investment tool
Speaker 1: for long term wealth building, then you're using it properly.
Speaker 1: So my biggest takeaway is to let people know that
Speaker 1: the h s A is one of the perfect investment
Speaker 1: vehicles for long term wealth building, So don't forget about
Speaker 1: the poor little hs A. It's basically Batman. Honestly, the
Speaker 1: only superhero movies I've ever seen are Batman movies. So
Speaker 1: leaving going back to like the classic, the old school
Speaker 1: Batman and Robin. Yeah, that was good stuff. Or they're
Speaker 1: climbing up the side of the building. Did they do
Speaker 1: that every single episode, like climb up the building like
Speaker 1: with a rope where they shot at sideways. I think
Speaker 1: so that Adam West was Batman back then. They've a
Speaker 1: lot of iteration since then. I think my favorite Batman,
Speaker 1: if I had to pick one, would have been the
Speaker 1: one where Jim Carrey was the joker. That was so good.
Speaker 1: I think I was literally called Batman and Robin. Really,
Speaker 1: which one was that? Is that in the nineties, ice
Speaker 1: h Man, It was probably two thousand two something like that.
Speaker 1: So I'm gonna have to disown you as a friend
Speaker 1: because you can't beat Christian Bale and Heath Ledger. Dude,
Speaker 1: come on, they were great. They were great, But nobody
Speaker 1: beats Jim Carey in my opinion, he was He's amazing. Yeah,
Speaker 1: you're wrong, Okay, Well that's the end of this podcast.
Speaker 1: I think we're never gonna we can't come to agreement
Speaker 1: on that, then the end. Yeah, you can find our
Speaker 1: show notes up at how to Money dot com and
Speaker 1: we'll link to that I r S post where they
Speaker 1: have the guidelines as to who is eligible and will
Speaker 1: also linked to our friend Brandon's long form article. You know,
Speaker 1: Brandon's site is where I go to always figure out
Speaker 1: where the best credit card sign up bonuses. By the way,
Speaker 1: so while you're there, click on travel cards and even
Speaker 1: if you don't want to travel card, you can click
Speaker 1: the button that switches it from travel to money money
Speaker 1: cash back. That's what I do. Yeah, he does a
Speaker 1: great job on his website and on his podcast The
Speaker 1: Mad Scientist. And if you've appreciated this podcast in this episode,
Speaker 1: we would appreciate your feedback. The best way to leave
Speaker 1: that feedback is to leave us a nice review on
Speaker 1: Apple Podcast. We'd really appreciate it, and it helps get
Speaker 1: the word out about our show to other people who
Speaker 1: want to learn about money stuff. All right, Joel, until
Speaker 1: next time, Man Best Friends Out, Friends Out