December 9, 2025 • 20 mins
In this episode of the Teaching Tax Flow podcast, hosts John Tripolsky and Chris Picciurro dive into the intricacies of Health Savings Accounts (HSAs), unpacking their extraordinary tax benefits. They highlight how HSAs can be a powerful financial tool for individuals looking to manage their healthcare expenditures while also enjoying significant tax advantages. As they explore the components of HSAs, they make complex financial concepts accessible, guiding listeners step-by-step through potential cost savings and tax efficiencies.
HSAs, as discussed in this episode, are not just mere savings accounts; they are a "tristar" tax-advantaged investments that offer threefold benefits: contributions are tax-deductible, the account grows tax-free, and withdrawals for qualified medical expenses remain tax-free. Chris relates his personal experiences and provides strategic advice, encouraging listeners to maximize their HSA contributions where feasible. Emphasizing actionable steps, the episode demystifies eligibility criteria and optimal usage scenarios for HSAs, reinforcing their potential in long-term financial planning.
Key Takeaways:
- Threefold Tax Advantage: HSAs offer a comprehensive tax benefit by allowing tax-free contributions, growth, and withdrawals for eligible medical expenses.
- Eligibility Criteria: HSAs require enrollment in a high-deductible health plan (HDHP) and have specific contribution limits that increase for individuals aged 55 and older.
- Flexibility: Unlike Flexible Spending Accounts (FSAs), HSAs roll over year-to-year, permitting funds to accumulate tax-free over time.
- Eligible Expenses: HSAs can cover a wide array of medical costs, including prescriptions, dental care, and vision expenses.
- Strategic Planning: Chris emphasizes starting early with HSA contributions, even for young individuals with minimal medical expenses, to optimize future healthcare budgets.
Resources
• Teaching Tax Flow Website
• Defeating Taxes Community
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- (00:02) - Understanding Health Savings Accounts and Their Tax Benefits
- (01:59) - Understanding HSAs and Their Tax Benefits
- (03:38) - Understanding Tax Benefits of Health Savings Accounts
- (04:44) - Understanding the Triple Tax Benefits of Health Savings Accounts
- (07:07) - Understanding HSA Eligibility and Contribution Limits
- (09:38) - Understanding HSA Contributions and Tax Benefits for Self-Employed
- (12:04) - Maximizing Health Savings Accounts for Medical Expenses
- (16:50) - Maximizing HSA Benefits for Future Medical Expenses
- (19:12) - Exploring Tax Benefits and Investment Advice
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
John Tripolsky (00:02):
Welcome back to the Teaching Tax Flow podcast,
everybody. Today, episode 165,we are going to look at HSAs. So
if you don't know what that is,we will give you the definition
of what an HSA is. If you don'tknow, but you will very shortly
after this brief moment from ourepisode sponsor.
Ad Read (00:23):
This podcast is brought to you by Legacy Lock. You are
new to estate planning or simplyneed to review your current
plan, Legacy Lock makes it aseasy as pie. Legacy Lock is a
unique platform that enables youto easily complete your attorney
drafted documents convenientlyfrom the comfort of your home or
office. Your first step to thispeace of mind is simply visiting
(00:44):
teachingtaxflow.com/legacy.
John Tripolsky (00:46):
We are gonna talk about HSAs today. So what
those are, obviously, healthsavings accounts. So there's a
lot of detail around these, butactually, I would say in some
sense, they're simpler than youmay actually think if you're
working with the best peoplearound you or as we like to say,
your personal board ofdirectors. So Chris Pacquero,
welcome back to your own show,sir. We're gonna talk about this
today or what?
Chris Picciurro, CPA (01:07):
Yep. Let's get rolling into it. And as you
know, I reside in the TriStarState, the state of Tennessee.
So health savings account, wecall it the TriStar tax
advantaged investment. And thereare three main tax benefits to a
HSA.
But let's talk about what it isfirst. Because remember, with
(01:28):
teaching tax flow, one of ourlaws is that tax law that, tax
agencies are your involuntarybusiness partner. Tax laws are
written to encourage and ordiscourage certain behavior. So
the laws are written toencourage us to put money away
for our medical needs andthere's definitely some tax
advantages to starting an HSAaccount. We're gonna talk a
(01:50):
little bit about qualifications,but that's something you're
gonna wanna lean into yourmedical insurance provider to
discuss to see if you areeligible for an HSA.
But we'll talk about it at a30,000 foot view limit and
ultimately understand this, thatmedical expenses paid out of
pocket are only deductible if,one, you itemize your
(02:13):
deductions, which the vastmajority of taxpayers actually
do not itemize their deductions.And two, even if you itemize
your deductions, the medicalexpenses exceed seven and a half
percent of your income. So let'ssay your income's a $100,000.
Even if you itemize yourdeductions, only the medical
expenses that exceed 75% orsomebody $7,500 are deductible.
(02:36):
Well, if you could put moneyinto an HSA and use that for the
medical expenses, ultimately,you are getting those pretax.
So, yeah, let's let's so an HSAstands for a health savings
account and it's a specialsavings account. You can have
that with a a credit union, abank. You could actually you
could actually invest in stocksand mutual funds and such with
(02:57):
your HSA. Obviously, talk toyour licensed financial adviser
but it's a special savingsaccount that you use just for
your health care costs. So likegoing to the doctor, buying
medicine, getting glasses, andit's a it's a pretty big benefit
to you.
