The Year of the HSA - Sis

This is going to be another big year for my family! We are welcoming another baby into our home this July. This is going to dramatically change our family's budget for the year.

Our first challenge is our health insurance plan changed. We now have a high deductible health plan which includes a HSA. It cost more per paycheck then last year. Also, it requires more money upfront but once you reach your deductible coverage is 100%. One advantage is my husband’s employer contributes $1000 per year to our HSA.

Let's take a step back for a minute and talk about what a HSA, or Health Savings Account is. You have to be enrolled in a high deductible health plan to qualify. The money you put into the account is not taxed and it is also not taxed when paying medical bills. This is a huge advantage. The funds rollover year to year. The annual contribution is limited to $4,450 for singles and $7,900 per family in 2018.

We are going to have planety of medical bills. Between doctor visits and delivering the baby, I am sure I will reach my person maximum without any issues. After reading about HSA on the forums there are two roads my husband and I can go down.

The first way is use the HSA is as it is intended. As the bills come in, pay them off using the HSA account.

The second option is to save the HSA as a second emergency fund. Then pay the bills off with our credit cards to receive points. From my understanding, you can hang onto old bills and claim them on your HSA at anytime. Therefore if an emergency arises, you can cash in your HSA. If you don’t need the extra funding, your HSA can grow tax free over time.

I think it’s a given that the second option is optimal. It gives you great access to a tax free account. The issue is you have to be able to budget to pay the medical bills. This is not an expense that we had last year so it will need to be worked into our budget. It is very intimidating to me to add another cost to an already tight budget, but the baby is cooking and the bills will be coming.

Also as a side note my husband signed up for hospital insurance. This was yet another extra, but since we knew I would be delivering a baby we knew it would get put to use. Its $20 per paycheck which are every other week. They will pay $1500 of out of pocket hospital costs.

One thing that brings me comfort is knowledge. We know that our individual maximum is $5000 to reach 100% insurance coverage. This gives us the ability to plan in advance and to start saving now. Knowledge is the key. You have to research your plan and educate yourself. The world of healthcare is scary and bills can add up quick. As a family everyone needs to be on the same page and prepared.

There are many great resources that go into this HSA strategy. My favorite is from the Madfientist. Please take a look!
https://www.madfientist.com/ultimate-retirement-account/

Comments

Post a Comment

Popular posts from this blog

FU vs FEveryone Money - Bro

The concept of FU* money is nothing new . The general idea is that you have enough money that you can tell someone (like a co-worker, boss, or bosses boss) FU and still be okay financially. Recently I stumbled across the concept of FEveryone money. FU money and FEveryone money might sound similar but the magnitude is different. FEveryone money is FU money taken to the next level. FU money is almost the same thing as an emergency fund. In a way it is an emergency fund on steroids. This money gives you room to speak your mind. If for some reason you need to quit your job FU money allows you to say “FU”. Eventually you will need to figure something out but you have the breathing room to figure things out. As your FU money grows the number of options you have grows. Starting out you might need to find a similar job a few months after saying FU. As your FU powers grow you might need to still get a similar job but a year or two after saying FU. Eventually your FU cushion might grow to the
Read more

Surviving VS Thriving - Sis

Image
We are all trying to survive, everyone is just trying to do the best they can. I don’t want to only survive though, I want to thrive. I want to live a life of passion and purpose. I want to have more good days than bad. Simple changes and one’s mindset can help promote a life of thriving. Thankful Happiness Reactive Ingenuitive Value Educated … like what I did there!  Thankful : I wake up every morning trying to be thankful. Some mornings are harder than others but before I get out of bed I try to think of one thing I am thankful for. It helps set my mindset positively and shows gratitude to the things around me. To thrive in life you need three bones. A wishbone, a backbone and a funny bone. -Reba McEntire Happiness: Turn that frown upside down. You alone can only create your own happiness. Choose a life filled with joys, as small or big as they may be. Learn to deal with and conquer challenges and find happiness in all areas of life. My mission
Read more

Why I FI - Bro

Image
My wife and I were out with some friends when the topic of FIRE came up. We are open with these friends and we informed them that we hope to be FI in 5 years or less. You could almost see their minds blow. They simply could not wrap their head around the fact it was possible much less why you would want to be FI. (It did not help matters that I referred to it as retiring early instead of financially independent) After this conversation it got me thinking about why I want to be FI. The first and foremost reason for FI is the security. My job is our family’s only source of income. If for some reason I lose my job then my family needs something they can fall back on. As our investments grow they become the equivalent of someone working full time at Colorado’s minimum wage*. Instead of being a one income family we are now a two income family with the second income is continually growing. The second reason for FI is optionality. Having a large amount of savings simply allows us to
Read more