Why to max out contribution to HSA

Amazon / QA
geezz

Amazon QA

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Motorola Mobility (a Lenovo Company), Veeva, Proteus Digital Health
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7d 13 Comments

What is the logic behind maxing out annual contribution to HSA ?

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TOP 13 Comments
  • Apple Dr.Dre
    So, u can deferred the income tax, and invest the money u don’t need, any investment gain is tax free.
    7d 0
  • LexisNexis Risk Solutions XgsJva6
    Related question: Would it make sense for someone on OPT or H1B (uncertain future in the US) to invest in HSA?
    7d 1
    • Apple Dr.Dre
      A couple items to consider in my opinion. Can u benefit from the long-term gain tax free? If u r OPT, u may need to withdraw the money out within 24 months if u r not able to secure a full time job. I don’t think that make sense to go through the troubles. If u r on H1B and u believe your job is stable enough for a least the full H1B life (6 or 7 years), then, it start making sense. But u need to read your company’s plan and calculate the math to see what’s the benefit. The benefit of HSA is surely there, if it makes sense for your situation (i.e. healthy single individual + your company also contributing money).
      6d
  • Google / Eng
    zQgN83

    Google Eng

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    LinkedIn
    zQgN83more
    HSA is triple tax advantaged. Max it out.
    7d 0
  • Apple Dr.Dre
    The best part is that u can spend the pre-tax money (for medical use only but the list is rather generous) without penalty.
    7d 1
    • Apple Dr.Dre
      Forgot to mention some companies will contribute money into your HSA account (i.e. Apple). If u r a healthy individual, the company contribution can cover a large portion of your annual medical needs (90+% in my case including preventive prescription drugs). That leave almost all of my personal contribution saving. So read your company’s benefit plan in details and it can help u plan better.
      6d
  • Apple Dr.Dre
    The investment part is the same as your put money into 401k. It’s better since the gain is tax free.
    7d 0
  • This would just be a long term investment right ?
    7d 3
    • Google / Eng
      zQgN83

      Google Eng

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      You can use the money as soon as you need it.
      7d
    • But there will be penalities if you take it out before retirement for other than medical purpose ?
      7d
    • Google / Eng
      zQgN83

      Google Eng

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      LinkedIn
      zQgN83more
      Yes, though I'm not sure what they are.
      7d
  • Microsoft tfsUEwWt
    just do it, eventually you will figure it out
    7d 0
  • SAP YjKq06
    If you invest 7K for 30 years, with annual return of 8%, you should have sum of about ~925K tax free for medical expenses. That should cover major portion of medical expenses for you and spouse in retirement .

    This math assumes annual contribution limit stays at 7K, it wont. You don't have major medical expenses during these 30 years, you may. HSA Laws don't change, they may. But considering social security benefits to wane in future this should be a good backup plan.
    7d 0