[USER]

About to start my first full time job making around 70k a year.

I was wondering if I should open a health savings account in addition to my insurance? I’ve asked some people in my life and have gotten mixed opinions.

Any information would be great!

[Andrew]

It kind of depends, in order to qualify for HSA, you need to have a high deductible insurance, and you pay for everything out of pocket until you meet that high deductible.

If you have moderate to frequent medical visits, procedures, medication, etc the high deductible/HSA may not be the best because you could potentially have to pay for everything all year out of pocket before you even reach your deductible and have insurance kick in.

If you feel like you would only need like the annual checkup and very few other medical needs, the high deductible/HSA combo may be good.

[Dennis]

Depends. You need to have a qualifying high deductible insurance plan. And check the IRS documentation for weird rules. I have a super high deductible, but my out of pocket max being so high makes me ineligible to contribute.

If you can get one, HSA is an amazing account to have. But don’t use it for medical. Put the max into it each year, which is pretax, let that money grow. When you have a medical or dental expense, keep an itemized receipt. There is no limitation on how long you can wait to reimburse yourself, so you could pay yourself back 10 years from now after that money has grown with the market.

Distributions for covered expenses aren’t subject to tax or penalty, and then when you turn 65, the penalty for non-covered expenses goes away, but will still be subject to income tax. It’s best to let the money grow, as medical expenses get larger later in life.

[Lisa]

Yes! If you qualify and your employer offers one. Also assuming you are healthy and don’t have high medical expenses at this point in your life. Here’s my understanding of the HSA:

the HSA is a triple tax advantage account. Contributions are pre tax, growth is non-taxed, and withdraws are non-taxed as long as they are used for qualified medical expenses

Your HSA is yours for life- different than an FSA, you don’t have to withdraw the funds every year. you can look at the HSA like an additional retirement savings investment plan for health care expenses, where if you are healthy now, contribute to your HSA and avoid withdraws from the account unless you really need to. The account will be there to pay your medical expenses when you are older/retire.

[David]

Yes. What are the downsides of having an HSA? It’s tax-advantaged. You can take it with you. You will have medical expenses at some time or another. It seems like a no-brainer if you can afford it.

[Colin]

I would. Years ago I had a similar income and a qualifying healthcare plan, and I opened an HSA at Fidelity. Maxed it out for several years and invested all the money in FZROX. Now that never-taxed money is growing tax-free and will continue to do so for the next 20+ years, and it won’t be taxed when I withdraw it. HSAs

[Author]

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