And and I will I would say oneof the mistakes I made when I
(03:17):
was younger was that, you know,younger people are using their
twenties. They don't have a lotof medical expenses so they
don't think that an HSA isimportant. Well, if anything,
that's when it is important toput money away so that can grow
and you could use it later inlife for your from your medical
expenses, your spouse's medicalexpenses, or a dependent's
medical expense.
John Tripolsky (03:38):
So yeah. I like how you said when you were
younger. Right? Because this Iand speaking for somebody that's
you know, in reality, I'm not awhole lot younger than you, sir.
I know we poke fun at each otherfor that.
But, you know, when we look atthese, I and I don't know at
what age, but just in the name,right, people are like, oh, it's
a savings account. I'm gonnasave for something. But as you
mentioned and why we're talkingabout it here, right, there are
(03:59):
very, very positive taximplications from doing this.
Right? So kind of notdelineating the the you know,
differentiating the you know,what it is and what it's not
based on that.
But there's a lot to it thatgoes beyond just having the
money for something in thefuture. Right?
Chris Picciurro, CPA (04:16):
Yes. So let's talk about that triple
threat or that tristar taxbenefit. And the first thing is
this, the money you put into ahealth savings account or what's
called your contribution is atax deduction or it's going in
pretax through your through youremployment. So so like my wife,
for instance, works at a school.They have a health savings
(04:38):
account.
So we maximize the the amountwe're putting in our health
savings account, and that'sgoing through her salary. Well,
that that money is going inpretax. So when we get her w two
at the end of the year, thatdoes not reflect as taxable
income. Conversely, you couldlet's say you're self employed
or or what have you. You couldmake contributions to an HSA
(04:59):
outside of your W two wages ifyou're eligible and then just
take a deduction on yourpersonal tax return.
So, ultimately, the money isgoing in what we call pretax,
meaning you're getting either,you're getting your tax
deduction for the contributedfunds into the HSA. Now, the
money is in an HSA. It grows taxfree. So, the HSA is similar to
(05:21):
a traditional IRA and so infact, you're getting a deduction
when you contribute the money.It's similar to a Roth IRA when
you, when the money grows taxfree.
Right? And then it's similar toa five twenty nine plan that if
you take a distribution that youis used for qualified expenses,
the distribution's tax free. So,ultimately, the HSA is a
(05:43):
Frankenstein of traditional IRA,Roth IRA, and a five twenty nine
plan.
John Tripolsky (05:47):
And talk about free money.
Chris Picciurro, CPA (05:48):
Free growth benefits. Yeah. So that
money grows tax free and thenwhen you use it for qualified
medical expenses, then thedistributions are tax free.
Here's the nice thing about anHSA that's a little different
than an FSA, what's called aflex spending account. An FSA is
typically set up through anemployer, and you have a use it
or lose it situation.
(06:10):
In HSA, if I contribute $5.00into an HSA this year, I might
not even have $5.00 of medicalexpenses in 2025 or '26. That's
okay. The money can rollforward. It's a savings account
for you for the future. Sothat's that triple threat tax
benefit that we Yeah.
Really like on the healthsavings account.
John Tripolsky (06:30):
And and the difference, I'm glad you you'd
said that too in FSA. And,Chris, you'll laugh at this. I
was being both from Michigan.You know what almost I spit out
of my mouth is that's whythere's a run at Block Drugs at
the end of the year. But youremember Block Drugs?
They've been out of businessprobably for twenty five, thirty
years. It's a drugstore inMichigan. But the flex plan,
that's where the flex accountthat's probably what people are
(06:51):
like, oh, boy. It's December 28.I gotta go spend this somewhere
on Sure.
You know, Band Aids. I don'tknow. I'm just making it up. But
the HSA and there's a lot moreto it. But, again, I I love that
we're tying this in to tax.
Right? Because it's just not aan account for use. It's like
you mentioned with with yourwife. What a great example.
(07:11):
Right?
Like, literally tax free,growing tax free, distribution
tax free.
Chris Picciurro, CPA (07:17):
Exactly. In the FSA, that's why you'll
see a lot of people getting inwith their dentist at the end of
the year. It's hard to get infor a dental cleaning or a
procedure because they've gotmoney that they have to use, and
HSA is different. But you canuse an HSA for for dental
expenses. So, who cancontribute?
Who can have an HSA? Well, it'ssomeone that has what's called a
HDHP. Oh gosh. That's a highdeductible health plan. So
(07:40):
again, that's where you're goingto want to talk to your health
insurance provider or your orif, you know, if you work with
someone, I'm picking healthinsurance or or your HR
department, determine if youhave an HSA eligible plan.
They're gonna be able to answerit just like that. So assuming
you have an HDHP or or highdeductible health insurance
(08:01):
plan, that means you areeligible for an HSA. You cannot
be enrolled in Medicare, though.So that's just and you cannot be
dependent on someone else'sreturn. So those are some of the
eligibility requirements, butmany, many people can can have
an HSA.
And here's the other thing.John, let's say you were
eligible for an HSA for tenyears. Let's say you worked
(08:21):
somewhere and then you you yougo out on your own and you get a
health insurance plan that's nota high deductible plan. That's
okay. That HSA is still yours touse and you could still use that
for any health expenses.
