New HSA Rules in 2025 You Need to Know

Рет қаралды 38,460

Күн бұрын

The IRS just announced the HSA contribution limits for 2025. Let me give you the complete breakdown of how my HSA will supplement my early retirement income.
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⏰ Table of Contents ⏰
0:00 HSA Rules in 2025
1:36 How HSA Works
4:18 Tax Savings with HSA
8:10 HSA Calculator
12:09 3 Bucket Strategy with HSA
#FIREPsyChat #FinancialIndependence #HSA
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Disclaimer: This video is not in any form of personalized financial advice. I am solely sharing my personal experience and opinions. All Strategies, tips, suggestions, and recommendations shared are solely for entertainment and educational purposes only. There are financial risks associated with investing. You must conduct your own research and due diligence or seek the advice of a licensed advisor if necessary.
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Пікірлер: 115

@FIREPsyChat 24 күн бұрын

One correction with the marginal tax rates: They should've shown the differences between the ladder from 10% to 12%, 22% to 24%, etc. I didn't catch it until after it was already presented, but I want to make sure it is addressed in the comment section. It was presented correctly in the other tax video, but this one showed the incorrect numbers

@akc5247 14 күн бұрын

You should pin this comment to top.

@f3n1xplat3ad0 24 күн бұрын

HSA are for healthy people. If you have a chronic disease, this is not for you. The best use is being 25 yrs out of your parents health insurance. Then start a HSA ASAP. Maybe you never have a health scare, and get to have $$$ for retirement.

@pchygrl17 20 күн бұрын

Perfect timing for this news. Thanks for covering this update!!!! 😊

@andrewschumacher9127 21 күн бұрын

That tip about calling the hospital biller was gold. Never thought of doing that! My son had an ER bill for $3,000. Investing in my HSA, so had to pay OOP 😢. Called and asked for a discount and they gave me %30 off the top, took me just 5 minutes 🎉. Thanks so much!

@bribradt3450 25 күн бұрын

I just opened my first HSA through Fidelity a couple months ago, and I was able to invest my very first contribution of $100. I didn't know some places require a minimum

@JayLewTheTruth 25 күн бұрын

my job uses Optum bank, and i couldn't invest until I had $1,000

@cur244 25 күн бұрын

@@JayLewTheTruth Must not be an Optum bank thing because I use Optum bank and my minimum is $2,000 unfortunately.

@monicageller226 24 күн бұрын

Medcom is also 1k

@jomo4976 23 күн бұрын

So the breaking news about new HSA rules for 2025 is that the limits have gone up?

@jmizer88 23 күн бұрын

This is awesome information. Thanks for sharing.

@nazeercurry5248 25 күн бұрын

Great information 🎉

@jenniferwise7975 8 күн бұрын

This is an excellent video. I learned a lot here.

@johnjohn40100 25 күн бұрын

The HSA is starting to look like the 401k in the early 2000s or so. Pretty soon, in 20 or 30 years,HSA limit will be what the 401k limit is now

@FIREPsyChat 25 күн бұрын

Hopefully higher if congress passes the new HSA bills

@headlibrarian1996 25 күн бұрын

@@FIREPsyChat Yeah, the HSA contribution limit should really be equal to the max annual out of pocket for HDHPs.

@DobyDuke 24 күн бұрын

People are sick and slowly dying from the corrupt food system, so I can see why

@Bryan-om3wq 11 күн бұрын

When healthcare costs are $15,000 annually it’s kind of crazy that you’re limited to less than 1/3rd of actual costs. Hopefully they do increase this.

@jessymadsen2699 14 күн бұрын

Love my HSA! But I do use it to pay receipts when the market is up. Even used it for braces for the kids! Of course, when the market is down I don’t withdraw. Fortunately we’ve been relatively healthy so it’s grown a fair amount.

@Roarshak94 19 күн бұрын

I did not overlook this i chose not to do it because i don't like paying over $1000 a month in health insurance. That would leave me a lot less to invest in general.

@AngelWilliam-vg5rw 2 күн бұрын

I think investors should always put their cash to work, especially In 2024, we'll start to see more market diversification. I'm hoping to invest about $350k of my savings in stocks against next year. Hope to make millions in 2024

@botruong5083 20 күн бұрын

Could you please explain what you mean by reimbursing yourself? Like how?

@ctrent859 25 күн бұрын

Another beast of a video! If I withdraw some of the growth or compound interest of my HSA for non-qualifying expenses will I still pay taxes before age 65?

