How to buy a boat with your Health Savings Account (HSA)
The HSA can help you finance more purchases than just your health care costs.
Health care costs are on the rise. According to the U.S. Bureau of Labor Statistics, prices for medical care were 5,038.18% higher in 2021 versus 1935 (a $50,381.81 difference in value). Between 1935 and 2021: Medical care experienced an average inflation rate of 4.69% per year.
According to The Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2021 may need approximately $300,000 saved (after tax) to cover health care expenses in retirement.
In order to help people try to combat these costs, the Health Savings Account was introduced in 2003. Here are the five things you need to know about the HSA:
There are no income limits
Contributions are tax-deductible
Funds can be invested and are tax-deferred
Your HSA is your account and not tied to your employer
You can withdraw the money tax-free to reimburse yourself for medical expenses.
We find that most of the clients we work with are in a financial position to cover their health care costs out of pocket. So instead of using their HSA money, they instead put their expense on their credit card (to get the points and pay it off every month in full).
The money in their HSA will be invested to compound and grow every year. As long as they track their medical expenses every year there is no expiration date on when they reimburse themselves. Those thousands of dollars contributed every year and growing could be reimbursed in the future and that cash can be used to offset any purchase, including a boat!
Even if you don’t want to track decades of expenses and instead want to use the money for non-qualified expenses, the HSA will act just like your traditional retirement account and be a way for you to stash more retirement money away.
The only catch is that you need to be enrolled in an HSA1 eligible health insurance plan, feel free to give us a call if you need to review and get started.
https://www.mayoclinic.org/healthy-lifestyle/consumer-health/in-depth/health-savings-accounts/art-20044058