Today we are talking about how to care for your family by cultivating a Health Savings Account (HSA). It might sound boring, but it actually gets pretty wild!
In the Beginning…
“The Lord God then took the man and settled him in the garden, to cultivate and care for it” – Genesis 2:15
The creation story is such a beautiful allegory that can be read and reflected on many times and always point to something deeper about ourselves. These stories are for everyone. Even for the not-as-religious they bring out a wealth of revelation to reflect on (see Jordan Peterson’s Biblical Series for example).
There is something about going back to our roots to realize more about ourselves today.
Shamar – to Cultivate and Care For
In this verse, soon after God creates man, He puts him in his place for the purpose of cultivating and caring for the garden and all that is within it. This was mankind’s first job, to cultivate the world around him and to care for it.
When this was written in the Hebrew, the word was SHAMAR.
Shamar literally translates to “guard, protect or attend to”. We all have this natural inclination to protect and attend to all that is around us. This is great when we get the sudden urge to tidy up around the house or start a garden, but our role was to attend to even before the fall. So what does this look like if not just working for our food and shelter?
Physical tending to can often be more fun than emotional, spiritual, or even financial tending because you see immediate results. Yet, we need to shamar in all of these areas to provide for our families and create a home.
Being Prepared is Caring
To be honest, I was incredibly fortunate to pretty much ignore medical costs until I was 25. Then I got married and for the first time in my life had to have a good chunk of my pay go to a medical plan. I did not understand the first thing about how it all worked, but I had to learn quick.
A few months into marriage, Katie and I were happy to be expecting a baby!
This sent me researching for what I need to be prepared for this next stage of life. I found a lot of people saying that babies are expensive and a few who say it costs what you make it. I think realistically, it is somewhere in between. Some costs are inevitable and can be prepared for. Meanwhile others can be avoided all together. Regardless of what your life situation is, medical expenses are pretty inevitable.
Let’s talk about the preparing.
Here is a way you can cultivate and care for yourself or your family both physically and financially.
The Health Savings Account (HSA)
A Health Savings Account (HSA) is an account that allows you save money for health care costs the same way you would save for retirement in your 401k, with pre-tax dollars. The money put away is tax deductible, and then you can use this money right away to pay for any medical expense without being taxed on your withdrawal.
To be eligible for an HSA, you need to have a High Deductible Health Plan (HDHP). This plan will have a higher deductible, but lower premiums. Most importantly this plan allows you to open and contribute to your HSA.
Cultivate with HSA
To cultivate is to prepare.
After finding that Baby Flame was coming our way, I was ecstatic to be an expecting father. After the joy, I felt a serious need to prepare. This led me to see where Katie and I could cut back our expenses and significantly increase how much I was putting into my HSA each paycheck.
Just like other retirement accounts, the IRS limits how much you can contribute to the HSA each year. For 2020 it will be $3,550 for individuals and $7,100 for families. Again, this money can be contributed pre-tax.
In addition to not being taxed in or out, any amount that you do not plan on spending in your HSA can be invested, and will grow tax-free with dividends and capital gains.
Cultivating Growth – HSA as an Investment Vehicle
Another aspect of cultivation is to open up the opportunity for growth.
Another amazing feature of the HSA is that you can pay for your medical expenses out of pocket, then later repay yourself with a transfer or even check. What is even crazier is that there is no time limit to pay yourself back.
So what does this mean?
This means that, as long as you are not desperate to have the cash in hand right now, you can leave your money invested in your account until you want to withdraw it. That way, any medical expense that you pay for out of pocket, turns into a free investment down the road that you can withdraw whenever you want with no repercussions and no taxes. It will stay in there continuing to grow. All of your dividends and all of your growth are free of tax which is like getting 15% more out of your investment.
Everywhere you read about investing, you see people trying to beat or even match the market as a whole, yet they have no complaints paying taxes on their victory which will automatically set you back 15% of your profit. Why put in so much effort over single percentages when you can just use your HSA to give you the advantage automatically. What you gain is yours to keep so that your work of cultivation goes even further. Would you rather reap, thresh, and winnow by hand? Or would you rather drive a sweet combine?
Cultivating Something that Will Last
The last characteristic of the HSA that makes it so nice is that it lasts. This account will stay with you for the rest of your life. You can continue to use your account to pay for medical expenses after you leave your job or are no longer eligible for a HDHP.
While the account stays with you, you will no longer be able to contribute to that account once you leave the HDHP, so definitely max out as much as you can while you can.
Lastly, don’t forget to actually go in and invest the funds in your account into low cost index funds or wherever you like your money to grow and pay you back.
Care with HSA
Care for Now
Your HSA funds are available to use any time you have a qualified expense. You would be surprised at how many things actually fall under “medical expenses” though. There has been no shortage of opportunities to use our account, especially with kids.
So how do we use the account? As I mentioned before, you can wait. That is always going to be best so that you can let your investments grow over time. But sometimes it is nice or even necessary to pay yourself back right away. Our account came with a debit card that allows us to pay directly. This avoids the extra steps of making transfers or keeping track of how much we are able to pay back.
Care for Later
Left over funds?
What if I don’t ever get sick? What if I never go to the doctor? Well, it is hard to believe that you haven’t racked up qualified expenses. Katie and I have used our HSA to pay for everything from her contact lenses and prenatal pills, all the way to the birth of our daughter last year!
But lets say you are 65 years old. Congratulations, now you don’t even need a medical expense to use your funds. At age 65, your HSA basically becomes an IRA and you can withdraw any amount penalty free.
Where to Find More Information About HSAs
For all of the logic behind getting the most from your account, see the Mad Fientist. He has a brilliant post about HSAs, which he calls the Ultimate Retirement Account. What is even cooler, is he actually put his knowledge into practice and retired with this being one of his strategies.
Lastly, see your employer’s benefits package, your insurance provider, or any institution where you can get an HSA. I don’t believe your HSA needs to be through any particular organization, but some companies will provide a matching amount if you open your account similar to a 401k. This is free money from your company. Take that when you can. However, there are many places to get an HSA, and I am not nearly qualified to tell you where to put your money.
How’s Your Garden?
Though it looked very different way back when, we have always been called to shamar in the garden around us. Whether it is preparing for the future with an HSA or daily ways of caring for family and friends, pray about all of the ways you are called to cultivate and care each day. Take into account you and your family’s health, physically, emotionally, and spiritually. What areas need tending?
