There is no doubt that a health savings account (HSA), known here as a Stealth Ira, is my favorite investment account and it is the first account that we finance every year. Too many people are not familiar with the HSA legislation, and they do not realize how many things you can do with an HSA. Today we will discuss 13 of them.
#1 Save on this year’s tax assessment
If your only health insurance plan is a designated High Deductible Health Plan (HDHP), you can contribute to an HSA. This year that amount is $ 4,300 [2025 — visit our annual numbers page to get the most up-to-date figures]. If the plan is a family plan (often available for two spouses, two domestic partners or a parent and at least one child), the contribution is $ 8,550. This amount is then deducted from the taxable income on your federal income tax return and, in most states (excluding California, New Jersey and every state without a state tax), on your income tax return. If your marginal tax rate, such as mine, is in the range of 40% -50%, this can save you $ 3,000, $ 4,000 or more of your taxes. That can be the equivalent of 2-4 days of work.
#2 Invest it
Many people do not realize that it is possible to invest your HSA. That’s right, it doesn’t have to be on a Piddly small savings account that pays almost nothing. With the best investment providers you can invest your HSA in investment funds, just like your 401 (K). There are even self -driven HSAs with which you can invest in real estate, precious metals, cryptoassets and private companies in addition to all the investments available at a broker. After making contributions for 12 years, more than half of the value of our HSA is now investment returns (ie composed interest).
#3 Bring it over
Just as there are several IRA providers and brokers, there are several HSA providers, and no law requires that you leave your HSA money where it started. You may transfer it as you can have a different investment account. Note that a direct transfer of Trustee-to-Trustee is somewhat different from a rollover. With a rollover the money is sent to you (minus 20% remembered by the IRS because it regards this as a taxable event). As long as you get the money in a new HSA within 60 days, you don’t have to pay tax on it (or the 20% fine), but it is impossible to get all the money in the new HSA because 20% of it was deducted by the old HSA Trustee. You can also only do a rollover every 12 months.
It is much better to make a direct transfer between managers. No remembering has been remembered; You can get all the money on the new account. There is no chance that a delay will make the entire transfer taxable. Moreover, you can do this as often in a year as you want.
More information here:
How we have built a 6-digit HSA (and what we are planning to do with it)
#4 Save on next year’s tax account
An HSA is just like any other tax -protected account. As the money grows, the dividends and other income that starting are not taxable, as long as it stays in the account. You can buy and sell in your heart, and there are no power gain taxes. This results in your money that grows faster than in a taxable account. Note that if you are a resident of California or New Jersey, you still have to pay income tax from the state about HSA income and profit.
#5 Pay for tax -free tax -free
You can remove and use money from your HSA at any age to pay for eligible healthcare costs tax -free. In essence, you can pay this for healthcare with dollars before taxes. The use of your HSA money for health care makes it “triple tax-free”, because you were deducted for the contribution, it grew without taxes and you pulled it without tax.
#6 Save wage taxes
But wait, there is more! An HSA can also be the only tax -free wage -free account. Four -time tax -free! As with employer’s contributions to your pension account (the “match”), HSA contributions from your employer are tax-free. For this reason, even if your employer’s HSA is not great, you may still want to finance your HSA (at least enough to get the maximum employer’s contribution) through the payroll of employees. This advantage does not exist for the self-employed person (unless the company is taxed as a company and you are an employee owner).
#7 Liver extra contributions
That limit of $ 8,550 for 2025 is not even the limit for how much you can place there. If you are 55+, you can place an extra catch -up contribution of $ 1,000 on the account. If your partner is 55+ and uses a separate HSA, they can also introduce an extra $ 1,000. In fact, there is nothing special about marriage when it comes to the HSA legislation. Many employers allow you to put a domestic partner on your health plan with you.
Remember that the only requirement to deliver an HSA contribution of a family format must be covered by a Family HDHP. If you are covered by a HDHP family, you can deliver a HSA contribution of the family format. Since your domestic partner is also covered by a Family HDHP, they can also deliver a completely separate HSA contribution to their own HSA. That is not the case if you are married to individual HSAs. If you are married, you must share one limit of a family contribution (actually splitting) between your two HSAs. If there is a child on one of the plans, the family contribution can all go in one plan, but there is no double immersion as there is for domestic partners. A bit of a wedding service there.