You don't have to stay eligibleover and over and over again.
John Tripolsky (08:37):
Interesting. Okay.
Chris Picciurro, CPA (08:38):
Yeah. So it's it's a really nice benefit.
Twenty twenty five limits andand and these are always, you
know, these these are typicallygonna be index for inflation,
but just give us an idea for forindividuals. It's about $4,300.
A family is about 8,500, andthen and then if someone's 55
and older, there's a what'scalled a catch up.
(09:00):
I call it the Heinz. Heinz 57contribution or catch up
contribution. So a family wheresomeone's 55 and older put up to
or over $9,500 a year into theHSA, and and check with your
employer too. Many employerscontribute on your behalf, even
if you don't contribute. Sothat's pretty pretty cool.
Interesting.
John Tripolsky (09:19):
So it So, yeah, there's it seems like there's a
lot that goes into actually, Iwouldn't say there's a lot. That
there's more that goes intoselecting the plan or or
figuring out if you'requalified, but the right person
is the person that you probablytalk to anyways about your your
health insurance. Right? So it'sit's not like you have to go out
and find somebody else just todo this. Like, it's an easy
thing to do.
But then here's a question foryou on this very related. You
(09:41):
know, obviously, there's huge,we'll say, tax benefits to doing
this. Is that usually somethingthat's even really brought up
when somebody's discussing thiswith a insurance, not a broker,
but the person helping to selectthat, or is that something that
they need to then make sure thattheir tax preparer knows that
this is going?
Chris Picciurro, CPA (10:02):
But I'm sorry, buddy.
John Tripolsky (10:03):
I don't understand. You're good. You're
good. You're good. It was kindof a lot in there.
Like, is this something like,say say I have somebody that I
go through. I talk to, say myemployer, a private broker for
health insurance. Sure. I go tothem, ask these questions. If I
qualify, they give the thumbsup.
They say, yep. You're good. Getone. I go through them What to
get do I what do I have to do?What comes back in my court to
make sure that I'm takingadvantage of the tax benefits?
(10:26):
Is it something
Chris Picciurro, CPA (10:26):
I have to then provide? If if it's your
employer, then it just goesthrough your w two just like my
wife's situation. Right. But sayyou're self employed. Then you
if you're self employed, thenyou'd have to go to a bank
credit union and set up by or ora financial institution, set up
an HSA account, and then you cancontribute to it out of your
pocket.
Then you'd get a deduction forit. Perfect. Perfect.
John Tripolsky (10:45):
Yep. That that explains it. So it it does come
a little bit back into thetaxpayers court if you're self
employed versus if it's, youknow, out of WT. It's all there.
Chris Picciurro, CPA: Ultimately, you're always (10:54):
undefined
responsible for your ownfinances even when you're
working with other people. Youstill have to enroll, and you
still have to make that electionto contribute to the HSA. It's
not an automatic. Just becauseyou're eligible, it doesn't mean
it's an you're it's an automaticcontribution. Perfect.
John Tripolsky (11:08):
Nothing is automatic, right, at all?
Chris Picciurro, CPA (11:11):
Well, at this point, there there's some
rule changes with retirementplans down the road with secure
two point o act where people aregonna be automatically enrolled.
But as far as this, no.Nothing's automatic. The one
thing a good tax planners do isthey say, alright. Let's say my
deductible is I'm just making upa number.
Is is is $5,000. My maximum outof pocket is $3,000. You might
(11:37):
as well take so your yourexposure, each year with your
the health insurance coverageyou have is 8,000. If and if
you're if you're a family thatgets you know, if you have a
large family like ours andsomeone's gonna be sick,
someone's gonna get hurt,someone's gonna break something,
something's gonna happen,someone's gonna need braces,
eyeglasses, we holler and, youknow, my wife and I just say,
well, instead of making youknow, paying them, getting no
(11:59):
deduction for it, let's justsock everything the max we can
into the HSA and then use that.Now, obviously, if your medical
expenses exceed the healthsavings account, then you've
gotta go out of pocket forthose.
But that's why it's importantto, if you can afford it, max
your HSA even if you don't needto use all those dollars in the
year you funded it. Becauseremember, it's gonna grow tax
(12:21):
free as long as the eligibledistribution is made. Now as we
wrap up, let's talk about whatyou can spend your HSA dollars
on. Because there's a lot, youknow, there's a lot, there are a
lot of things you can. You know?
I I yeah. I'll give you anexample. How or my wife and I,
(12:42):
she we unfortunately, Isustained a pretty serious
injury to my leg, playing, ofcourse, pickleball, and, we
needed yo. There's a there's a,you know, like, a machine that
can help help me recoverquicker. And, you know, it was
it was, like, a couple $100.
(13:03):
You know? It's which but we usedour h it was HSA eligible. 99%
of the time when you look atbuying a medical device or
something like that, you know,physical therapy related, you're
going to, it'll let you know ifit's HSA eligible. And like for
ours, in many HSAs give you adebit card to utilize. So let's
say you go grocery shopping, youand and you you stop and get,
(13:25):
you know, something that's HSAeligible, you typically, when
you check out, the checkout'sgonna identify what is eligible
for HSA, and you can use thatHSA debit card for those
expenses, and then, obviously,your personal expenses can be
now these are at larger grocerystores.