@FIREPsyChat 25 күн бұрын

If you use it for non-qualified medical expenses set forth by the IRS before age 65, not only will you pay federal and state income taxes but you will be penalized 20% on top of it. That’s not just the growth or interest but also your contributions because they’re in pre-tax

@richm4769 24 күн бұрын

Question. If i go $10 dollars into the 22% tax bracket. Do I get the 22% back from my contribution. I will be retiring soon and will contribute max in cash into my account each year. What determines getting the 12 percent back or the 22% back???

@adry729 7 күн бұрын

What is the expense ratio? Plus, how much does Fidelity charge?

@408Machine 24 күн бұрын

My employer only offers an FSA account, which can't used as a Roth IRA after 65. Would a post-tax HSA account be worth it? Do we still have to pay capital gains taxes if we choose to withdraw after 65?

@anhtopoftheworld 23 күн бұрын

Would you recommend getting an HSA if you start it in 2024, but then will eventually move to CA in 4-5 years, would it be worth it to max it out still?

@bige3969 8 күн бұрын

I am using my HSA to save for Long Term Care expenses if I ever need them or paying my Medicare B premiums when I am 65. This can be a great way to save for those expenses.

@bossmanxll1023 13 күн бұрын

hi i have question about Hsa if i live in California. Can you explain what are the difference? 1. i wonder can i use this for my tax deduct when i do income tax? 2. if i sell the stock that i invest but i dont put dont use it yet do i have to pay tax ?

@Rastebb 17 күн бұрын

Lively is who i use for my HSA. It doesnt require a cash balance to invest, i just roll my employer HSA plan over once per year

@raiden031 22 күн бұрын

What i do is let most of my HSA grow in investment funds, buy every now and then i will take out reimbursements based on medical receipts and put the money in a 529. So my hsa money is never taxed, plus i get an additional state deduction due to the 529 contribution.

@patienceisalpha 25 күн бұрын

I max out my family HSA, but withdraw as soon as I have receipts because of a few problems I have with the HSA: 1/ you have to keep receipts for decades. I don't want my wife to have to care about this. 2/ receipt value gets eroded by inflation, so eventually you may or may not have enough receipts to reimburse yourself. 3/ if you don't have receipts after 65, you will face regular income tax rates, at the same time you may have to do Roth conversions or actually have social security income filling up lower tax brackets. 4/ you may be trading long term capital gains tax rate for earned income tax rates. So what I do is max it out through paycheck (for added fica deductions) then I withdraw as soon as I can and put it in taxable brokerage account on low cost etfs. It comes to around 0.3% tax drag while Accumulating but with LTCG rates at the exit. Better imho The final nail in the coffin imo is that I hold a EU citizenship and can hedge against crazy high healthcare cost by relocating to my country of origin.

@oness1334 25 күн бұрын

Never looked at it this way.

@dec1slh 25 күн бұрын

@@oness1334why would you, it doesn't make that much sense

@patienceisalpha 25 күн бұрын

@@dec1slh it does when you Grow up with 0 healthcare cost and are used to it. I rip 90% of the benefits of the HSA by maxing it out from paycheck. And I can get 0% LTCG at the exit by filing married filing jointly. I also did not talk about a big estate drawback of the HSA, which is that it becomes fully taxable to the recipient the year of the death of the account owner. If the recipient doesn't have the receipts to show for it'll be costly. A taxable brokerage account gets a step up in basis. If you want to compute the tax drag, think about the fact that an sp500 etf has 100% qualified dividends and yields around 2%. So while the account grows the real tax drag is (your LTCG rate) * 2%. In my case, I am at 24% marginal, hence 15% LTCG. Investing in a brokerage accounts cost me (15% * 2%) per year, so an added expense ratio of 0.3% to gain the full flexibility of a brokerage account. The tax torpedo is real with an HSA and I think many people will be surprised in the incoming decades.

@patienceisalpha 24 күн бұрын

@@dec1slh it starts to make sense if you're filing married filing jointly, that you can get 0% long term capital gains tax, that your spouse won't have to care about receipt when you die, that she'll have a step up in basis instead of a tax torpedo. It makes super sense when you grew up outside the US and are used to pay 0 for Healthcare costs!

@Direct.injection212 24 күн бұрын

The money in your HSA grows until you take it out.

