Thursday, April 17, 2014

Healthcare and HSA Reminders

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Whether you have health insurance or not, it’s important to stay abreast of the major changes that have occurred to the healthcare system in the wake of the Affordable Care Act—also known as Obamacare. Fortunately, the IRS has issued four reminders to Americans as they go forward. After each reminder, I’ve added a short bit of additional information and commentary.

1. Most people already have qualified health insurance coverage and will not need to do anything more than maintain qualified coverage throughout 2014. Indeed, many employers offer health insurance that fits the requirements set by the Affordable Care Act. If your employer offers an acceptable plan and you do not take it, you will be mandated to register for health insurance or, eventually, pay a penalty fee.

2. If you do not have health insurance through your job or a government plan, you may be able to buy it through the Health Insurance Marketplace. Using the marketplace, accessible at healthcare.gov, is a new tool launched by the government to help Americans find the insurance plan that works best for them. The deadline to sign up for 2014 has passed, but you can still browse plans for next year on the Marketplace.

3. If you buy your insurance through the Marketplace, you may be eligible for an advance premium tax credit to lower your out-of-pocket monthly premiums. Tax credits and subsidies are a major part of the Affordable Care Act. By offering ways to lower premiums and expenses, the government is encouraging Americans to get covered. You must meet certain requirements including whether your employer offers a plan and how much money you make.

4. Your 2014 tax return will ask if you had insurance coverage or qualified for an exemption.  If not, you may owe a shared responsibility payment when you file in 2015.

The IRS issues tips and reminders periodically and you can browse them by visiting www.IRS.gov. IF you have questions about health insurance or about Health Savings Accounts (HSAs), visit www.ndira.com.

Tuesday, March 4, 2014

2014 IRA Contribution Limits and HSA Contribution Limits

The IRS has issued 2014 contribution limits for IRAs and HSAs. Take a look below to see what you’ll be able to contribute to your account(s) this year.

The annual contribution limit for IRAs is $5,500 for 2014, which is unchanged from 2013. The additional catchup limit for individuals 50 and older is still $1,000.

The annual contribution limit for 401(k) plans—as well as 403(b) and most 457 plans—will remain unchanged at $17,500. The catchup contribution limit of $5,500 for 401(k) owners over the age of 50 also stays the same from 2013.
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It’s important to note that Individual 401(k)s must be established by the end of 2013 in order for contributions to be made to the account for 2013. Contributions as the employer to an Individual 401(k) for 2013 can be made through the extended deadline of the company’s tax return, either Sept. 15 or Oct. 15. Employee deferrals are typically made per paycheck (unless a self-employed individual does not receive regular paychecks, in which case other filing rules apply.)

Health Savings Account (HSA) contribution limits grew slightly to $3,300 for individual plans and $6,550 for family plans. HSA catch-up contribution limits remained unchanged at $1,000 per year for HSA account holders over the age of 55.

Maximum out-of-pocket expenses for High Deductible Health Plans (HDHPs) were heightened slightly to $6,350 for individuals and $12,700 for families. There was no change in HDHP minimum deductibles ($1,250/individuals and $2,500/families).

Remember that anyone can contribute to your HSA. That means if an HSA holder cannot afford to contribute $3,300 to his account this year, a friend or relative can contribute to his account. However, an account can only receive up to the contribution limit in a given year, no matter who or how many people contribute to it.

For more information on IRA and HSA 2014 contribution limits, visit www.NewDirectionIRA.com.

Friday, December 20, 2013

Using the HSA for Long-Term Medical Expenses

A Health Savings Account, or HSA, is a valuable tool in managing medical expenses. They can help you save, pay for certain expenses not covered by your insurance and you can reimburse yourself at any time in the future for medical expenses you incur while the HSA is open.

First, let’s look at Qualified Medical Expenses, or QMEs.

The HSA can be used to pay for QMEs that are not covered by your HDHP. QMEs are medical expenses the IRS allows HSAs to pay, including (but not limited to) dentist and optometrist visits, eyeglasses, transportation to medical care, chiropractic care and much more. The best part is that these expenses can be paid tax-free with the HSA. QMEs include expenses of the individual, their spouse and dependents regardless of their medical insurance coverage.

Secondly, your HSA can reimburse you for QMEs at any time. You decide. You can take a reimbursement the day you incur the medical expense or 30 years in the future. Regardless of when you take the QME reimbursement, it is tax free.

Say you go to the doctor for a checkup and get a bill for $1,000. With an HSA, you can pay that bill with your HSA funds immediately, or you can pay the bill out of pocket, keep the receipt, and reimburse yourself that $1,00 anytime, tax-free, in the future. That gives you $1,00 more dollars in your HAS to invest, which will hopefully appreciate over time.