Like, as you like to say, WallyWorld, and and some of the other
(13:46):
places.
John Tripolsky (13:47):
In reference to Walmart. So so, yeah, there
there's obviously some verydefined things that can be used
on. Something I didn't see onthat list, though, you know, I
visited you right after you hurtyourself. I wonder if I could
send you an invoice for, like,your emotional support friend.
Because when Chris can't playpickleball, by the way, it is a
very disturbing situation foreverybody.
Chris Picciurro, CPA: Disturbing. Yeah. Luckily, after (14:05):
undefined
being out almost two months, I'mback in action. So so okay.
What's qualified?
Doctor and medical services. Sothat's gonna be office, business
lab tests, surgeries, physicaltherapy, chiropractic care,
medicine and drugs, soprescription medicines, but also
over the counter drugs. Excuseme. Like ibuprofen, an allergy
(14:28):
medicine, insulin is is used isreusable for HSA. Dental care.
So for us, I mean, we use a wegot five miles though with a
bunch of teeth in them, we youknow, our cleanings and any type
of I mean, I had to get a coupleteeth extra not not a fun
experience a couple years ago,but a couple teeth extracted.
(14:49):
That wasn't fun, and it hadinsult injury. It stinks pain
for it. So at least when I well,actually, after the extraction,
my wife had to drive me homebecause I was I was coming out
of anesthesia. We slapped ourHSA card on the counter.
But vision care, you know, Iluckily, I have never had to to
wear glasses. The one that wearsglasses is my wife, and if you
(15:10):
saw me, you'd realize why. Buteye exams, glasses, contact
lenses, LASIK, eye surgery couldbe used. So think about these
are some big expenses, hospitalemergency services like hospital
stays, ambulance, you know, youwant to avoid an ambulance ride,
but anesthesia, pregnancy andfamily planning, fertility
(15:30):
treatments, and those sort ofthings. So again, these are
things that you might, you know,when you're early 20s, might not
be thinking you need, but, youknow, it's kind of and the nice
thing about HSA, especially ifyou're with an employer, it's
kinda like set it and forget it.
You know, it comes out of your wtwo wages, and you forget kinda
forget about it, and then andthen that money's there when you
(15:53):
need it. So in my case, medicalequipment and aid. So aid aid,
medical aids, like, crutcher. Iat least I didn't need crutches,
but crutches, walkers, andcanes. I don't need a cane yet.
Wheelchairs, hearing aids, thosefor people with sleep apnea.
Johnny might be going down thatroute since he threw me under
the bus.
John Tripolsky (16:11):
CPAP machine. Oh, yeah. I I snore like a saw.
Chris Picciurro, CPA (16:14):
And then in all serious like mental
health, mental health andtherapy. So counseling and
psychiatry. So again, a lot ofexpenses that you are eligible.
So the bottom line is at somepoint, you're gonna have medical
expenses in your life. At leastbe smart and make them tax
deductible, and and if you can,fund that that HSA.
(16:39):
And then at the end of the year,if you if you contribute to an
HSA or you take distributionsfrom an HSA, there'll be some
tax reporting to do. There's aspecial tax form called the form
eighty eight eighty nine. Yourtax preparer will be very aware
of. But, yeah, these are, youknow, these are really good
opportunities of that you shouldbe thinking about early. And so
(17:02):
so get at it, guys.
Come on.
John Tripolsky (17:04):
And you hit and you hit so many good points here
too, and I and I'll close onthis, right, is the earlier you
start something like this, itdoesn't have to be, oh, you
know, I'm gonna max it out whenI'm 20 years old and continue to
max it out. Right? I think youmentioned that keyword. If you
can afford it, max it out or maxit out as much as you can. It's
not a use it or lose it everyyear.
(17:25):
It's gonna grow tax free. Again,distribution's tax free. And
it's almost inevitable that atsome point, you're gonna have
some pretty substantial medicalexpenses. So you might as well
take advantage of it all as youcan, start smaller, grow into
it, maybe whatever it is. I wishI knew about this twenty years
ago.
But, again, the tax benefits, inmy opinion, almost outweigh what
(17:46):
the actual input of dollars gointo it in some sense too if
depending on your situation. Soit's really this really, again,
is not as complicated, I think,as some people think it is. It's
pretty straightforward. Again,just, you know, obviously taking
the responsibility of reportingthat, oh, you know what? I've
set it up.
I'm utilizing it. I'm fundingit, etcetera. And, yeah, check
(18:06):
all the boxes. Right? So isthere anything else you might
wanna add to this before
Chris Picciurro, CPA (18:10):
we Consider as if you're listening
to this, there is an option todo a once in a lifetime rollover
from an IRA, which if you takemoney out of the IRA, it's gonna
be taxable to an HSA. It'scalled a qualified HSA funding
distribution or or QHFD. Again,this is not something you should
just go do willy nilly on yourown, but that's something to
(18:31):
consider. And then in somecases, you can actually roll a
five twenty nine plan over to anHSA. So, again, talk to your tax
professional, talk to yourfinancial adviser, but if you
you know, these are alternativeways to funding your HSA.
