What is an HSA, and why should you have one? Find out the benefits and qualifications for a Health Savings Account in this week's Arista Advice.
Hello, welcome to Arista Advice. "Paul, what is an HSA, and why should I have one?" Well, health savings account is the acronym as you know, I throw a lot of acronyms around out there, and HSA is just one of them.
An HSA is a tax-advantaged account that grants you a tax deduction on the funds way into the HSA account. They grow tax-deferred, and they come out tax-free on eligible expenses.
To qualify for an HSA, you must have four things - number one: have a qualified High Deductible Health Plan.
Number two: have no other health coverage.
Number three: not be enrolled in Medicare, and number four: not be claimed as a dependent on someone else's tax return.
Next important question - what is the maximum amount of contribution that you can put into an HSA?
In 2020, individual, it was $3,550, and a family account was $7,100.
In 2021, it goes up to $3,600, a whopping $50, and for a family, it goes from $7,100 to $7,200.
HSA contributions are an above-the-line dollar-for-dollar tax deduction. It's a way to get money into a qualified vehicle. That asset is then invested into a basket of index funds that we use, such as Fidelity, and then at an applicable time, you pull it out for qualifying and eligible deductions.
Remember, go to AristaWealth.com to get other videos, tools, tips and resources to help you live your optimal life.