HSA vs 401k Savings

[Jared]

May 29, 2023 at 10:31 pm

So I had this idea a while back to start saving more in the HSA and to not take anything out. Basically, try to take the maximum savings for our small family in the HSA, by <span style=”text-decoration: underline;”>not paying for any medical expenses</span> from that account so it can build up tax-free interest. Since we have to pay taxes on what we earn, I figured it would be best to pay out of the cash (yes taxed once) but it would be better long-term to increase the HSA and continue to get tax-free dividends on that vs continuing to pay taxes for 10 years on whatever I earned if I saved the cash. Has anyone done that analysis?

I wish I would have done that sooner, like 7 years ago, but now that we’re building it up, it seems like we just will need 5-6 years to get it up to an amount that we could potentially have 40k or so in there so that we could spend it on healthcare costs, which seem to be quite broad. I’m going to have to find out where the list is of all things you can pay for from your HSA, but it seems like quite a bit. I’m not sure what people think, but it would be nice to see if we could use that to pay for like supplemental insurance if my wife and I don’t have jobs. Anyone, know where we can find an official list that shows what we can pay for out of the HSA? I’m assuming it’s with my provider somewhere, but they seem to want to keep it hidden if it’s not from the normal insurance-covered items or prescribed by a doctor.

Also, the reason why I wanted to post up this now is that I found this article that semi-validates what I was thinking: https://www.msn.com/en-us/money/retirement/this-retirement-savings-account-is-at-least-17-better-than-a-401k-says-expert-its-a-complete-cheat-code/ar-AA1bD1ag

If we can build the HSA up to 80k eventually, it might be able to pay for either cash expenses for medical care or for some kind of insurance.

What do you all think about that plan or how to pay for other coverage?