Before I explain in detail this new revelation, please allow me to explain what an HSA is. An HSA is an account that you can contribute money to annually. You can then deduct the contribution from your income taxes just like a Traditional IRA. In order to qualify, you must have a health insurance policy personally or at work that has a high deductible (in excess of $1,000). The purpose for the account is to allow you to accumulate funds to offset the out of pocket medical expenses, such as the deductible and other medical expenses not covered under the health policy. The funds are deposited and accrue earnings on a tax deferred basis Out of pocket expenses that qualify can be reimbursed from the account tax free. Later, after the funds have accumulated, they can be withdrawn as needed. There is no “use it or lose it” clause, such as in the Section 125 cafeteria plan where the participant must use up all dollars by the close of the year or else lose the money entirely.
With all of that said, you may ask yourself, “what is the big deal with the ability to invest the funds in an HSA? Could you not invest the funds before?” And the answer is yes, you could invest the funds before but unfortunately like all new programs brought about with new legislation, no one quite new how to do so. The law and the regulations were also not clearly defined. Thus, the only investment we had available was an interest bearing account. Years later a couple of insurance companies offered a mutual fund or two, but the offerings were very unattractive. Now, we have the ability to establish the HSA account exactly like a self directed IRA. We can invest in CD’s, Treasury Bonds, Corporate Bonds, Stocks, Mutual Funds, and Exchange Traded Funds (I will explain these to you later). This is great news for those who accumulate the funds in their HSA’s instead of spending those funds. The HSA is another opportunity to shelter more money from taxes and use the funds for possibly accumulating more money for retirement.
Ten years ago, when the MSA account first began, I began my own However, I switched to an HSA when legislation enhanced the benefits of the accounts even further. In the past, I have been disappointed that there were no investment vehicles available. Now, I am ecstatic that I can invest my HSA in a self directed account.
The contribution limits for a single insured person is $2,850 for 2007 and $5,650 for a family insured. These contributions can add up to a substantial amount over time. They can also provide a great emergency fund in case there is some sort of unplanned for medical expense.
I am forever searching for more pockets to shelter and grow your wealth. I am Corey Callaway of Callaway Financial Services, Inc. Remember, before you give it away, call Callaway. All securities are offered through Callaway Financial Services, Inc. member NASD & SIPC. For additional information on this topic, contact us at email@example.com, subject line the article title.