Note that your HSA cannot pay for medical expenses incurred before the account is opened, but it can reimburse for any expense after that even if the account does not have that amount in it at the time.

Lastly, any withdrawals are subject to ordinary income tax, just like traditional IRAs. So if you and your dependents are fortunate enough to not have medical expenses but you need the money for non-medical expenses after age 65, the HSA works in your favor by letting you keep that money in the account.

There are no Required Minimum Distributions (RMDs) for HSAs. That means you may continue to make contributions as long as you are not enrolled in Medicare. When you die, your HSA funds can be used by your spouse or it can be taxed and pass on to your non-spouse beneficiaries.

Friday, August 16, 2013

Alternative assets in an HSA

At New Direction the focus, rather than selling or recommending investments, is to help the clients learn about their options and guide the client through the process of making it happen. Co-founder and CEO Bill Humphrey said, “Self Direction is not for everyone. The self directed investor must be willing to take the responsibility for investment choices. Although their outside advisers or associates can help. Since we don’t sell any investments, we don’t question your choices or try and steer your decisions. Our clients already have the sexiest IRAs on the block.” New Direction offers Roth and Traditional IRAs, SEP IRAs, as well as 401k plans.

hsa assets, hsa alternative assets, hsa news, hsa blogHumphrey warns clients and potential clients not to overlook the HSA for retirement expenses of the medical variety. Creative investors are discovering the investment potential of HSA funds and some clients feel that the tax shelter of an HSA can be better than either a Roth or Traditional IRA. New Direction includes Self Directed Health Savings Accounts in the available plans, Humphrey explained, because many employers are now offering plans in conjunction with HSA contributions.

Most investors look at an IRA as a long term investment, and recently, according to New Direction, more HSA investors are doing the same thing. As mentioned in the WSJ article, investors in hardwood trees are looking for a long term return. Humphrey said, “Our clients mention the low initial amount required as one of their reasons for making the investment aiming that the trees will ‘grow’ in value between now and retirement.”

A New Direction HSA can purchase Hawaiian Koa trees or whatever investment they choose, and harvest future profits. Those profits are never subject to tax, provided distributions are used for qualified medical expenses. And HSA contributions are not subject to tax either. Thus, HSAs offer tax free contributions and distributions as well. Account holders generally defer distributions from HSAs to retirement years while allowing the account to grow in the meantime.

Given the lower typical balances in HSAs, the focus is often on lower priced investments. Small plan balances don’t necessarily limit the client to small investments. HSAs and IRAs with low balances may also, as mentioned in the WSJ article, make purchases with other investors or using debt leverage.
Since 2003, New Direction has focused on education of investors on the details of the process and rules. They teach hundreds of free webinars and classes to educate both new and experienced investors how the take advantage of a self directed plan. Through their professional training classes for CPA and others, the details of tax treatment of profits of the plan and any UBIT (unrelated business income tax) are also addressed.

New Direction IRA, Inc., a self-directed IRA plan provider and record-keeper, offers only self-directed IRAs, HSAs, Coverdell educational savings accounts, plus company sponsored SEP, SIMPLEs, 401k plans and recordkeeping for qualified plans and defined benefit plans. They can be reached at 303-546-7930 or toll free at 877-742-1270. Visit their website at NewDirectionIRA.com. New Direction does not offer investment advice nor do they sell any investments.

Friday, August 9, 2013

Gold HSA: Holding precious metals in an HSA

Health Savings Accounts (HSAs) are becoming increasingly popular for investors looking to save money and help pay medical expenses. Most investors don’t realize that like other IRAs, the HSA can be used to invest in alternative assets such as gold and other precious metals.

HSAs enable you to save on your medical expenses because you can make pre-tax contributions to your HSA, and withdraw those moneys tax free when you want to pay for the expenses. Anyone can make contributions into your HSA—and you can contribute to anyone else’s—until the contribution limit is met.

HSAs even allow the HSA account-holder to pay themselves back for bills paid out of pocket (provided paperwork still in hand and that the HSA was opened prior to the medical expense). You can hold on to those receipts for years, allowing the account to grow to its maximum potential before using the funds to reimburse yourself for those expenses.
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At the same time, you may have been considering the merits of holding real physical precious metals such as gold and silver in a retirement account. Holding precious metals in an IRA provides protection against the erosion of purchasing power via inflation as well as the potential for appreciation as hard assets.

