Sep 22, 2022
In today’s episode of the “Inside the Plan with the
401(k) Brothers”, host Bill Bush and Andy Bush, advisors at
Horizon Financial Group talk about HSAs as a Retirement Strategy.
They take us through Health Saving Plans which can also act as
retirement plans, and these health saving accounts can actually be
valuable over time that you can access in retirement. Bill and Andy
are going to go through some of the basics and how it might work in
- 01:00 – You can only have an HSA (Health Savings Accounts) if
you participate in a certain type of plan which is a high
deductible healthcare plan.
- 03:00 - To draw the differences of the catch-up provision in a
401 K plan, that catch-up triggers at age 50. So, you can put more
into your 401 k when you are 55.
- 06:00 – One advantage of a flexible spending account is that
you can carry over dollars from year after year, and there's no
time limit for using the money.
- 08:00 – HSA also covers some of the qualified medical expenses
needed to maintain your health or maybe prevent certain health
- 10:20 – Another benefit of having HSA is that not only would
you be able to reimburse your future qualified medical expenses,
but you can also start to reimburse your past qualified medical
expenses and be able to get money out of an account tax-free.
- 12:00 – At the time of retirement if you had a major surgery
where the out-of-pocket expense is a lot then if you had the
qualified medical expenses balance saved up in the HSA, then you
can use that.
- 14:00 - There's a spectrum here of how people use their HSA. So
some people enroll in a high deductible plan and don't even use the
HSA or they don't contribute.
- 16:30 - People that are in the higher income group, maybe the
top 20% or top 40%, their life expectancy is a little longer than
those that are in the lower income range.
Three Key Points
- If you have a high deductible health plan, within HSA or Health
Savings Account, you can contribute a pretty good amount into the
Health Savings Account. You're still paying your premiums for the
High Deductible Health Plan, but you can make contributions to this
Health Savings Account and this is the definition of a High
Deductible Health Plan. So, for 2022 IRS defines it as a plan with
a deductible of at least $1400 for an individual, or 2800 for a
family. The High Deductible Health Care Plan can't be more than
$7,050 for an individual or 14,100 for a family, per year.
- If you happen to be a healthy person, and you're in a High
Deductible Health Plan that has an HSA, it can be a very valuable
tool for you over time. You can reimburse yourself for qualified
medical expenses from your HSA but there's no time limit on those
medical expenses. So, you can start compiling any medical expenses
you had in the past. if you can pay those out-of-pocket, you can do
that, but not out of your HSA. Then down the road when you get into
retirement, you can come back and reimburse yourself for those
medical expenses. Another beautiful thing about the High Deductible
Plan is that there is a limit to how much you're going to have to
pay for things that are more catastrophic.
- There was a great study done recently that dropped the spending
state savings and spending study and what they saw was two of the
top three retiree spending concerns are Health Care Premiums,
Insurance Premiums, and Out-of-Pocket Health Care Expenses. People
fear having to pay those because it's something they know that
they're going to have to pay, but it's way out there in the
- “The maximum amount in 2022 that you can contribute to if
you're a single person to the HSA is $3,650.” - Andy Bush
- “The first thing you need to check is if your employer offers
an optimal health plan?” – Andy Bush
- “The beauty of HS is that there's just the Triple Tax
Advantage.” – Bill Bush
- “A lot of the HSAs have a little card like a debit Fount.” -
- “You can save and this comes in handy for folks that have
already maxed out their 401k and are looking for other places to
put pre-tax dollars.” – Bill Bush
- “I think finally; Andy's favorite word is wherewithal.” - Bill