@Bryan-om3wq 11 күн бұрын

I’m hearing conflicted information on things HSA can be used for. Some people are claiming they’ve been allowed to use for gym memberships and nutritionists, is there a list of things that are “qualified medical expenses”

@miragexl007 25 күн бұрын

Man. Hard to decide or make that decision to max out Everythung. 401, rith, hsa. Lol. Close with roth and has...but 491 is 15% + 2% match. Make More in stock market on average. Like 15-30%. So many variables

@chriswb7 11 күн бұрын

If you have a roth and 401k - just put what your company matches in the 401k and then max out what you can in the IRA.

@harrycee656 25 күн бұрын

You should always start saving to an HSA. It gives you an automatic 7.5% tax break on the medical expenses you would need to pay anyways.

@pnic4540 24 күн бұрын

Curious, I’m pretty sure the employer match is not included the the limits. I could be wrong here, can you do some digging? My source was from HSA bank back in maybe 2023 Also, paying out of pocket isn’t entirely the best financial decision. Put it on a payment plan at zero percent and pay it off when your account has recovered. Don’t pay these figures with post tax dollars if you don’t have to. We are in tax arbitration at this point, keep it simple and use the dollars for what they are meant for

@iposttvshows 15 күн бұрын

This is my first year having an HSA. I did my full contribution at once since I don't get it through an employer. I invested it all in SCHD and I'm basically at break even 😭

@chriswb7 11 күн бұрын

In 20 years you will thank your younger self.

@iposttvshows 11 күн бұрын

@@chriswb7 except that I don't have 20 years for an HSA.

@marvilrivera3104 10 күн бұрын

I started my HSA 2 years ago & invested it in NVDA/ AMD/QQQ/SCHD/O, now I am up 51%, w/ NVDA average cost @ $35. 😊

@rkem1000 8 күн бұрын

I have a question about HSA accounts. I know they cover medical bills, but can I cash out for personal use, like with a 401k or Roth IRA?

@davidcloyd1296 24 күн бұрын

Thanks! Using HSA to pay bills 30 years afterwards may not jive with inflation. A $500 bill today will seem like $.05 30 years from now. Am I wrong?

@TroyCraft 24 күн бұрын

You’re not wrong about a dollar today having less buying power 30 years from now. what you’re missing, is that money in the HSA is invested and (hopefully) grows. You are not taxed on that growth

@iceblade6330 24 күн бұрын

That’s a giant inflation rate. Not unheard of in other parts of the world maybe, but hopefully not the USA. Nonetheless, I expect to spend more on healthcare after I retire than I do in most of my younger years, so I’ll just hold onto it.

@arresthillary9502 11 күн бұрын

well thats the rub. to invest it tax free and make it grow greater than the inflation rate. there is a thing called a real rate and a nominal rate

@linhdang1972 25 күн бұрын

Thank you so much for sharing information about HSA account, I have a question. I am recently retired, can I open an HSA account?

@FIREPsyChat 25 күн бұрын

You can as long as you’re on a HDHP

@Virgil7long 24 күн бұрын

you cannot be on Medicare, if you are no.

@s.7.7.74 25 күн бұрын

What’s considered high deductible? What’s the amount?

@lofi-gurl 25 күн бұрын

For 2024, the IRS defines HSA-eligible plans as high-deductible health plans (HDHPs) with a deductible of at least $1,600 for an individual and $3,200 for families. These health plans must also have an annual out-of-pocket maximum spending amount of no more than $8,050 for an individual and $16,100 for families.

@sarsarsvintagejewelry 19 күн бұрын

I wish I could have an HSA.

@wadsbanks7068 24 күн бұрын

Your 2024 Marginal Tax Chart does NOT LOOK CORRECT!!!!! EX 383900 at 24%=92136. The whole amount is not at 24%. 180k at 24

@FIREPsyChat 24 күн бұрын

Yup completely my bad for not double checking the numbers. Thanks for pointing that out

@helenibrahim6330 17 күн бұрын

I am 66 and working full time. I have Medicare can I open a has acct.

@michaelsd284 25 күн бұрын

Instead of worrying about saving receipts from long ago, you can use your HSA to pay for Medicare (Part B, D, and Medicare Advantage) premiums, co-pays, deductibles, as well as long-term care insurance if you need that. Of course you can use it for medical expenses while in retirement and use it for what ever you like once 65 (avoid penalties) in which it will be treated as ordinary income for taxes. Keep in mind, you must stop HSA contribution once you enroll in Medicare, even if just Part A (which is free).