A Gold HSA, then, will allow you to create a reoccurring purchase plan with a metals dealer of your choosing to make specific bullion or precious metals purchases at regular intervals. As your HSA accumulates funds, it can buy more assets, potentially generating more money to pay for expenses. This is called Dollar Cost Averaging.

Dollar Cost Averaging Basics

Dollar Cost Averaging has long been popular with mutual fund investors, since this practice of buying the same dollar amount or same number of specific items, at regular intervals, means that you automatically a bit less when prices have risen, and you buy a bit more when prices have fallen.

In other words, over time these price fluctuations even themselves out, enabling the investor to accumulate the investment at a lower average cost, while also protecting against the risk that prices will drop just after making a big lump investment.

What’s the bottom line to me?

Obviously, since prices — whether they be stocks, gold, or foodstuffs — will tend to rise over time, the best investment strategy (provided you knew what you wanted to buy and how much of it) would be to invest all the funds now, rather than over time. Since this is a retirement account, however, and therefore one is typically making annual contributions over a number of years’ time, the “all at once” strategy may not be feasible.


The next best thing, however, is Dollar Cost Averaging—and the Gold HSA utilizes the power of this principle in tandem with the practical matter of accumulating hard assets such as gold or silver to your retirement account.

Wednesday, July 17, 2013

How to use an HSA: Save for medical expenses, save for retirement

It's difficult sometimes to make ends meet while putting away enough to reach our retirement goals, especially with an uncertain market and ever-changing legislation. The government recognizes this. And so we're fortunate, at least, that our current tax laws provide us with a great way to save and reduce our taxes in retirement accounts.

Health Savings Accounts (HSAs), specifically, are rapidly growing in popularity and provide a unique way to save money, grow retirement accounts and pay for medical expenses. HSAs have been available since 2004 and have the tax-free quality of a Roth IRA but the tax deductibility of a Traditional IRA.
hsa account, hsa, hsas, how to hsa, hsa savings, self directRising health insurance costs have forced employers into offering High Deductible Health Plans to employees. Some employers choose to fund the HSA for the employee to take some of the sting out of the high deductible. However, what makes these HSAs alluring is that contributions to HSA accounts made by the individual are 100% tax deductible and distributions for qualified expenses from the HSA are not taxable.

The best part of taking HSA distributions is that there is no time limit on how long you can hold onto qualified expenses before requesting a reimbursement. In fact, waiting to take distributions from the HSA gives the account time to grow.

Most HSA accounts are meant to be spent, which means that most of those offered are without access to true investments. In order to gain access to investments that are going to grow your HSA, you need to open a self-directed HSA account and direct the funds. You may direct the funds into brokerage accounts, precious metals or, in the case of one account holder, real estate. There is no limit on what you can invest in as long as you stay within the IRS guidelines.

Consider this example: Joe has been contributing to his HSA for 3 years and has accumulated more than $16,000. Although he has more than $10,000 in reimbursable medical expenses he plans on holding on to them for a while. As a real estate broker Joe sees lots of opportunities for second mortgages. One of his office mates, Phil, has a deal that requires additional cash. A first mortgage has been obtained by Phil’s client for the purchase but the renovations will require an additional $15,000. Joe offers to lend the funds to Phil’s client for 8% and will secure the financing with the property. The money will be tied up for 2 years but during that time it will be earning a reasonable interest rate.

Why not invest in something long-term and request reimbursement 10, 15 or 20 years in the future? Allowing your contributions to grow long-term (now $6,450 per family in 2013) could result in a lucrative and pain-free investment.


New Direction IRA is a self-directed IRA and HSA account administrator and does not sell or sponsor any investment products nor provide investment or tax advice. Since 2003 New Direction has helped clients invest in what they know and understand.

Tuesday, July 2, 2013

HSAs continue to grow in popularity

More than 13.5 million Americans are enrolled in Health Savings Accounts as of January, 2013, according to an annual census released by America’s Health Insurance Plans.


HSA, health savings account, what is hsa, self direct hsaConsidering the economy, many small businesses are choosing HSAs to save on healthcare costs for employees and the company itself. Any healthcare change can be difficult, but many employees have discovered their HSAs can be as good as, or better than, their previous health care.

Many of the 13.5 million have discovered that they can use an HSA to save for future health expenses after they retire. Self-directed HSAs can provide a unique investment opportunity in the healthcare arena. Anyone with a self-directed HSA can invest the funds in real estate, precious metals, or many other investment alternatives. If the HSA holder has investment success, the funds will be tax-free to pay for qualified medical expenses.

HSAs can be used as an investment tool, or just as a savings account and tax break. Especially with the healthcare overhaul, HSAs will continue to provide many options for Americans in all tax brackets.