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/

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