And and yeah. So so let's actionitem here. As we wrap up the end
of 2025, If you have if you'reeligible for an HSA, make sure
(18:53):
you're maxing that out if youcould afford it. And if not,
start getting hopefully, getstarted in 2026. And,
definitely, if you like whatyou're hearing and you
appreciate the information thatwe're giving out, just subscribe
to this wonderful YouTubechannel if you're watching.
If you're watching, again,apologize for our appearance.
(19:14):
Wish we were more handsome. Butif you're listening, thank you.
Rate, review, and subscribe, onall the podcast, outlets.
John Tripolsky (19:23):
Absolutely. Absolutely. Great way to end it
here, Chris. And, again, thankyou everybody for joining us
here on the teaching tax fullpodcast. Glad you could join us
and kind of watch how we marrytwo things together.
Right? Taking something that youmay think has no tax benefit and
showing just exactly howpowerful that is. So have a
great week, everybody. We'll seeyou back here again next week on
the podcast. Same day of theweek, different date, completely
(19:47):
different topic.
Disclaimer (19:58):
For all tax and legal advice, please consult
your CPA or attorney. Investmentadvisory services are offered
through Cabin Advisors, aregistered investment advisor.
Securities are offered throughCabin Securities, a registered
broker dealer. The content thispodcast is not constituted offer
of securities. Offerings canonly be made through an offering
memorandum, and you shouldcarefully examine the risk
factors and other informationcontained in the memorandum.
Welcome back to the Teaching Tax Flow podcast,
everybody. Today, episode 165,we are going to look at HSAs. So
if you don't know what that is,we will give you the definition
of what an HSA is. If you don'tknow, but you will very shortly
after this brief moment from ourepisode sponsor.
Ad Read (00:23):
This podcast is brought to you by Legacy Lock. You are
new to estate planning or simplyneed to review your current
plan, Legacy Lock makes it aseasy as pie. Legacy Lock is a
unique platform that enables youto easily complete your attorney
drafted documents convenientlyfrom the comfort of your home or
office. Your first step to thispeace of mind is simply visiting
(00:44):
teachingtaxflow.com/legacy.
John Tripolsky (00:46):
We are gonna talk about HSAs today. So what
those are, obviously, healthsavings accounts. So there's a
lot of detail around these, butactually, I would say in some
sense, they're simpler than youmay actually think if you're
working with the best peoplearound you or as we like to say,
your personal board ofdirectors. So Chris Pacquero,
welcome back to your own show,sir. We're gonna talk about this
today or what?
Chris Picciurro, CPA (01:07):
Yep. Let's get rolling into it. And as you
know, I reside in the TriStarState, the state of Tennessee.
So health savings account, wecall it the TriStar tax
advantaged investment. And thereare three main tax benefits to a
HSA.
But let's talk about what it isfirst. Because remember, with
(01:28):
teaching tax flow, one of ourlaws is that tax law that, tax
agencies are your involuntarybusiness partner. Tax laws are
written to encourage and ordiscourage certain behavior. So
the laws are written toencourage us to put money away
for our medical needs andthere's definitely some tax
advantages to starting an HSAaccount. We're gonna talk a
(01:50):
little bit about qualifications,but that's something you're
gonna wanna lean into yourmedical insurance provider to
discuss to see if you areeligible for an HSA.
But we'll talk about it at a30,000 foot view limit and
ultimately understand this, thatmedical expenses paid out of
pocket are only deductible if,one, you itemize your
(02:13):
deductions, which the vastmajority of taxpayers actually
do not itemize their deductions.And two, even if you itemize
your deductions, the medicalexpenses exceed seven and a half
percent of your income. So let'ssay your income's a $100,000.
Even if you itemize yourdeductions, only the medical
expenses that exceed 75% orsomebody $7,500 are deductible.
(02:36):
Well, if you could put moneyinto an HSA and use that for the
medical expenses, ultimately,you are getting those pretax.
So, yeah, let's let's so an HSAstands for a health savings
account and it's a specialsavings account. You can have
that with a a credit union, abank. You could actually you
could actually invest in stocksand mutual funds and such with
(02:57):
your HSA. Obviously, talk toyour licensed financial adviser
but it's a special savingsaccount that you use just for
your health care costs. So likegoing to the doctor, buying
medicine, getting glasses, andit's a it's a pretty big benefit
to you.
And and I will I would say oneof the mistakes I made when I
(03:17):
was younger was that, you know,younger people are using their
twenties. They don't have a lotof medical expenses so they
don't think that an HSA isimportant. Well, if anything,
that's when it is important toput money away so that can grow
and you could use it later inlife for your from your medical
expenses, your spouse's medicalexpenses, or a dependent's
medical expense.
John Tripolsky (03:38):
So yeah. I like how you said when you were
younger. Right? Because this Iand speaking for somebody that's
you know, in reality, I'm not awhole lot younger than you, sir.
I know we poke fun at each otherfor that.
But, you know, when we look atthese, I and I don't know at
what age, but just in the name,right, people are like, oh, it's
a savings account. I'm gonnasave for something. But as you
mentioned and why we're talkingabout it here, right, there are
(03:59):
very, very positive taximplications from doing this.
Right? So kind of notdelineating the the you know,
differentiating the you know,what it is and what it's not
based on that.
But there's a lot to it thatgoes beyond just having the
money for something in thefuture. Right?
