I’m 32, no kids yet, but hopefully relatively soon. I have almost $50k in my HSA and contribute the max every year. SO doesn’t have and never has as she obviously uses her healthcare more and doesn’t have an attractive HDP.

I’ve yet to spend any of my HSA money and have it all in broad funds outside of the mandated cash amount. Any of you guys self insure through an HSA and if so what is your balance? I don’t plan to stop contributing anytime soon, but at what point is it better to divert those funds to another vehicle?

This post was edited on 5/13/26 at 10:44 pm

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Posted by GoCrazyAuburn

Member since Feb 2010

41081 posts

Posted on 5/13/26 at 11:21 pm to CPA Yung Boi

quote:
at what point is it better to divert those funds to another vehicle?

There isn’t tbh. It’s the first place I put funds after getting the max employer contribution on a 401k. Only place you can get triple tax advantage. Max it out forever. If you never touch it, you use it as retirement income or even better, you use it to pay for your medical expenses in retirement and never pay tax on it

Also, keep track of your medical expenses and payments even if out of pocket. You can reimburse yourself in retirement for them and it is completely tax free, even if the expenses were 30+ years ago.

This post was edited on 5/13/26 at 11:23 pm

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Posted by Zilla

Member since Jul 2005

10653 posts

Posted on 5/13/26 at 11:50 pm to CPA Yung Boi

$50k at 32 is fantastic, congrats on that....let time go to work on it now

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Posted by ronricks

Member since Mar 2021

12196 posts

Posted on 5/14/26 at 4:31 am to CPA Yung Boi

I treat my HSA as basically a second Roth account. Max it every year and have it invested in low cost index fund and will not touch it until 65 when I can use it for anything just not medical. I’d argue maxing an HSA first before your 401k or Roth is the best option since it’s triple tax advantaged.

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Posted by SETH6180

TEXAS

Member since Feb 2020

1178 posts

Posted on 5/14/26 at 5:11 am to ronricks

Aren’t you taxed on withdrawals if it’s not for healthcare? Basically an IRA at that point?

This post was edited on 5/14/26 at 5:13 am

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Posted by Im4datigers

Northern Virginia

Member since Oct 2003

4661 posts

Posted on 5/14/26 at 6:17 am to SETH6180

That’s what I thought too but you can use it for anything and don’t have to pay the 20% penalty. I think you’re just taxed at the normal income rate for non medical withdrawals. But I also think you can go back 20 years to recoup a medical expense you paid so long as you have it documented.

This post was edited on 5/14/26 at 6:21 am

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Posted by SETH6180

TEXAS

Member since Feb 2020

1178 posts

Posted on 5/14/26 at 7:00 am to Im4datigers

Yes, it's taxed as normal income if not used for medical purposes. Yes, you can go back in time for a while as well. It's an excellent vehicle for sure.

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Posted by ronricks

Member since Mar 2021

12196 posts

Posted on 5/14/26 at 8:01 am to SETH6180

quote:
Aren’t you taxed on withdrawals if it’s not for healthcare? Basically an IRA at that point?

The huge benefit here is at 65 you can:

A: You can use funds for any purpose, including non-medical

B. you can use HSA funds tax-free for Medicare premiums (Part A, B, C, D) and long-term care premiums.

(B) is the biggie. Yes you would be taxed but you also received a tax advantage when you contributed as well.

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Posted by GoCrazyAuburn

Member since Feb 2010

41081 posts

Posted on 5/14/26 at 9:31 am to Im4datigers

quote:
That’s what I thought too but you can use it for anything and don’t have to pay the 20% penalty. I think you’re just taxed at the normal income rate for non medical withdrawals

In retirement, the funds operate just like they would in your 401k/Traditional IRA as far as income tax on the contributions/gains, if you withdraw the money for non-medical expenses.