Another form of extra contribution occurs for your adult, non-dependent children who fall under your HDHP family. Because they are covered by a HDHP family, they can contribute their own family format to their own HSA. In contrast to a pension account contribution, this does not have to be earned income that is contributed. You can give them the money as a gift if you want. Just make sure that your total gifts remain up to them within the annual amount of the gift tax ($ 19,000 in 2025), so that you do not have to hurry with a gift tax return. With the help of this technique between the age of 19-26, I think you can give your child a seven-digit HSA as a gift.
More information here:
What is the best HSA? Lively vs. Fidelity Review
The best way to follow your HSA vouchers
#8 Separates the expenses of the withdrawal
According to current legislation, there is no rule that you have to withdraw the HSA withdrawal in the same year in which you spend the money on health care. This Maas in the law makes the “SAVE receipts” strategy possible, whereby you can store revenue (scanning, digitizing and carefully submitting them in case you are checked) for years or even decades, so that the money can continue to compile tax -free before you are admitted. You can only withdraw the nominal amount that is equal to the original costs without tax, not the compound interest on that principal sum, but that extra tax -protected growth can really be valuable if you can afford to pay your healthcare costs of your current cash flow.
#9 Pay for Medicare
Although you are generally unable to pay for premiums for health insurance policies – even health insurance purchased via an “Obamacare” exchange of the government with HSA money – Medicare is an exception. You can use HSA dollars to pay medicine premiums, deducts, co-pays and co-insurance for Medicare Parts B, C (Medicare Advantage) and D but not Medigap (Medicare Supplement Insurance). Many people do not realize that Medicare has premiums until they turn 65 and they start to see their social security control. You can reimburse yourself with the help of your HSA, a good use for an “overfinanced” HSA.
#10 Buy a boat
HSA -money does not have to be spent on health care. You can spend it on everything you want. If you have enough in the past to ‘cover’ the withdrawal, you can even spend it on a boat and penalty-free. Even if you have not done the SAVE reception strategy, you can make HSA recordings at any time and use them to buy a boat-free (but not tax-free) as soon as you reach 65. In this respect, the tax treatment is exactly like that of your tax -proposed 401 (K) or IRA. This is why an HSA is often called a ‘stealth Ira’. Even in the worst case, it is still as good as your other pension accounts. So there is no reason not to finance your HSA as much as possible and to grow it as large as you want. There really isn’t something like a “over -financed” HSA, because it turns unofficially into an IRA at the age of 65.
#11 Give the charity
Do you not need the money for health care or a sailboat? You can give HSA money to a charity before or after death. Although there is no extra deduction for this, there are no tax costs. In essence, you have donated pre-tax money to your favorite charity. There is also no fine.
#12 Buy things that you may not consider as healthcare
The list of eligible HSA costs is much larger than you might think. All the following (and more) are eligible to be paid with HSA dollars.
- Hand disinfecting agent/masks
- Freely available medicines
- Acupressure/Acupuncture
- Female hygiene products
- Glasses/contacts/guidance dogs
- Costs for special education
- Weight allocation program (for a specific disease such as obesity)
- Massage (for a specific condition)
- Orthodontics
- Fertility treatments
- Athletic brackets and tape
- Car or house adjustments for a medical need
More information here:
Look after! An HSA is great. . .
#13 Stiff creditors
In 10 states, your HSA, like your pension accounts, is protected against creditors, even if you are forced to declare bankruptcy. These states include:
- Florida
- Indiana
- Minnesota
- Mississippi
- Montana
- Oregon
- Tennessee
- Texas
- Virginia
- Washington
The Bottom Line
Instead of being an insignificant part of your financial life, an HSA can be a very flexible and affordable addition to your portfolio. That’s why it’s my favorite.
What do you think? Which of these things do you do with your HSA? What else can you do with an HSA?
#HSA #White #jacket