Chris Picciurro, CPA (04:16):
Yes. So let's talk about that triple
threat or that tristar taxbenefit. And the first thing is
this, the money you put into ahealth savings account or what's
called your contribution is atax deduction or it's going in
pretax through your through youremployment. So so like my wife,
for instance, works at a school.They have a health savings
(04:38):
account.
So we maximize the the amountwe're putting in our health
savings account, and that'sgoing through her salary. Well,
that that money is going inpretax. So when we get her w two
at the end of the year, thatdoes not reflect as taxable
income. Conversely, you couldlet's say you're self employed
or or what have you. You couldmake contributions to an HSA
(04:59):
outside of your W two wages ifyou're eligible and then just
take a deduction on yourpersonal tax return.
So, ultimately, the money isgoing in what we call pretax,
meaning you're getting either,you're getting your tax
deduction for the contributedfunds into the HSA. Now, the
money is in an HSA. It grows taxfree. So, the HSA is similar to
(05:21):
a traditional IRA and so infact, you're getting a deduction
when you contribute the money.It's similar to a Roth IRA when
you, when the money grows taxfree.
Right? And then it's similar toa five twenty nine plan that if
you take a distribution that youis used for qualified expenses,
the distribution's tax free. So,ultimately, the HSA is a
(05:43):
Frankenstein of traditional IRA,Roth IRA, and a five twenty nine
plan.
John Tripolsky (05:47):
And talk about free money.
Chris Picciurro, CPA (05:48):
Free growth benefits. Yeah. So that
money grows tax free and thenwhen you use it for qualified
medical expenses, then thedistributions are tax free.
Here's the nice thing about anHSA that's a little different
than an FSA, what's called aflex spending account. An FSA is
typically set up through anemployer, and you have a use it
or lose it situation.
(06:10):
In HSA, if I contribute $5.00into an HSA this year, I might
not even have $5.00 of medicalexpenses in 2025 or '26. That's
okay. The money can rollforward. It's a savings account
for you for the future. Sothat's that triple threat tax
benefit that we Yeah.
Really like on the healthsavings account.
John Tripolsky (06:30):
And and the difference, I'm glad you you'd
said that too in FSA. And,Chris, you'll laugh at this. I
was being both from Michigan.You know what almost I spit out
of my mouth is that's whythere's a run at Block Drugs at
the end of the year. But youremember Block Drugs?
They've been out of businessprobably for twenty five, thirty
years. It's a drugstore inMichigan. But the flex plan,
that's where the flex accountthat's probably what people are
(06:51):
like, oh, boy. It's December 28.I gotta go spend this somewhere
on Sure.
You know, Band Aids. I don'tknow. I'm just making it up. But
the HSA and there's a lot moreto it. But, again, I I love that
we're tying this in to tax.
Right? Because it's just not aan account for use. It's like
you mentioned with with yourwife. What a great example.
(07:11):
Right?
Like, literally tax free,growing tax free, distribution
tax free.
Chris Picciurro, CPA (07:17):
Exactly. In the FSA, that's why you'll
see a lot of people getting inwith their dentist at the end of
the year. It's hard to get infor a dental cleaning or a
procedure because they've gotmoney that they have to use, and
HSA is different. But you canuse an HSA for for dental
expenses. So, who cancontribute?
Who can have an HSA? Well, it'ssomeone that has what's called a
HDHP. Oh gosh. That's a highdeductible health plan. So
(07:40):
again, that's where you're goingto want to talk to your health
insurance provider or your orif, you know, if you work with
someone, I'm picking healthinsurance or or your HR
department, determine if youhave an HSA eligible plan.
They're gonna be able to answerit just like that. So assuming
you have an HDHP or or highdeductible health insurance
(08:01):
plan, that means you areeligible for an HSA. You cannot
be enrolled in Medicare, though.So that's just and you cannot be
dependent on someone else'sreturn. So those are some of the
eligibility requirements, butmany, many people can can have
an HSA.
And here's the other thing.John, let's say you were
eligible for an HSA for tenyears. Let's say you worked
(08:21):
somewhere and then you you yougo out on your own and you get a
health insurance plan that's nota high deductible plan. That's
okay. That HSA is still yours touse and you could still use that
for any health expenses.
You don't have to stay eligibleover and over and over again.
John Tripolsky (08:37):
Interesting. Okay.
Chris Picciurro, CPA (08:38):
Yeah. So it's it's a really nice benefit.
Twenty twenty five limits andand and these are always, you
know, these these are typicallygonna be index for inflation,
but just give us an idea for forindividuals. It's about $4,300.
A family is about 8,500, andthen and then if someone's 55
and older, there's a what'scalled a catch up.
(09:00):
I call it the Heinz. Heinz 57contribution or catch up
contribution. So a family wheresomeone's 55 and older put up to
or over $9,500 a year into theHSA, and and check with your
employer too. Many employerscontribute on your behalf, even
if you don't contribute. Sothat's pretty pretty cool.
Interesting.
John Tripolsky (09:19):
So it So, yeah, there's it seems like there's a
lot that goes into actually, Iwouldn't say there's a lot. That
there's more that goes intoselecting the plan or or
figuring out if you'requalified, but the right person
is the person that you probablytalk to anyways about your your
health insurance. Right? So it'sit's not like you have to go out
and find somebody else just todo this. Like, it's an easy
thing to do.
