In this Episode of the Secure Your Retirement Podcast, Radon and Murs discuss the powerful benefits of Health Savings Accounts (HSAs) with in-house tax strategist and Certified Financial Planner, Taylor Wolverton. Often overlooked or misunderstood, HSAs offer a rare and highly valuable triple tax advantage—tax-free contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. This episode breaks down the core principles of how HSAs work, how they integrate into your financial and retirement planning, and what rules to watch for, especially when transitioning to Medicare.

Listen in to learn about how to maximize HSA benefits for both short-term healthcare expenses and long-term retirement planning. Taylor explains how to use your HSA as a stealth retirement savings vehicle, how HSA and Medicare interact, and the critical contribution limits and eligibility requirements. If you’ve ever wondered how to use an HSA strategically in retirement, this episode is a must-listen.

In this episode, find out:

• What is a Health Savings Account and how does it offer a triple tax-free advantage?
• HSA contribution limits and eligibility rules under a high-deductible health plan.
• How HSAs interact with Medicare and when contributions must stop.
• The best strategies for HSA retirement planning and growing your account long-term.
• What happens to your HSA when you pass away and how HSA beneficiaries are taxed.

Tweetable Quotes:

“HSAs are the only triple tax-free account—contributions, growth, and withdrawals can all be tax-free when used correctly.” – Taylor Wolverton

“A health savings account isn’t just for annual expenses—it’s a stealth retirement tool when used strategically.” – Murs Tariq

Resources:

If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the full transcript:

Welcome to secure your retirement podcast. Today we are going to be talking about 

HSAs and when we talk about anything related to tax benefits or how that might help 

us or hurt us or whatever. We always bring on our tax strategist, 

in -house tax strategist, Taylor Wolverton. So, before I go any further, Taylor, thank 

you very much for coming on with us today and having this conversation. – You’re 

welcome. – All right, so let’s talk a little bit and give everybody a little bit of 

an idea of what the day show was about. So, health savings accounts are something 

that have been around for a while. One of the things that we’ve had discussions 

about is, do people really understand how they work? Do they understand, you know, 

the benefits of them? What are the restrictions? How do I even be able to get into 

them? So, we’re going to kind of go through all of that today. And we’re just excited 

that you come on to help us think all these things through and make sure we 

understand all the rules. Before we do go much further though, I do want to make 

Everybody understands we are going to be talking about a few different numbers today 

and guidelines. We will have a blog article that will have all of these numbers in 

there. So, if you’re listening to this and you’re on a walk or you’re on your, 

you’re in the car, don’t worry about that. We’ll have all this documented for you. 

But first you want to get us started in the conversation. Yeah. So, Taylor, what I’d 

like to do is just get an overview of what an HSA is. Radon mentioned health 

savings account, but what does that actually mean to our listeners? And you always, 

HSA kind of gets goes hand in hand, or if you read articles about them, 

you say you don’t want to ignore these, they have tremendous tax benefits. So, help 

us understand what is an HSA and what are the tax benefits? Yeah, 

HSAs are great because they are the only triple tax -free account available. 

So triple tax -free, what I mean by that is for one, the contributions that you 

make to NHSA are tax -free. Inside of the account, you can invest your contributions 

and any growth on those invested contributions is also tax -free. And then if you 

use the distributions for qualified medical expenses, which we’ll talk about a little 

bit later, the distributions are also tax -free. So, contributions, growth, 

and distributions all tax -free. That’s the triple tax advantage, and HSAs are the 

only account that offer all three. And that’s income tax -free, but also most HSA 

plans kind of just depending on the way that it’s written and the way you’re making 

your contributions. Most HSA plans are also not subject to FICA tax, 

which is Social Security and Medicare, 6 .2 % of all of your earned income goes to 

Social Security, 1 .45 % goes to Medicare. So, it’s also a possibility that not only 

is it income tax -free, but also FICA -free as well, so. – Can we just talk about 

an example just so everybody can catch up here a little bit? Let’s just say, I 

want you to, I want us to walk through a scenario. So put $1 I’m making the 

number really easy. I put $1 ,000 into my HSA or health savings account. So, we’re 

saying that that $1 ,000 is now going in and I don’t have to pay taxes on the $1 

,000 ‘ because it’s tax deductible. But let’s say I leave it in there for a few years 

and it grows to 2 ,000. So, I did not pay, so leg one is I put it in, 

I don’t pay taxes on it. Leg two is I put $1 ,000 and it grows to 2 I’m not 

going to pay tax on the growth of the 2000 and now the third way I’m going to 

get tax benefit is how? How do I get it out tax -free? What do I have to do? 

