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Self Directed Accounts - HSA (Health Savings Account)

What is an HSA?

A Health Savings Account (HSA) is a tax advantaged savings account for current and/or future medical expenses. In 2004, Congress created the HSA as a tool to address the continually growing cost of healthcare and increase the efficiency of the healthcare system. Coupled with a high-deductible health plan, HSAs offer consumers a way to have more control over their healthcare choices and costs while simultaneously saving for future health expenses.

An HSA is an individual account that is controlled by the account holder. Primary tax advantages are that the HSA holder can:

  1. Contribute "pre-tax" money up to the annual contribution limit. The cash and assets stay in the account and grow without tax until distribution by the account holder.
  2. Distribute money tax free for Qualified Medical Expenses (QME) at any time after the HSA is open (as long as the QME occurred after the HSA was open).

What is a High Deductible Health Plan (HDHP)?

A High Deductible Health Plan (HDHP) is health insurance that has lower premiums but a higher deductible.  An HDHP pays for catastrophic medical expenses and qualifies consumers to set aside tax-free funds in an HSA.  HDHPs are an alternative to the plans offered by HMOs and PPOs that feature low deductibles but charge high premiums.

In 2014 HDHPs must have a deductible of at least $1,250 ($1,300. for 2015) for self coverage and $2,500 ($2,600 for 2015) for family coverage. Maximums for deductible and out-of-pocket expenses are $6,350 ($6,450 for 2015) for self coverage and $12,700 ($12,900 for 2015) for family.

Out-of-pocket expenses for HDHPs include money paid to satisfy the deductible, copayments, and other expenses. These are all costs that the HSA may be used to cover.

An HDHP may provide preventive care benefits without a deductible or with a deductible below the minimum annual deductible. Preventive care includes periodic health evaluations, immunizations, and more.

What are the benefits of An HSA?

  • An HSA is an individual account. Once established, it is controlled by the account holder regardless of changing employers or health coverage.
  • Tax-free distributions to reimburse QMEs (Qualified Medical Expenses) can be made at any time as long as the QMEs occur after the HSA is open. QMEs include: chiropractic care, dental care, corrective eye surgery, homeopathy and many others.
  • HDHP and HSA plans offer lower premiums than other health plans because deductibles are high.
  • Those with an HDHP and HSA who already spend little on healthcare annually may experience net savings.
  • HDHP holders are covered for major medical events and emergencies.
  • HSA investments grow tax deferred.
  • Anyone can contribute money to your HSA.
  • Contributions to HSAs do not count toward your annual IRA contribution limit.
  • The HSA can be used to invest in a wide variety of assets including real estate, precious metals, public and private stock, notes, and more.
  • Once the account holder has reached age 65, HSA funds can be distributed for non-QME, subject to tax but no penalty.
  • No Required Minimum Distributions (RMD) like you would have with a traditional IRA
HSA Educational Videos -
Watch the following FREE educational videos
10 Ways to Supersize Your HSA
HSA Health Savings Account 1- Choose When to Withdraw From Your HSA - 2 m 05 s   HSA Health Savings Account 6- Become a Better Healthcare Consumer - 1 m 30 s
HSA Health Savings Account 2- Invest Your HSA - 1 m 38 s   HSA Health Savings Account 7- Avoid Using Your HSA Debit Card - 1 m 35 s
HSA Health Savings Account 3- Maximize Employer Contribution - 1 m 33 s   HSA Health Savings Account 8- Learn What Your HSA Can Do - 1 m 25 s
HSA Health Savings Account 4- Maximum Contribution Each Year - 1 m 47 s   HSA Health Savings Account 9- Use Free Preventative Care - 1 m 20 s
HSA Health Savings Account 5- Strategic Reimbursement of Expenses - 1 m 22 s   HSA Health Savings Account 10- New Healthcare, New Strategies - 1 m 23 s

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Learn more about HSA Contribution and HSA Distribution.

It's easy to invest for retirement with an HSA

  1. Open an HSA with New Direction IRA
  2. Put money in that HSA by making a contribution, transferring from other HSAs or MSAs, or doing a one time direct transfer from an IRA (limited to the annual contribution amount) .
  3. Direct your HSA to open a brokerage account, buy real estate, precious metals, private equity, loans, and more.

HSA Eligibility and Other Rules

  • You need a qualified HSA trustee for this account (New Direction IRA is an authorized provider of HSAs). The HSA can be established through a custodian that is different from your health plan provider.
  • In order to self-direct your HSA funds, you need a self-directed HSA provider like New Direction IRA.
  • An employee covered by an HDHP and a health FSA or an HRA that pays or reimburses qualified medical expenses generally cannot make contributions to an HSA.
  • You (and your spouse, if you have family coverage) generally cannot have any other health coverage that is not an HDHP. See exceptions below.
  • You are not enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else's tax return.
  • An HSA is "portable" so it stays with you if you change employers or leave the work force.
  • You can roll over amounts from Archer MSAs and other HSAs into an HSA.
What is HSA
Exceptions to HSA Rule Limiting Other Health Insurance

You can have additional insurance that provides benefits only for the following items.

  • Liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property.
  • A specific disease or illness.
  • A fixed amount per day (or other period) of hospitalization.

You can also have coverage (whether provided through insurance or otherwise) for the following items.

  • Accidents.
  • Disability.
  • Dental care.
  • Vision care.
  • Long-term care.

For more detailed information, feel free to contact us or visit IRS.gov.

Self Directed IRA educational videos - Health Savings Account
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Build Wealth Through Health with an HSA

Reduce your health care costs with a Health Savings Account. While most HSAs provide only savings or money market accounts, limiting what your HSA can earn, a self directed HSA can earn more by investing in precious metals, real estate, mortgages, limited partnerships, mutual funds and more.

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