I believe health savings accounts are one of the most effective places you can invest your money,

but only if you know the rules around how to properly use them. So in today's episode,

we're going to talk about health savings accounts, how they work in some strategies, some little-known

strategies that you can use to maximize the tax impact of everything you contribute to your HSA plan.

This is another episode of Ready for Retirement.

I'm your host, James Knoll, and I'm here to teach you how to get the most of the

life with your money.

And now, on to the episode.

Let's start by getting a quick rundown of how health savings accounts or HSAs work.

With an HSA, any contributions you make are tax-free at the federal level,

and they are tax-free at the state level at all but two states. So California and New Jersey

do not recognize HSA contributions, but the other 40 out of 50 states do, and those contributions

are tax-free. Now, these contributions also continue to grow tax-free. So with an HSA, and we'll get to this in a little bit, you have to keep some of your money in cash-free. Now, these contributions also continue to grow tax-free. So with an HSA, and we'll get

to this in a little bit, you have to keep some of your money in cash, but you can invest the difference.

You can invest the remainder, and that money grows tax-free, and then if you're pulling that money

out for qualified medical expenses, we'll also get to that a bit later, that money comes out tax-free.

So what you essentially have, these have a triple tax benefit here, tax-free contributions, tax-free growth, and tax-free withdrawals, and what I'm going to show you is how do you take

most advantage of this in some little-known ways to maximize the effectiveness of what this account can do for you?

The first detail to know at this is are you even eligible

for an HSA? To be HSA eligible, you have to be enrolled in a high deductible health plan.

Now, just because you believe that your health care plan has a high deductible does not necessarily

mean that it is a high deductible plan. These plans will have minimums for the actual deductible

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