Sun May 12 2024, by Tyler Gardner

Hey dad, could you tell me something that seems illegal but isn't?

Absolutely! Each year I shelter just under $8,000 of our income from the IRS. Is this just some secret of the rich?

Nope! Anybody can take advantage of contributing to a health savings account.

Are those contributions taxed?

Nope!

Oh, so it's like a traditional IRA and that money is taxed when you spend it?

Nope!

So is it just some stupid savings account?

Nope! I can even invest the money within the account for tax-free growth.

So what's the catch?

The money just has to be spent on qualifying medical expenses.

Look, we all inevitably have to pay for our health costs anyway, right?

Right. So why not pay for those costs with the only 100% tax-free investment plan?

But doesn't that account get lost if you don't spend it in one calendar year?

That's an FSA, son. This one rolls over forever.

Which is good because you will need to tap into that HSA when I need my hearing aids, physical therapy, dentures, x-rays, and eyeglasses.

Got you, dad.