Health Saving Accounts (HSAs)
Part of my mission for Midwifery Business Consultation isn’t just how to run a midwife business but teach financial awareness so midwives can focus on high quality care while having a high function income stream. The income stream doesn’t have to be directly from giving care. There are laws and financial strategies very powerful to use in business and personal setting.
Health Saving Accounts (HSAs) are one of my favorite! A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, co-payments, coinsurance, and some other expenses, you can lower your overall health care costs.
An HSA can be used only if you have a High Deductible Health Plan (HDHP) — generally any health plan (including a Marketplace plan) with a deductible of at least $1,350 for an individual or $2,700 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”
For 2018, you can contribute up to $3,450 for self-only HDHP coverage and up to $6,900 for family HDHP coverage. HSA funds roll over year to year if you don’t spend them. An HSA may earn interest, which is not taxable.
Some health insurance companies offer HSAs for their high deductible plans. Check with your company. You can also open an HSA through some banks and other financial institutions.
Having Tax Free Money In and Out for Medical Expense
Having tax free money in and out for medical expense is the main perk of having a HSA. The one few people know about is using your HSA funds to invest in real estate, businesses, or almost anything while it continues to grow. Most people have their funds sit in a savings account for easy access to use for medical expenses. When we are young and healthy, those accounts typically continue to grow each year. Instead of sitting in savings account at 0.01% interest, put that money into a self directed investment plan for potential high returns. You can buy buildings, (HINT, HINT…birth center), businesses like already established midwifery practice, and so much more.
There are a few custodian of self directed accounts manage HSA funds that you can directly invest in. Mark Kohler, amazing accountant and lawyer talks about his “meth lab rental home” that grows his HSA on top of yearly maximum personal contributions. Wouldn’t it be amazing to have a savings account tax free with millions to use for the most expensive care costs as you get older: medical bills!
Mark Kohler’s talk about HSA investing
HSA medical eligible options