- The Finance Gourmet

Procedure for Using HSA Account To Pay Medical Expenses

September 27, 2025August 23, 2025 by Finance Gourmet

I’ve written a bit lately about Health Savings Accounts, or HSAs, how HSAs work with state taxes, and the difference between Health Savings Accounts and Flexible Spending Accounts. But, the one question I keep getting is how exactly to use a HSA account. The Health Savings Account Theory The idea behind a Health Savings Account, or HSA, is a little bit like a 401k account, or even a 529 college savings plan account. You save money for future expenses like college or retirement, but in the case of an HSA, you are saving for medical expenses. Like with a 401k plan, or an IRA, you get a tax deduction benefit for making contributions. Also, like the other accounts, your money grows inside the account tax free. And, finally, like a Roth IRA, or a 529, you withdrawals for approved expenses are also tax free. So, theoretically, assuming the world around you proceeded in an orderly and predictable manner, and your budget contained plenty of room for all appropriate spending and savings, then you would contribute regularly to your HSA account, and invest that money, so it could grow over time, into a big reserve that is available to you when you …

Health Care Portal Open 2023 But Hurry

January 16, 2023December 18, 2022 by Finance Gourmet

The Federal health care portal, HealthCare.gov, has been reopened for 2023. This means that people who live in the 36 states that use HealthCare.gov as their health care insurance portal have until January, 16th to enroll in a health care plan. Health Care and Financial Independence Achieving financial independence without health insurance is luck. There are too many ways a person may need health care, from accidents to illness. Yours truly spent 47 years basically never seeing a doctor save once or twice every two or three years. My last stretch before being diagnosed with cancer, it had been four years since I had seen a doctor or used health care in any way. Then, bam, an unexpected diagnosis and treatment that costs thousands of dollars per dose, a hospital stay of two weeks, and more. My high-deductible health plan (HDHP) with Health Savings Account saved my $200,000 of liquid assets by having a legally required out-of-pocket maximum. I never had time to worry about deductibles and copays. By the time the first bill hit my house, I had crushed the $7,000 out-of-pocket family maximum, which ironically, had the function of making my family’s health carefree for the rest of …

What Is The Difference Between FSA and HSA?

April 28, 2021February 26, 2021 by Finance Gourmet

There is a lot of confusion around the difference between an HSA and a FSA. HSA stands for Health Savings Account. FSA stands for Flexible Spending Account, or sometimes, Flexible Spending Arrangement. Both types of medical savings accounts are tax-advantaged ways to save and pay for various medical expenses, but there are some very big differences. These accounts are very important for tax planning because otherwise, there is a very high threshold before you can deduct any medical expenses you might have. For many people, an HSA will be better than a Flexible Spending Account, but only if your health insurance plan qualifies. What Is a Flexible Spending Account or FSA? The FSA has been around longer, and so most people are more familiar with it. A flexible spending account is a benefit offered by your employer. You defer a certain amount of your paycheck into the FSA. Any funds contributed to an FSA are pre-tax contributions, just like a 401(k) contribution, which means you not only don’t pay taxes on that money, it doesn’t count as income for things like IRA contribution thresholds, or the child tax credit, or deducting student loan interest. That makes these contributions a very …

HSA Contribution Limits 2020 and 2021

January 29, 2021June 12, 2020 by Finance Gourmet

A health savings account, or HSA, is a great way to save money for medical expenses. If you qualify for an HSA, you get to deduct every dollar in contributions up to the HSA contribution limit. If you pay your medical expenses with an HSA, it ends up that you can deduct every single dollar of medical expenses, instead of just the amount over 10% of your income. In addition, over time, your money grows tax-free inside of the account. HSA Contribution Limits 2020 The 2019 HSA Contribution limit is $3,550 for an individual, or up to $7,100 for a family. Remember to qualify for an HSA, you have to have a qualifying HDHP (High-Deductible High Health Plan). HSA Contribution Limits 2021 The IRS recently released the information regarding contributions to an HSA in 2021. Each year, the contribution limit for HSA accounts is adjusted for inflation. This year, inflation was slightly higher for the year, so there was a small increase in the contribution limits for HSA accounts. For 2021 HSA contributions, the limits will be $3,600 for an individual, or “self-only” high deductible health plan. For someone with family coverage, the limit rises to $7,200, up from $7,100 …

Should I Invest Money in My HSA Account?

December 13, 2016 by Finance Gourmet

A Health Savings Account, or HSA, is a tax-advantaged way to save money for health care costs. An HSA account is different from a Flexible Savings Account, or FSA, that many people are more familiar with. For most people with qualifying health insurance plans, an HSA is better than an FSA. HSA Investing One of the advantages of a Health Savings Account is that the money does not have to be spent in a single year. Instead, those funds can be left in an HSA for years. In fact, that money can be invested, just like with a 401k plan, or a 529 plan, in order to grow for future medical costs. But, does it make sense for YOU to invest money in your Health Savings Account? Money that is invested in an HSA grows tax-differed, just like in an IRA or 401k. That many can also be withdrawn tax-free, if and only if, it is used to pay for medical expenses. There are several factors that determine whether it is a good idea to invest your HSA funds, or whether you are better off leaving them in the cash, or money market account. How You Use Your HSA Determines …

Health Savings Accounts State Taxes

July 6, 2016 by Finance Gourmet

We’ve discussed before how much of a benefit a Health Savings Account, or HSA, can be for saving money on your taxes. Contributions to an HSA are tax deductible for federal income tax purposes, or in the case of pre-tax contributions, they are simply not part of your income for federal income tax purposes. In addition, all interest, or capital gains earned within an HSA are tax-free, assuming all withdrawals are made to pay qualified medical expenses.But, what about state taxes on Health Savings Accounts? State Taxes on HSA Accounts The Federal Government can’t force states to do things, although there are ways around that, such as make your drinking age 21, or you get less federal highway funds. So, the various states don’t necessarily have to go along with the Feds when it comes to what is and is not tax deductible. In some states, however, that just happens by default. For example, in Colorado, the state income tax form is based upon the taxable income that you calculate for your federal income taxes. In other words, if you deducted it on your U.S. income taxes, it is already deducted when you start doing your state income taxes. That …

Which Is Better HSA or FSA?

May 11, 2016 by Finance Gourmet

Which is better a flexible spending account or a health savings account? The answer to which is better between a health savings account or flexible spending account depends, unfortunately, on the specifics in which they are setup. However, it is relatively simple to determine which is better an FSA or an HSA. First, you’ll want to understand what an FSA vs an HSA looks like. When FSA Is Better Than HSA An flexible spending account, or FSA has many advantages over paying for medical expenses out of your own pocket. However, it has only one real advantage over a health savings account, or HSA. The only eligibility requirement for having and using an FSA is that your employer offers one. It doesn’t matter what kind of health insurance plan you choose, or whether that plan has a high deductible. In order to have an HSA, you must have a qualifying high-deductible health insurance plan. The reality is that the deductibles aren’t necessarily that high, and in fact, may be close to the deductibles on other health plans. But, if you don’t qualify for an HSA, then a FSA is better than an HSA. The only other advantage of an FSA …