@randolphh8005 25 күн бұрын

Excellent points! We are retired and still collecting receipts. Obviously receipts from years ago are devalued, but still helpful if you have substantial amounts in your 😅HSA. Getting the money out tax free is obviously the most helpful. We have substantial HSA money, we treat it as a Roth. But, people who have very large amounts will essentially have just a regular IRA. I think if you have a huge amount of HSA money, it is not better than a Roth Contribution at lower income tax rates, since you have to “spend” money AND contribute, and may not be able to take it out tax free. The money you “spend” and not reimburse yourself for is essentially a tax since the value of that receipt severely deflates over 10-20 years or longer. Based on our current experience as retirees at 63, and now both on Medicare, having about $150k in our HSA, our medical expenses INCLUDING Part B and D and copays are a bout $10k for both combined per year. We should have no problem spending the HSA down, but also expect the funds to last for 15-20 years. The value of our receipts is only about $20k today. If we had $500k in the HSA, we would never be able to spend it all on medical expenses short of long term care. Nothing wrong with saving it for LTC, but good chance we won’t need it all for that. So my advice is to max out an HSA for 15-20 years IF current medical expenses are low. If not so healthy, I would not. After 15-20 years, I would just target a Roth, especially in lower income years.

@davidbrooks8809 24 күн бұрын

🎉 I'm David and I love my health savings account😂😊

@FIREPsyChat 24 күн бұрын

😂

@JustinAZ 24 күн бұрын

Dude goes straight from "I didn't understand how the US progressive tax system really worked" immediately to "become my personal client" for financial advice... Good on him for being humble, but yeah, I'll pass.

@Chris-ut5ih 25 күн бұрын

Is GEHA HDHP HSA minimum still $1000 or $100 before I can transfer the funds to my fidelity HSA account?

@bribradt3450 25 күн бұрын

I did not know you could transfer money from one HSA to another

@acilirp 25 күн бұрын

$100 before you transfer to the brokerage.

@sanguineel 24 күн бұрын

$100

@raedelatorre2592 25 күн бұрын

Do you pay taxes when you take the money out of the HSA after 65?

@RothBalloon 25 күн бұрын

Yes, unless it is used for approved medical expenses. It is basically another IRA at that point.

@TotalReturns 25 күн бұрын

Only if the withdrawal is not used for qualified medical expenses.

@nazeercurry5248 25 күн бұрын

No. You can use the money for anything after the age of 65.

@FIREPsyChat 25 күн бұрын

After age 65 you can use it for non-qualified medical expenses but you will pay federal and/or state income taxes (penalty free). Qualified medical expenses are tax free and penalty free regardless of your age

@michaelsd284 25 күн бұрын

@@nazeercurry5248 Nope, you can use it for non-qualified medical expense and avoid the penalty but not the State and Fed tax. Using for qualified medical expenses avoids both penalties and taxes. Once you enroll in Medicare you must stop contributions.

@DeepSleepRhythms 15 күн бұрын

Optum min cash is 500

@RothBalloon 25 күн бұрын

I have a HSA and do everything stated here except for saving the receipts for reimbursement at a later date. I think it is a wash because you are not calculating the opportunity cost of not investing the cash in the Expected Expenses Cash account. Instead, I just keep all that cash invested and pay my here and there medical expenses straight from the HSA as intended. Both my invested cash and the HSA funds will continue to grow and I’ll end up at the same place with no headache of tracking receipts. Also, the invested cash in the brokerage account will be taxed at long term capital gains vs this massive HSA which will be taxed as ordinary income when withdrawn and used for retirement after 65. Pretty much a wash 🤷🏾‍♂️

@DefinitelyNotRin 25 күн бұрын

Yeah I don't agree with doing what he mentioned either. There's basically no benefit considering even once you get 65, if you do, it will still be taxed if you take it out to pay for non medical expenses. Like maybe if you're just overflowing with cash and you don't know what to do with then his way works fine.

@shaw7598 25 күн бұрын

Why are you not investing? My HSA is invested in SPX index fund

@oness1334 25 күн бұрын

@@DefinitelyNotRin Most people will have medical expenses at 65. But I agree with your views.

@RothBalloon 25 күн бұрын

@@shaw7598 Mot sure if this was for me, but my HSA is invested in FXAIX, and I max my contributions yearly. Fortunately, I only use about 10 to 20% from it for yearly medical expenses.