But then here's a question foryou on this very related. You
(09:41):
know, obviously, there's huge,we'll say, tax benefits to doing
this. Is that usually somethingthat's even really brought up
when somebody's discussing thiswith a insurance, not a broker,
but the person helping to selectthat, or is that something that
they need to then make sure thattheir tax preparer knows that
this is going?
Chris Picciurro, CPA (10:02):
But I'm sorry, buddy.
John Tripolsky (10:03):
I don't understand. You're good. You're
good. You're good. It was kindof a lot in there.
Like, is this something like,say say I have somebody that I
go through. I talk to, say myemployer, a private broker for
health insurance. Sure. I go tothem, ask these questions. If I
qualify, they give the thumbsup.
They say, yep. You're good. Getone. I go through them What to
get do I what do I have to do?What comes back in my court to
make sure that I'm takingadvantage of the tax benefits?
(10:26):
Is it something
Chris Picciurro, CPA (10:26):
I have to then provide? If if it's your
employer, then it just goesthrough your w two just like my
wife's situation. Right. But sayyou're self employed. Then you
if you're self employed, thenyou'd have to go to a bank
credit union and set up by or ora financial institution, set up
an HSA account, and then you cancontribute to it out of your
pocket.
Then you'd get a deduction forit. Perfect. Perfect.
John Tripolsky (10:45):
Yep. That that explains it. So it it does come
a little bit back into thetaxpayers court if you're self
employed versus if it's, youknow, out of WT. It's all there.
Chris Picciurro, CPA: Ultimately, you're always (10:54):
undefined
responsible for your ownfinances even when you're
working with other people. Youstill have to enroll, and you
still have to make that electionto contribute to the HSA. It's
not an automatic. Just becauseyou're eligible, it doesn't mean
it's an you're it's an automaticcontribution. Perfect.
John Tripolsky (11:08):
Nothing is automatic, right, at all?
Chris Picciurro, CPA (11:11):
Well, at this point, there there's some
rule changes with retirementplans down the road with secure
two point o act where people aregonna be automatically enrolled.
But as far as this, no.Nothing's automatic. The one
thing a good tax planners do isthey say, alright. Let's say my
deductible is I'm just making upa number.
Is is is $5,000. My maximum outof pocket is $3,000. You might
(11:37):
as well take so your yourexposure, each year with your
the health insurance coverageyou have is 8,000. If and if
you're if you're a family thatgets you know, if you have a
large family like ours andsomeone's gonna be sick,
someone's gonna get hurt,someone's gonna break something,
something's gonna happen,someone's gonna need braces,
eyeglasses, we holler and, youknow, my wife and I just say,
well, instead of making youknow, paying them, getting no
(11:59):
deduction for it, let's justsock everything the max we can
into the HSA and then use that.Now, obviously, if your medical
expenses exceed the healthsavings account, then you've
gotta go out of pocket forthose.
But that's why it's importantto, if you can afford it, max
your HSA even if you don't needto use all those dollars in the
year you funded it. Becauseremember, it's gonna grow tax
(12:21):
free as long as the eligibledistribution is made. Now as we
wrap up, let's talk about whatyou can spend your HSA dollars
on. Because there's a lot, youknow, there's a lot, there are a
lot of things you can. You know?
I I yeah. I'll give you anexample. How or my wife and I,
(12:42):
she we unfortunately, Isustained a pretty serious
injury to my leg, playing, ofcourse, pickleball, and, we
needed yo. There's a there's a,you know, like, a machine that
can help help me recoverquicker. And, you know, it was
it was, like, a couple $100.
(13:03):
You know? It's which but we usedour h it was HSA eligible. 99%
of the time when you look atbuying a medical device or
something like that, you know,physical therapy related, you're
going to, it'll let you know ifit's HSA eligible. And like for
ours, in many HSAs give you adebit card to utilize. So let's
say you go grocery shopping, youand and you you stop and get,
(13:25):
you know, something that's HSAeligible, you typically, when
you check out, the checkout'sgonna identify what is eligible
for HSA, and you can use thatHSA debit card for those
expenses, and then, obviously,your personal expenses can be
now these are at larger grocerystores.
Like, as you like to say, WallyWorld, and and some of the other
(13:46):
places.
John Tripolsky (13:47):
In reference to Walmart. So so, yeah, there
there's obviously some verydefined things that can be used
on. Something I didn't see onthat list, though, you know, I
visited you right after you hurtyourself. I wonder if I could
send you an invoice for, like,your emotional support friend.
Because when Chris can't playpickleball, by the way, it is a
very disturbing situation foreverybody.
Chris Picciurro, CPA: Disturbing. Yeah. Luckily, after (14:05):
undefined
being out almost two months, I'mback in action. So so okay.
What's qualified?
Doctor and medical services. Sothat's gonna be office, business
lab tests, surgeries, physicaltherapy, chiropractic care,
medicine and drugs, soprescription medicines, but also
over the counter drugs. Excuseme. Like ibuprofen, an allergy
(14:28):
medicine, insulin is is used isreusable for HSA. Dental care.
So for us, I mean, we use a wegot five miles though with a
bunch of teeth in them, we youknow, our cleanings and any type
of I mean, I had to get a coupleteeth extra not not a fun
experience a couple years ago,but a couple teeth extracted.
