How To Utilize Health Savings Accounts For Taxes

"My CPA told me: You don't have to spend your HSA — just let it grow." Last week, I reviewed a client's tax return. They contributed $8,300 to their HSA... and panicked thinking they had to spend it all. They'd been saving receipts all year, planning a December shopping spree for eligible expenses. I stopped them cold: "That's FSA thinking. Your HSA never expires." That money? Still sitting there, tax-free, compounding. Completely untaxed growth — potentially for decades. Their face when they realized their HSA could become a stealth retirement account was priceless. The HSA is the ONLY triple-tax-free account in existence: - Tax-deductible going in (immediate savings) - Grows tax-free (no capital gains taxes ever) - Withdraw tax-free for qualified medical expenses — even decades later And if you don't use it for medical expenses? At age 65, it works like a traditional IRA — withdraw for anything, just pay income tax (no penalties). Here's how to actually win with an HSA: - Max out the contribution every year ($8,300 family limit for 2024, rising to $8,550 in 2025) - Do NOT spend it. Pay medical costs out-of-pocket if you can  - Invest the HSA balance — don't leave it in cash earning nothing - Keep every medical receipt digitally. You can reimburse yourself years later, tax-free - Treat your HSA as part of your retirement portfolio — not a short-term medical fund Remember: The average couple needs $315,000 for healthcare in retirement. Your future self will thank you for this tax-free medical nest egg. If your CPA hasn't explained this strategy to you, you're leaving one of the most powerful tax advantages on the table.

There's $200+ billion in medical debt in the U.S. Here's how you can use your medical expenses to build wealth: What is an HSA? It's a tax-advantaged account where you use the funds for qualified medical expenses. But the reason why we love it? It is the only investment vehicle with a triple tax benefit. Which looks like this: 1) Contributions are tax-deductible (Like a Traditional IRA) 2) Funds grow tax deferred (Like any IRA) 3) Funds distribute tax-free (Like a Roth IRA) for medical expenses But of course, it's not flawless: 1) Must have a high-deductible health insurance plan. 2) Low contribution limit (Including employer match) [2024] - $4,150 for individuals - $8,300 for families 3) Taxed and hit with a 20% penalty if not used for medical purposes Is it locked forever? If funds are not used for medical purposes but taken out at 65, they're taxed but not penalized. So if you boil it down, it becomes like a Traditional IRA down the line. Interesting fact about the HSA: There is no time limit on when funds must be utilized for expenses. For example, you could: - Incur a medical expense - Not distribute the funds immediately - Wait 10 more years and make a distribution - Still use that expense to make it tax free Why is this important? You can keep your funds inside and have it continue growing. That way you don't disrupt compounding interest and take the funds out tax free backed by all the medical receipts you collected. It's a strategic way to grow and distribute tax-free income. This means you should keep receipts on file over time. And these can only be expenses made after the HSA was opened. So be sure to keep the receipt on file for its use in the future. You'll want to make the most of those bills! So, who is it right for? For whoever needs a high-deductible health insurance plan, which is typically suitable for: - Young adults - Those seeking to lower monthly premiums - Healthy individuals (who don't see doctors often) The health plan should align with you first.

Your Secret Turbo Retirement Account Most people treat their HSA like a little side jar for doctor visits and prescriptions. But we can and should do much more with it. An HSA (Health Savings Account) is basically a flexible retirement account with one of the most powerful tax structures out there: • Contributions are pre-tax. • Growth is tax-free. • Withdrawals for medical expenses are also tax-free too. Assuming you haven’t used that account for any medical bills, when you turn 65, you can pull money out for anything. Non-medical withdrawals are taxed like a 401(k), but there’s no penalty. In 2025, contribution limits are $4,300 (individual) and $8,550 (family), plus an extra $1,000 if you’re 55+. The only requirement is being on a high-deductible health plan. So how do you turn this into a turbo retirement plan? 1. Invest it. Don’t let your HSA sit in cash. Treat it like your IRA/401K. 2. Pay your medical expenses out of pocket today. If you can afford it, cover medical bills now. Save the receipts for later. 3. Reimburse yourself later. Ten or twenty years from now, those ‘old’ receipts become a tax-free ATM. That $5,000 hospital bill you paid in 2025 for your new born? In 2035, you can pull it out tax-free and use it for a vacation instead. That’s why I love HSAs: they’re not just about healthcare, they’re about giving yourself more flexibility, more freedom, and a bigger retirement cushion. Most people underutilize them (myself included). The right way to to use these HSA’s is to treat them like a retirement account on steroids. Max it out and build wealth. #HSA #TaxStrategy #RetirementPlanning #FinancialFreedom