If you have a high-deductible health insurance plan, a health savings account can help you pay your medical bills. But HSAs have hidden superpowers that make them a great way for some people to create a tax-free pot of money for retirement or other long-term goals. In the right circumstances, you can even use an HSA to help your young adult children start saving for their futures. In my latest for the Associated Press, find out if a high-deductible health insurance plan is right for you.
health savings account
Friday’s need-to-know money news
Today’s top story: How to stand out in a tough job market. Also in the news: 3 ways to skip your bank’s long phone lines, how a temporary relocation during the pandemic may affect your taxes, and new HSA rules.
How to Stand Out in a Tough Job Market
A message for the Class of 2020.
3 Ways to Skip Your Bank’s Long Phone Lines
Don’t sit on hold forever.
How Will a Temporary Relocation During the Pandemic Affect Your Taxes?
You may be required to file twice.
New HSA Account Rules
New rules make HSAs even more valuable.
Thursday’s need-to-know money news
Today’s top story: Should seniors consider a reverse mortgage now? Also in the news: Make the most of these store cards during a crisis, financial experts say a recession could be looming, and why you should think of your HSA as an extension of your emergency fund.
Should Seniors Consider a Reverse Mortgage Now?
Reverse mortgages offer tax-free cash for home equity, but understand how they work and explore alternatives.
Make the Most of These Store Cards During a Crisis
Some of the best cards to optimize your budget.
Financial experts say a recession could be looming; here’s how you can prepare
Be proactive.
Think of Your HSA as an Extension of Your Emergency Fund
Your contributions can increase in 2021.
Wednesday’s need-to-know money news
Today’s top story: When can I retire? Also in the news: How to get your own royal family photos at commoner prices, how to make the most of your HSA, and how living in one of these cities means you could pay your student debt off sooner.
When Can I Retire?
How to determine the right time.
Get Your Own ‘Royal’ Family Photos at Commoner Prices
You don’t need a castle.
How to make the most of your HSA — for now, and the future
Protecting your health costs.
Living in one of these cities means you could pay your student debt off quicker, study says
Cost of living can make a big difference.
Thursday’s need-to-know money news
Today’s top story: The IRS isn’t having any of these reasons not to pay taxes. Also in the news: What to buy (and skip) in April, how to shop for used clothes – and why you should, and 4 ways to use your health savings accounts to boost your bottom line.
The IRS Isn’t Having Any of These Reasons to Not Pay Taxes
The IRS doesn’t want to hear your arguments.
What to Buy (and Skip) in April
Look for Tax Day goodies.
How to Shop for Used Clothes — and Why You Should
Lots of money to be saved.
4 ways to use health savings accounts to boost your bottom line
Cushion your emergency savings.
Q&A: Health savings accounts can supercharge retirement funds, but not for this guy
Dear Liz: Prior to retiring in 2015, I contributed to a health savings account. At the time my spouse and I were enrolled in my employer-provided high deductible health insurance plan. After I retired, I enrolled in an HMO plan my employer provided, which is not high deductible, and my wife enrolled in a Medicare supplemental plan. Can I make a one-time IRA rollover of $8,750 into the HSA? If not the $8,750, can I make any one-time contribution to the account while I am enrolled in the Kaiser health insurance plan? I have only $53 in the HSA. Are there any reasons to keep the account open or should I close it?
Answer: You did have the option, while you were enrolled in the high-deductible plan, to make a one-time rollover from your IRA to your HSA. The amount you could roll over is capped to the HSA contribution limit. The limit in 2015 would have been $7,650 ($6,650 for a family, plus a catch-up contribution of $1,000 for those 55 and over). You would have had to subtract from the rollover any amounts already contributed to the account that year.
Since you no longer have the high-deductible plan, though, rollovers and new contributions aren’t allowed. There’s no reason to keep open a plan with just $53 in it because most HSA providers charge monthly fees that will quickly eat up such a small balance. (Your employer may have paid these fees while you were working and covered by the high-deductible plan.)
That’s too bad, because a properly funded HSA can be an excellent way to save for medical expenses in retirement. HSAs offer a rare triple tax break: Contributions are pre-tax, the money can grow tax deferred and withdrawals are tax free when used for qualifying medical expenses. HSAs are meant to cover the considerable out-of-pocket expenses that come with high-deductible health insurance plans, but the money in the account can be rolled over from year to year and even invested so it can grow.