How I Failed At Investing My HSA Funds
“There are baby steps one must take before advancing in this game of financial independence”
-Peerless Money Mentor
What is an HSA?
An HSA stands for health savings account and it as available to people who choose a high deductible health care plan. As you can see in the chart above from SHRM.ORG, your minimum deductible must be $1,300 if you have an individual policy or $2,600 if you have a family policy. I have an individual policy and my current deductible is $2,000 so I am allowed to contribute up to $3,400 annually towards my health savings account with Health Equity. When you deposit enough funds in your account to cover your deductible, that is when you can start investing your excess funds! Unfortunately, before I could reach $2,000, I ended up going to the doctor and using some of my HSA funds for medical expenses. This meant I could no longer join Paula Pant and the other four percent of the U.S. population who invest their funds, according to Morningstar.
FI HSA Hacks
In the financial independence community, several people recommend maxing out your HSA fund and using it as a de facto retirement account. I believe it is a brilliant strategy if you are at a stage in your financial life where you can pull this off. The HSA has three tax advantages in that you can deduct contributions on your taxes, earnings from interest and investments are not taxed, and you do not pay taxes on qualified medical expenses! When you reach a point in your life when you are ready to invest your HSA funds, I highly recommend that you read this article by Mad Fientist titled HSA-The Ultimate Retirement Account. There are baby steps one must take before advancing in this game of financial independence and I have a long way to go before I get to the Mad Fientist or Paula’s level; they are full grown Giraffes!
The reason I was able to save almost $2000 in my health savings account was because I decided not to see the doctor for my annual checkups. After conversing with family about the issue, I decided to make a change after I had an epiphany that the road to financial independence begins with investing in my health; my dedication to saving and creating a plan to invest and grow my wealth means nothing if I am not around to enjoy the fruits of my labor. I have always known this to be a fact but insisted on ignoring my health because I was afraid to visit a doctor and have him or her discover I had some terminal illness. “We are all going to die some day and I am better off remaining in the dark about my health,” I foolishly told myself.
Yes, it is an indisputable fact that we are all going to die but we can choose to potentially prolong our lives by at least getting our annual checkups. I got my annual checkup this year and it was not as scary as I thought it would be. The doctor seemed very knowledgeable and we conversed about the documentary What the Health. Little did he know that I ate McDonald’s french fries and a hot and spicy with no mayo while watching the documentary. The power of habit is a powerful thing so do not judge me; I am a work in progress. He recommended I eat less red meat and drink more water, which I have been doing lately!
I challenge you to schedule your yearly checkup next year if you have not done so yet. Let’s take care of our health so we can enjoy our wealth for years to come. Also, stay tuned to see how I use my HSA for travel hacking in a future post. I might not be in a financial position to invest my HSA funds yet but I can use it to reach my minimum spend amount for travel reward bonuses!
Click here to read my post HSA Travel Hacking Strategy!
Do you invest your HSA funds?
Do you invest your HSA funds?
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My name is Jerry, and I am just a personal finance nerd who writes from a bottom to top perspective. I believe anyone can improve their finances by adopting certain habits/strategies taught by the financial independence community.
In my popular post From Broke Phi Broke to Financially Woke I wrote, “While I am not 100% debt free yet, I hope the financial independence community welcomes me with open arms.”
Since writing that article, the financial independence community has embraced me as one of their own. I have even gotten a chance to do some amazing things like write for Business Insider.
Well, enough about me. I want to hear from you. Feel free to reach out to tell me your million dollar secrets 🙂