What qualifies for that? Yeah, so we have to use it for medical expenses, 

which could be like any copays that you’re making. It could be anything that goes 

towards your deductible or like coinsurance, things like that that you can use for 

medical expenses directly, any distributions that you use for medical expenses are 

going to be completely tax -free. – Yeah, so I just wanted to walk us through so 

everybody gets that, right? So that’s why we’re saying triple tax benefit is I can 

now, because otherwise I could go and let’s just say I went and bought something 

that was approved medically and I just went and paid that out of my bank account. 

I’ve already paid taxes on that money. I now go buy it. I don’t get to be able 

to deduct that medical whatever I bought, the prescription medicine or let’s just go 

with a prescription medicine. I don’t deduct that. So, I’ve paid taxes. It didn’t 

grow tax -free and I had to buy it and it’s now not tax deductible. When I used 

the health savings account, I pretty much was able to get that, I mean, in just a 

wonderful tax benefit. And I don’t think people really understand the power of that 

triple tax benefit. And I just think it’s such a, such a huge benefit. So, I don’t 

mean to interrupt. I just want everybody’s brains to kind of come around and go, 

wow, this is amazing on what we can do here. Sorry, Merce. If I got into this, 

but I think that’s good. And I think it’s nice to point out my bet, and I don’t 

know that this is actually true. My bet when they just say was created, was it 

for, it was really for, hey, let us find a way to help you out tax wise in your 

calendar year to help with your health expenses throughout the year. But as people 

have learned more about it and become more educated on  this triple tax benefit 

and long -term growth and compounding growth, now it’s turned into a bit of a 

retirement strategy that I think we can talk about as we close out the episode 

today. But I think first things first, HSA sounds fantastic, triple tax benefit 

sounds incredible. But what makes someone eligible to open up this type of health 

savings account? Yeah, the first thing that you need to make sure of is that you 

have a high-deductible health plan. Any other sort of health insurance is not going 

to qualify to use an HSA, so it has to be high-deductible health plan, which right 

now the minimum deductible if you’re an individual on an individual health plan is 

$1 ,650 or for a family plan has to be at least three, 

the deductible least the deductible estimate is 3 ,300. So high deductible is 

important. Obviously, you have to be employed or self -employed to have that health 

insurance plan connected to that as well. Could be through your employer’s employer 

sponsored plan or yeah like I said if you’re self -employed you can also go through 

the marketplace and get a high-deductible health plan there as well. And if you are 

employed then it’s possible you can make contributions through your payroll just like 

you would to your 401k. It comes directly out of your paycheck, goes straight into 

the HSA, or it’s possible you can also open a health savings account on your own 

and make contributions out of your checking account. The tax benefits all get 

reconciled on your tax return at the end of the year. So even though the dollars 

that go into your checking account, technically you’ve already paid tax on it, you’ll 

get that tax refunded when you file your tax return. So whichever way makes the 

most sense and as easy as for you to make those contributions, you can go either 

way. – So can we talk a little bit about, I know we talked a little bit or just 

set up here with Medicare, how does that work once a person gets into Medicare age? 

– Yeah, so one thing to be aware of, once you are enrolled in Medicare, 

Part A or Part B, you are no longer eligible to make HSA contributions because 

Medicare is not a high-deductible health plan. So, for one thing as well, 

if you start Social Security, you’re automatically enrolled in Medicare Part A and by 

default ineligible to make HSA contributions. So that’s one thing to be careful 

about. If you’re starting Social Security, you need to make sure your HSA 

contributions stop. 

So, for example, let’s say you turn 65 in January of this year, 

and you’re employed, you’re on a high-deductible health plan, you’re making 

contributions to your HSA, and then you plan to enroll in Medicare, 

let’s say in December of this year, you’re going to retire, go on to Medicare in 

December, then you need to stop your HSA contributions actually six months prior to 

when you enroll in Medicare because Part A is retroactive for six months. 

So again, if you’re retiring in December, you’re 65, you’re going to go on Medicare in 

December, you need to stop your HSA contributions in June, six months. 

