Health Savings Accounts: Your Questions Answered
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What is the main topic discussed in this episode?
Here's your Money Briefing. I'm J.R. Whelan at The Wall Street Journal in New York. You've got questions about health savings accounts. We've got answers. We'll check in with Wall Street Journal reporter Ann Turgason on how HSAs allow people to set aside money to pay for medical expenses tax-free. First, some money and market news you should know. Short-term vacation rental companies like Airbnb, Sonder, and Vrbo take a lot of heat from local governments, which accuse them of reducing housing supply. But the numbers show that those short-term rentals have not significantly contributed to U.S. housing costs. A study by Oxford Economics and commissioned by Vrbo owner Expedia found that over a four-year period, only two-tenths of a percentage point
What are Health Savings Accounts (HSAs) and why do they matter?
of the rise in inflation-adjusted rent could be attributed to the effects of short-term rentals. And for home sales, the impact of short-term vacation rentals was less than $9 on the average monthly mortgage payment. The Disney Plus streaming service is only about a week old, but stolen account usernames and passwords are already on sale on hacking forums. Disney says there's no indication of a security breach compromising passwords, and it hasn't said how many subscribers have had security problems. Disney Plus requires users to enter codes sent by email when changing account passwords, but it doesn't require those codes for logging in from new devices.
How do HSAs compare tax-wise to 401(k)s and IRAs?
The streaming service costs $7 a month or $70 a year. The hacked codes are going for $3.
Some health insurance policies include health savings accounts, or HSAs. They allow people to save up money over the year or many years to use for medical expenses. And it turns out they're also a great savings tool. Let's bring in Wall Street Journal reporter Anne Turgason to help us understand some key details and answer some questions that members of our audience had. So Anne, HSAs are a fairly recently created savings tool. What do they allow people to do?
Who is eligible for an HSA and what does an HSA-qualified plan require?
They have more tax benefits than 401ks and IRAs. They allow you to put money into an HSA account tax-free, and then it's tax-deductible. And then the money can build up tax-free. And then when you withdraw the money, if you use it for medical purposes, it's also tax-free.
But not everyone is eligible to open an HSA in which to make contributions.
Right. You have to have a high deductible health plan, and it has to be a high deductible health plan that qualifies for an HSA. So it's not enough just to have a high deductible health plan. You need to ask and make sure that it's HSA qualified.
Now, an HSA should not be confused with a flexible savings account or an FSA.
So FSAs are also tax-advantaged accounts. You can put money in pre-tax, and you can use the money for medical expenses. But that's sort of an older type of account, and I think people recognize those accounts because of their use-it-or-lose-it feature. A lot of them function that if you don't use the money in that account by a certain deadline, usually it's like sometime – In the early part of the year, you have to use your previous year's FSA or you lose the money. So a lot of people are nervous about those accounts.
And HSA is not use it or lose it.
Exactly.
How do HSAs differ from Flexible Spending Accounts (FSAs)?
With the HSA, it's just like an IRA or a 401k. It's in your name. And the money that you put in there is yours. And you can leave it there for years and years if you want.
You know, our readers had a lot of good questions regarding HSAs, and one of them was what kinds of medical expenses can someone use their HSA money for?
First of all, you can use your HSA money in real time, like in other words, for the medical expenses that you're accruing right now. Some people actually prefer to pay out of pocket for their current medical expenses and leave their HSA money untapped so that it can grow for retirement purposes. Regardless of whether you use it now or in the future, it has to be used for medical purposes. So if you want to use it, save that money for the future, you should save any unreimbursed medical receipts that you have now so that you can pull that money from the account in the future and match it to your current
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:05–0:48
2
What are Health Savings Accounts (HSAs) and why do they matter?
0:48–1:27
3
How do HSAs compare tax-wise to 401(k)s and IRAs?
1:27–2:07
4
Who is eligible for an HSA and what does an HSA-qualified plan require?
2:07–3:31
5
How do HSAs differ from Flexible Spending Accounts (FSAs)?
3:31–4:30
6
What medical expenses can you pay for with HSA funds?
4:30–8:18
7
Can employers contribute to HSAs and are HSAs portable between jobs?
8:18–8:52
8
What are contribution limits, divorce implications, and withdrawal penalties for HSAs?
8:52–9:24
Speakers
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