Author Topic: The Poor Gal's HSA: Starting an HSA a little at a time.  (Read 1886 times)

kspry

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I initially became intersted in an HSA as a way to set aside money specifically for Medical Costs, and make a smidgen of interest along the way.  I learned that many have fees, and at a deposit of a mere $100 a month the interest and tax breaks didn't seem to make sense for my situation. I learned there are fee free HSAs but would like some advice  about whether I even should do an HSA at all.  If I should, then maybe some recommendations as to some good fee free HSA's  and tips on how to get the most out of my account, as a poor gal, would also be helpful.
Cheers, K

bacchi

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Re: The Poor Gal's HSA: Starting an HSA a little at a time.
« Reply #1 on: May 01, 2015, 07:17:50 PM »
Yes, you should definitely start an HSA. It's one of the best investment vehicles out there.

Many let their money accumulate but keep their medical receipts. This works as a emergency fund (you can withdraw at any time up to the receipts total) but more importantly allows the investments to grow unhindered.

I have some money at Cattle Bank, https://www.cattlebank.com/deposits/savings/no-bull-health-savings-hsa. I've never paid any fees and their rate is 0.9%.

Once you get a few thousand in there, you can transfer it to a brokerage HSA. http://healthsavings.com/ is a popular choice for Vanguard funds. Others use http://www.hsabank.com for investing. They both have fees but the investment gains make it worth it.


kspry

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Re: The Poor Gal's HSA: Starting an HSA a little at a time.
« Reply #2 on: May 03, 2015, 07:57:52 PM »
Hey thanks for your reply, thanks I will definately look into it.   Cheers, K

amonostereo

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Re: The Poor Gal's HSA: Starting an HSA a little at a time.
« Reply #3 on: June 18, 2015, 01:54:08 PM »
They both have fees but the investment gains make it worth it.

That's what I wanted to know. Thanks for the help!

seattlecyclone

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Re: The Poor Gal's HSA: Starting an HSA a little at a time.
« Reply #4 on: June 18, 2015, 02:12:37 PM »
There are basically two strategies with the HSA:

1) Contribute to the HSA to avoid paying tax on that money, then withdraw from it to pay your medical bills as they arise. This strategy is good for people with lower incomes, because the tax you save on the money you pay for medical care can then be reinvested into another account.
2) Contribute to the HSA to avoid paying tax on that money. Invest that money and let it grow until retirement. Save medical bills so that you can take the money out tax-free after you retire. This strategy is good for people whose income is high enough that they can max out all of their tax-advantaged retirement accounts. If you're in this position, why take out money from the HSA early when you still have after-tax money available to pay for medical bills?

It sounds like strategy 1 is right for you at this time. Find a low-fee/no-fee HSA. It doesn't even need to offer a high interest rate or investment options because you don't necessarily plan to leave the money in there very long. If you get to the point where you can afford to max out your retirement accounts, then you might consider switching to an HSA with better investment options and following strategy 2.