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Tax Advantaged Accounts

Combat Rising Health Care Rates with an HSA

October 10, 2018
If you faithfully contribute to an HSA over the course of 20 years, you could contribute as much as $75,000 to $140,000 (single or family), and over that time, the investment returns could bring these accounts to double that amount, assuming an average annual 5 percent gain.
Ray Martin (CBS News Money Watch)

HSA Eligibility

To be eligible for an HSA, you:

  • Must be covered by a High Deductible Health Plan (HDHP)
  • Must not be covered by another health insurance plan (not applicable to specific injury insurance and accident, disability, dental care, vision care or long-term care)
  • Must not be enrolled in Medicare
  • Cannot be claimed as a dependent on someone else’s tax return

Because you must be enrolled in a HDHP to be eligible for an HSA, you can potentially reduce your monthly premiums, while additionally having the opportunity to save for medical expenses in an HSA.

It’s important to note that the 2019 contribution limit for HSAs is $3,500 for single accounts holders, but it is possible to save more in an HSA by investing in alternatives, like other self-directed retirement accounts.

For 2020, the contribution limits for HSAs increased. For individuals with self-only HDHP coverage, the limit is $3,550. For indiivudals with family HDHP coverage, the contribution limit is $7,100.

What is a self-directed HSA?

The funds in an HSA can be invested the same as you would invest your self-directed IRA funds. Returns on the investment are added to the account and accumulate tax-free.

These returns aren’t considered contributions and don’t count toward the contribution limits. As with IRAs, contributions to an HSA may be made until April 15 (or tax filing deadline) to obtain a deduction for the prior tax year.

You are able to invest in stocks, bonds or mutual funds. However, other HSA owners invest in real estate or other alternatives to grow their HSA.


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