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Self-Directed HSA

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A Health Savings Account (HSA) is a tax advantaged savings account for current and/or future medical expenses.

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An HSA is an Individual Custodial Account, and unlike a flex spending account, it is not "use it or lose it." 

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Contributions are made in cash and are "pre-tax," account earnings are tax-deferred, and distributions for Qualified Medical Expenses (QME) are tax-free.

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HSAs can invest in assets (stocks, real estate, gold, etc.) on a tax-deferred basis.

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To open an HSA and make contributions, you must have a high-deductible health plan, not be claimed as a dependent, and not be enrolled in Medicare.

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Tax-free distributions to reimburse QMEs can be made at the time of service or anytime thereafter; as long as the QME occured  after the HSA is open.

 

What Is A High Deductible Health Plan (HDHP)?

  • A High Deductible Health Plan (HDHP) is health insurance that has lower premiums but a higher deductible.
  • An HDHP pays for catastrophic medical expenses and qualifies consumers to set aside tax-free funds in an HSA.
  • HDHPs are an alternative to the plans offered by HMOs and PPOs that feature low deductibles but charge high premiums.
  • In 2017 HDHPs must have a deductible of at least $1,300 for self coverage and $2,600 for family coverage
  • 2017 maximums for deductible and out-of-pocket expenses are $6,550 for self coverage and $13,100 for family.
  • Out-of-pocket expenses for HDHPs include money paid to satisfy the deductible, co-payments, and other expenses.
  • These are all costs that the HSA may be used to cover.
  • An HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible.
  • Preventive care includes periodic health evaluations, immunizations, and more.

What are the Benefits of an HSA?

An HSA is an individual account. Once established, the HSA is controlled by the account holder regardless of changing employers or health coverage. However, anyone can contribute money to your HSA. HSA investments grow tax-deferred. Tax-free distributions to reimburse QMEs (Qualified Medical Expenses) can be made at any time, as long as the QMEs occur after the HSA is open. QMEs include: chiropractic care, dental care, corrective eye surgery, homeopathy and many others. 

HDHP and HSA plans offer lower premiums than other health plans because deductibles are high. Those with an HDHP and HSA who already spend little on healthcare annually may experience net savings. HDHP holders are covered for major medical events and emergencies.

HSAs can invest in a wide variety of assets including real estate, precious metals, public and private stock, notes, and more. Contributions to HSAs do not count toward your annual IRA contribution limit. Once the account holder has reached age 65, HSA funds can be distributed for non-QMEs. These distributions are subject to tax, but incur no penalty. There are no Required Minimum Distributions (RMD) like is required for Traditional IRAs.
  • HSA Eligibility and Other Rules:

  • You need a qualified HSA trustee for this account (New Direction IRA is an authorized provider of HSAs). The HSA can be established through a custodian that is different from your health plan provider.
  • In order to self-direct your HSA funds, you need a self-directed HSA provider like New Direction IRA.
  • An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA.
  • You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. See exceptions below.
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else's tax return.
  • An HSA is "portable" so it stays with you if you change employers or leave the work force.
  • You can roll over amounts from Archer MSAs and other HSAs into an HSA.
An infographic explaining disqualified persons

Exceptions To HSA Rule Limiting Other Health Insurance

You can have additional insurance that provides benefits only for the following items.

  • Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property
  • A specific disease or illness
  • A fixed amount per day (or other period) of hospitalization

You can also have coverage (whether provided through insurance or otherwise) for the following items.

  • Accidents
  • Disability
  • Dental Care
  • Vision Care
  • Long-term Care
 
 

It's Easy to Invest for Retirement with an HSA

Step 1 Open a self-directed HSA with New Direction IRA.
Step 2 Put money in that HSA by making a contribution, transferring from another HSA or doing a one-time direct transfer from an IRA (limited to the annual contribution amount).
Step 3 Direct your HSA to buy real estate, precious metals, private equity, loans, and more!

Build Wealth Through Health with an HSA

Reduce your health care costs with a Health Savings Account. While most HSAs provide only savings or money market accounts, limiting what your HSA can earn, a self directed HSA can earn more by investing in precious metals, real estate, mortgages, limited partnerships, mutual funds and more.

 

Learn more about HSA Contribution and HSA Distribution.

For more detailed information, feel free to contact us or visit IRS.gov.

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