(14:49):
That wasn't fun, and it hadinsult injury. It stinks pain
for it. So at least when I well,actually, after the extraction,
my wife had to drive me homebecause I was I was coming out
of anesthesia. We slapped ourHSA card on the counter.
But vision care, you know, Iluckily, I have never had to to
wear glasses. The one that wearsglasses is my wife, and if you
(15:10):
saw me, you'd realize why. Buteye exams, glasses, contact
lenses, LASIK, eye surgery couldbe used. So think about these
are some big expenses, hospitalemergency services like hospital
stays, ambulance, you know, youwant to avoid an ambulance ride,
but anesthesia, pregnancy andfamily planning, fertility
(15:30):
treatments, and those sort ofthings. So again, these are
things that you might, you know,when you're early 20s, might not
be thinking you need, but, youknow, it's kind of and the nice
thing about HSA, especially ifyou're with an employer, it's
kinda like set it and forget it.
You know, it comes out of your wtwo wages, and you forget kinda
forget about it, and then andthen that money's there when you
(15:53):
need it. So in my case, medicalequipment and aid. So aid aid,
medical aids, like, crutcher. Iat least I didn't need crutches,
but crutches, walkers, andcanes. I don't need a cane yet.
Wheelchairs, hearing aids, thosefor people with sleep apnea.
Johnny might be going down thatroute since he threw me under
the bus.
John Tripolsky (16:11):
CPAP machine. Oh, yeah. I I snore like a saw.
Chris Picciurro, CPA (16:14):
And then in all serious like mental
health, mental health andtherapy. So counseling and
psychiatry. So again, a lot ofexpenses that you are eligible.
So the bottom line is at somepoint, you're gonna have medical
expenses in your life. At leastbe smart and make them tax
deductible, and and if you can,fund that that HSA.
(16:39):
And then at the end of the year,if you if you contribute to an
HSA or you take distributionsfrom an HSA, there'll be some
tax reporting to do. There's aspecial tax form called the form
eighty eight eighty nine. Yourtax preparer will be very aware
of. But, yeah, these are, youknow, these are really good
opportunities of that you shouldbe thinking about early. And so
(17:02):
so get at it, guys.
Come on.
John Tripolsky (17:04):
And you hit and you hit so many good points here
too, and I and I'll close onthis, right, is the earlier you
start something like this, itdoesn't have to be, oh, you
know, I'm gonna max it out whenI'm 20 years old and continue to
max it out. Right? I think youmentioned that keyword. If you
can afford it, max it out or maxit out as much as you can. It's
not a use it or lose it everyyear.
(17:25):
It's gonna grow tax free. Again,distribution's tax free. And
it's almost inevitable that atsome point, you're gonna have
some pretty substantial medicalexpenses. So you might as well
take advantage of it all as youcan, start smaller, grow into
it, maybe whatever it is. I wishI knew about this twenty years
ago.
But, again, the tax benefits, inmy opinion, almost outweigh what
(17:46):
the actual input of dollars gointo it in some sense too if
depending on your situation. Soit's really this really, again,
is not as complicated, I think,as some people think it is. It's
pretty straightforward. Again,just, you know, obviously taking
the responsibility of reportingthat, oh, you know what? I've
set it up.
I'm utilizing it. I'm fundingit, etcetera. And, yeah, check
(18:06):
all the boxes. Right? So isthere anything else you might
wanna add to this before
Chris Picciurro, CPA (18:10):
we Consider as if you're listening
to this, there is an option todo a once in a lifetime rollover
from an IRA, which if you takemoney out of the IRA, it's gonna
be taxable to an HSA. It'scalled a qualified HSA funding
distribution or or QHFD. Again,this is not something you should
just go do willy nilly on yourown, but that's something to
(18:31):
consider. And then in somecases, you can actually roll a
five twenty nine plan over to anHSA. So, again, talk to your tax
professional, talk to yourfinancial adviser, but if you
you know, these are alternativeways to funding your HSA.
And and yeah. So so let's actionitem here. As we wrap up the end
of 2025, If you have if you'reeligible for an HSA, make sure
(18:53):
you're maxing that out if youcould afford it. And if not,
start getting hopefully, getstarted in 2026. And,
definitely, if you like whatyou're hearing and you
appreciate the information thatwe're giving out, just subscribe
to this wonderful YouTubechannel if you're watching.
If you're watching, again,apologize for our appearance.
(19:14):
Wish we were more handsome. Butif you're listening, thank you.
Rate, review, and subscribe, onall the podcast, outlets.
John Tripolsky (19:23):
Absolutely. Absolutely. Great way to end it
here, Chris. And, again, thankyou everybody for joining us
here on the teaching tax fullpodcast. Glad you could join us
and kind of watch how we marrytwo things together.
Right? Taking something that youmay think has no tax benefit and
showing just exactly howpowerful that is. So have a
great week, everybody. We'll seeyou back here again next week on
the podcast. Same day of theweek, different date, completely
(19:47):
different topic.
Disclaimer (19:58):
For all tax and legal advice, please consult
your CPA or attorney. Investmentadvisory services are offered
through Cabin Advisors, aregistered investment advisor.
Securities are offered throughCabin Securities, a registered
broker dealer. The content thispodcast is not constituted offer
of securities. Offerings canonly be made through an offering
memorandum, and you shouldcarefully examine the risk
factors and other informationcontained in the memorandum.
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