I count the FICA as only a slight advantage to the HSA since paying less FICA could potentially reduce your SS benefits in the future. If your health plan is HSA eligible but your employer can’t help you set one up, I’d take a look at Health Savings Administrators. Would you consider ~0.5% fee investment “low cost”? I have been looking for ways to sock away more money tax-free. I have an HSA but only contribute about half the max and haven’t invested it yet. When you have your bundle of joy, you can use this year’s contributions to help pay for it. If converted to a Roth the earnings are not accessible without penalty until 59.5. – 2.35%: $200,000. Brilliant post, Mad FI. I believe we are still taxed on ordinary income portion for the employee W-2. Does that sum it up correctly? At best the article is disingenuous and at worst its steering people to make costly financial decisions (which I assume is the opposite goal of this site?). For example, a really bad car accident involving a lot of people. I have been struggling to find an HSA administrator that has reasonable fees for an investment account. That's my…, I hold onto my ESPP too but for income purposes I calculate how much I would have earned if I sold i…, Yup. Mike, I would say yes, IF you can put in extra HSA money. Get Access! My company just decided to start chipping in $500 every year as well so I’m excited the HSA will be even better for me in 2015! If I were concerned about keeping receipts over many years, it seems I could withdraw money from the HSA to cover medical expenses, but then put that money in a Roth. Wow, chris. You can’t plan for early retirement without also planning for standard retirement. Bankruptcy is so far off my radar that it’s not something I personally worry about. This post was originally published on 10/16/2012 but was updated on 11/5/2018. Thank you MadFientist for another great article. Get traffic statistics, SEO keyword opportunities, audience insights, and competitive analytics for Madfientist. 1. I changed to our HSA/HDHP two years ago when I started doing all the math. So IMO HDHPs and HSAs are only good for young, healthy individuals who have a low chance of needing to use their health insurance each year beyond a few routine doctors visits. If you max out your deductible every year, you’d be paying nearly $900 more to go with the HDHP so I doubt that’d be worth it, just to get access to an HSA. I found out I have 22 mutual funds I can choose from, including 2 vanguard index funds. What if my company’s payroll structure does not support pre-tax contributions to the HSA so I need to make them post tax? I already max out my 401K, and contribute the max each year to my Roth IRA (and my wife’s). Thanks. Would the tax free growth out weigh the extra cost of having health insurance? Look up the rules. Hey Jim, check out this IRS bulletin (see the answer to question #19). With the HDHP, they have $5080 (gains) in 30 years at 3% growth. A basic interest-earning account really won’t let you maximize the HSA as I described in this article. In this episode of the BiggerPockets Money Podcast, the Mad Fientist shares 3 ways to access your retirement funds before the typical age of 59½. thanks. Then toss the receipts, etc. Hi, when I first learned about HSA 3 years ago I knew they were a great opportunity and participated for 2 years and maxed out contributions. Great article! In fact I’d argue that given inflation you are better off paying your medical expenses out of the HSA as intended. Your graphic revisions have gotten clearer and clearer. The math is tricky because we don’t know how the deductible and coinsurance will play out, but let’s say they have a $250 deductible but a higher monthly fee. Just looked through it now though and to me like I am stoked would be 240K, + gains. 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