. 

maximum contribution that you can make for 2025 is $4 ,300. If you’re on a family 

plan, then the maximum HSA contribution you can make in 2025 is $8 ,550. 

There is also a catch -up contribution for HSAs. If you’re over the age of 55, 

then you can add an additional $1 ,000. So, if you’re over 55 and you’re on an 

individual plan, your maximum contribution is $5 ,300 for 2025. If you’re over 55 and 

you’re on a family plan, then your maximum contribution is $9 ,550. 

And those contribution limits are indexed for inflation each year, so they do go up. 

So, make sure you’re checking the actual year that it is for those contribution 

maximums. And one thing too is a lot of employers, if you’re on an employer 

-sponsored plan, they will make contributions to your HSA as well, kind of like a 

401 (k) match, similar methodology there. Your employer contributions also count towards 

that maximum. So, if you’re on a family plan, you’re over 55, the maximum is $9 

,550. If your employer puts in $2 ,000 for you, 

then your remaining contribution is $7 ,550. So that’s a little bit different. 

Like with 401ks, your employer match does not count towards your individual maximum 

contribution, but HSAs work a little bit differently. So, you need to make sure if 

there are employer contributions, you’re factoring that into that maximum dollar 

contribution for this year. – All right, excellent. And how does this work if I want 

to put money in, like a 401 (k) or not a 401 (k) but an IRA where I can put it 

in after January 1st and apply it to the year prior? Yes, the deadline for HSA 

contributions is April 15th, so that aligns with the tax return filing deadline. 

So, yeah, if the end of the year comes and you’re, you know, a few months into 

the next year, you can still make contributions for the prior year up until the 

April 15th deadline. – Okay, great. So, funding it’s going to be important and doing 

that at the right time and then definitely the Medicare piece of it too. We don’t 

want to incur penalties. So, let’s say we do all that properly and then that one big 

tax benefit is on withdrawals. So, I know we touched on it earlier, but can we walk 

through what the qualifying medical expenses are that’s going to let us use this money 

tax -free? – Yeah, so anything that you would need to pay out of pocket for like 

medical related expenses, anything that would count towards your deductible, any co 

-payments that you have, anything like related to co -insurance payments, if you have 

Medicare premiums, you can use your HSA to pay your Medicare premiums, 

Same with long -term care insurance premiums and also Cobra. 

So not only is it like for the actual service, like health-related services or 

products that you’re using, but you can also use it for those premiums for insurance 

as well. – Yeah, I mean, you think about that. I mean, that’s how I think about 

it. So, I fund an HSA, Max funded every year, I’ve never taken any money out of it 

because I do look at it and go, hey, if I build this up, I can use it for the 

other. And although I do have medical expenses, I just don’t use it for that 

because I want it to grow because I think in the future, I might even have a 

bigger expense that it makes more sense for me to say, I want to utilize that at 

that point. So that kind of brings us to this next question that I’m going to set 

up is that, you know, what’s my long -term benefits. You know, there’s certain like 

medical, I can’t remember what it’s called, but sometimes you’ve got the account 

where it within the within the company and you have to use it every year. An FSA, 

FlexBend, Flexible spending, like spending account. So, and health 

savings account, what is my long -term benefits? Yeah, so like we talked about how 

you can invest your contributions, that account is yours forever. If you change 

employers, the HSA follows you. If you change health insurance plans, the HSA is 

still in existence. So, it’s never going to be an account that you lose or that you 

are disqualified for or anything like that. It stays in your name regardless of any 

other changes related to that. So that is kind of like a typical advice being if 

you have health expenses, and you need to use your HSA that’s fine you can but if 

you have other cash or other resources available to cover those medical expenses then 

leave your HSA as it is leave it invested long term because like you were talking 

about Radon, as you get later into retirement like eventually, you’re going to need 

your HSA you’re going to have medical expenses likely as you get older. So the 

longer you can leave those dollars invested, growing tax -free available to you for 

future medical expenses on distributions tax -free, then that’s only going to benefit 

you long -term over the course of your retirement. – Right, imagine if you fund this 