@a32tl 24 күн бұрын

I don’t think you are understanding what he’s saying. I invest my HSA funds and pay for my medical expenses out of pocket. I save my receipts while my HSA investments keep growing. I will reimburse myself at age 65 or older for all the years of expenses I’ve already paid. I pay myself back tax free after years of compounding that money.

@kungdu 24 күн бұрын

The thought is nice but most people are just living paycheck to paycheck. Always have a plan and a back up plan. This would be good once you got your emergency fund set, investments going and have extra cash left. We know what people are going to do when they have extra money. Spend it like no tomorrow.

@SettyS2011 2 күн бұрын

8300 is for 55+ and 7300 for all.

@hawktangerine405 25 күн бұрын

i just got to move out of California before I retire, CA doesn't recognize HSAs and tax them like any non-qualified account.

@xaxb4178 24 күн бұрын

What does this mean? I know the state does not not, but federal is accepted?

@hawktangerine405 23 күн бұрын

@@xaxb4178 say you invested $10k in an HSA and purchased stock XYZ and it grew to $50k after 20 years. When you sell the stock in the account, California will tax the capital gain.

@kelmike060404 25 күн бұрын

If you turn 55 mid year next year can you contribute that extra 1000?

@a32tl 24 күн бұрын

You can contribute the extra $1k in the year that you turn 55.

@esbiermann62 6 күн бұрын

So you are supposed to have all this money to fund an HSA, to fund two savings accounts? Who has that kid of money? Secondly what if you have very few medical expenses and a larger HSA fund?

@MaritsaDarman 21 күн бұрын

What if you’re dirt poor

@enigmathegrayman2953 23 күн бұрын

I just get a box of bandaids to cover my medical emergencies in order to not touch my HSA 😂

@FIREPsyChat 29 күн бұрын

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@logandaniels5 24 күн бұрын

You cannot write off out-of-pocket medical expenses unless you paid more than 7.5% of your annual gross income in said expenses. Paying medical expenses out-of-pocket and losing out on the tax deferred benefits of the HSA is not smart and it's bad math. If you are making a profit doing what you are saying, you are committing tax fraud, and I would probably avoid posting a video about it or maybe you need to explain better what you're doing. Not only that, but you cannot claim medical expenses AND take the standard deduction, you need to itemize. This is assuming you are paying less than 7.5% AGI, like I mentioned, like most US citizens will be.

@FIREPsyChat 24 күн бұрын

Yeah you need to watch the video again but this time slowly. Never did I say to write off medical expenses with the standard deduction in the video. The HSA contributions are in pre-tax dollars and reduce your taxable income. It’s not a schedule A write off. IRS Form 8889 reports the HSA contributions.

@logandaniels5 24 күн бұрын

@@FIREPsyChat Ok, since you want to get smart with a comment like that, you should reread my comment again. At no point did I say that is what you said. I’m saying that is what would need to be done for what you’re saying to work. I’m also saying your advice is bad for many different reasons. It is NOT beneficial in any way to pay for medical expenses with post-tax dollars if you have a tax deferred HSA. It doesn’t matter that you can invest that money tax free or not. If you have to pay $3,000 in expenses, as you showed, you’re essentially paying $3,720 when figuring for lost taxed money at 24%. If you paid your medical expenses with your HSA and invested that leftover $720 instead, you would come out ahead using your tax deferred account every single time. People that use their HSA like this are not doing the math correctly and need to stop giving advice.

@dustyroads3071 25 күн бұрын

Why in the world would they increase the contribution limit to $4300 and only increase the HSA contribution limit for a family to $8550. They should have just increased it to $8600.

@FIREPsyChat 25 күн бұрын

They did this in 2022 and it’s pretty annoying. I wish they would just double it to make it even

@dustyroads3071 25 күн бұрын

@@FIREPsyChat I agree. It's annoying.

@headlibrarian1996 25 күн бұрын

It’s a consequence of rounding to the nearest $50. The single limit made the cut and the family limit didn’t. In other years the opposite can occur.

@touchofgrace3217 25 күн бұрын

I think it is absurd that self employed people who opt out of high deductible health insurance plans or any other plan due to the insane costs are not allowed to have an HSA. We are the very population that would benefit from one. HSA is nothing more than an incentive plan to participate in an ObamaScare program.

@andrewschumacher9127 21 күн бұрын

@FIREPsyChat 20 күн бұрын

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