HSA concept for 20, 30 years without touching it, and it makes a decent rate return 

five, six, seven percent. I mean, that could be pretty powerful over time. over 

time. So, what happens if we get to a place where we’re in retirement now and we 

want to use this money not for qualified medical expenses? What’s the issues there 

and how does that turn around on us later on? Yeah, so another unique feature of 

HSAs is that once you reach age 65, the rules around HSA distributions shift at 

that point in time. And then the HSA almost becomes like a traditional IRA were 

you can use your HSA for whatever you want. If you don’t have medical expenses, 

you want to buy a car or whatever it is, you can use your HSA. However, the 

distributions are still taxable if you’re using it for something other than medical 

expenses. And again, that’s only over the age of 65, but still a flexible type of 

account that can benefit you. If you need to use that, it’s available to you. Like 

I said, you will pay income tax on the distributions if you’re not using it for 

medical expenses, but it is a possibility to incorporate that into your distribution 

and income planning. So, I just want to give everybody though, I just want to give 

everybody again, a visual on So, so let’s pretend that I found my health savings 

account, do a very nice job getting money in there. I don’t touch it. Then comes 

a, then comes 65. When 65 comes, let’s say now I’m going to go back to your 

analogy, I need a car. 

I’m going to ask this question, rhetorical, would it really make sense to take money 

from my health savings account and go buy the car? I’m going to give you big 

astounding no, and here’s why what I could say is well, how much is my Medicare 

premiums? Let’s say to my Medicare premiums between me and my spouse. Let’s just say 

our $500, $600 a month, you know, let’s just whatever it is. I now use my HSA to 

make my $500 

Medicare premiums, which now frees me up to go buy a car with a $500 payment and 

I and I got the tax -free benefit So I wouldn’t really use that money to go buy 

the car. I would say I’m going to make these payments over here that frees up 

money that I was having to pay. I get the tax -free benefit, now I can go buy the 

car on the side. And it’s just, that’s again, how do I want to make sure I 

classify the money? I’m obviously going to spend this money as much as possible to 

get the tax -free benefit. So, buying the car with the HSA money probably doesn’t 

make sense, but I could free up cash flow. So, Before somebody goes out at 65 and 

says, “I want to go spend this money,” I think that comes back to let’s have a 

plan. One of the things that we talk about is with you, Taylor, we’re having tax 

strategy meetings with our clients every single year. If a client said, “Hey, I 

think I’m going to use my HSA to go buy a car,” we’d probably go, “Ding, ding, 

ding. Don’t do that.” I was like, “Stop, think,” and then move forward. The other 

thing on that too is like if you were to be audited for your HSA distributions it 

comes down to you need to have the receipts to show that you have those medical 

expenses so it doesn’t have to be like you take those exact dollars out of your 

HSA to pay for you know whatever happens to be if you have receipts showing that 

you’ve had medical expenses, and you take a distribution equal to whatever your 

receipts are showing then that’s that that’s all the evidence that you need to prove 

that you have medical expenses if you were to be audited for your HSA distribution. 

So as long as you’re keeping good records, you have those receipts, then you’re good 

to go. Yeah, so I think, you know, right today, I think we don’t see a lot of 

money left in HSAs today, but I think with it becoming such a big retirement 

planning tool, I think what we are going to have is people that end up having money 

left over in their HSAs that they weren’t able to use. So how does that work? Then 

someone passes away and let’s say they’ve got 100 ,000 left in their HSA, does that 

just disappear? Yeah, I think this is important to be aware of as well, 

just so that you can be planning and be using your HSA as needed. 

So, if you’re an HSA owner and you pass away, if your spouse is your beneficiary, 

your spouse can inherit that HSA and keep the same rules for tax -free distributions 

on medical expenses. But if you pass away and the beneficiary is a non -spouse, 

anyone other than your spouse, the rule is that they have to take a lump sum 

distribution, full distribution of that HSA, it’s not treated as like your typical 

HSA rules. All those rules go away. It’s a fully taxable lump sum distribution in 

the year that they inherit the account. So, if you are leaving your HSA to your 

spouse, that’s fine. Those benefits continue to your spouse. But if you’re leaving 

your HSA to anyone other than your spouse, then you want to be careful and try to 

use up your HSA because it’s not going to benefit the beneficiary if it’s someone 

other than your spouse that those tax benefits do not continue beyond you as the 

account owner. So yeah, something to pay attention to. All right. 

Well, I think to sum this up is health savings accounts. If we are eligible, make 

a lot of sense for us to be able to fund and the benefits there are really, 

really, really good. So, thank you very much, Taylor, for coming on and helping us 

break this down in such an easy-to-understand way.