Money Musings 💭 don’t miss this holiday
Happy National HSA day!
Yes, this might be the nerdiest holiday EVER lol BUT HSAs are truly magical accounts that I want to make sure you know about.
What’s an HSA?
HSA stands for Health Savings Account and you are eligible to contribute to one if you have a high deductible health insurance plan (deductible over $1,400 for an individual and $2,800 for a family).
You can set aside pre-tax money into your HSA (up to $3,000 for an individual and $7,000 for a family in 2021) and use the money on eligible medical expenses tax free. 🤩
But - there’s more!
You don’t have to use the money the year you contribute it (or even in the next 10 years).
Once your balance hits $3,000, you are able to invest the money in the account and have it grow tax-free. TAX-FREE. No paying capital gains taxes - just like your 401(k) and/or IRA!
We are eligible and max out our HSA each year. We tend to need more of the money than we expect for medical expenses (anyone else notice their health care costs going up each year?!!) but we’re able to invest in the account and are slowly but surely building that balance.
You can celebrate National HSA Day by looking into your eligibility and getting yourself signed up, if applicable.
At the very least, they’re a great way to get a discount on the medical expenses you’ll be paying for anyway.
P.S. What are your favorite women and BIPOC-owned 📚 bookstores? Hit reply and let me know or add them here.
MONEY MOVE OF THE WEEK
CHOOSE A BROKERAGE ACCOUNT.
With brokerage accounts (an account that lets you buy and sell investments), you’ll find that some will be a better fit for you than others. BUT at the end of the day, it’s better to make a choice than to not take action and miss out on time for your money to grow.
Read through this list, then set a timer for 30-60 minutes to do some research. When the timer goes off, make your choice. Here’s how to choose a brokerage account.
Start with customer reviews. Googling the best brokerage accounts or asking friends / family for recommendations is a great place to start (but know, some may pay to get on top 10 lists). Take a look at customer reviews as well. It’s important to see what people are saying who are actually using and experiencing the platform. Think about what’s important to you because a lot of this is personal preference.
Is there a minimum to open an account? Depending on how much money you are starting with, certain account minimums will be a dealbreaker. Many have very low to no minimums so having a low minimum is a very reasonable criteria.
Is there a fee to make a trade? Back in the day when I started investing, many brokerage accounts charged a fee or commission each time a trade was made (unless you were trading their securities). It’s now easy to find brokerage accounts that charge $0 commission, all the time. Only open accounts where you won’t get charged a fee per trade.
Are there any other fees? Are there any other fees like a monthly or annual account maintenance fee? Take note of any fees you’ll have to pay in your research as well.
Do they pass your consumer activist criteria? This is about whether the company aligns with your values. We can be activists in our investment choices and by choosing with which companies we choose to invest. The financial services space is evolving (albeit more slowly than I’d like). There are new companies being founded and the more established brands are implementing changes to do better. You might not be able to find a perfect fit, but you can definitely factor this into your decision.
SIPC insurance. Any reputable brokerage firm will be SIPC insured. This is similar to FDIC insurance in that if the brokerage firm goes under for any reason, your money is protected. That being said, it’s very important to understand that it doesn’t protect your investments from losses as far as ups and downs in the market.
YOU GOTTA SEE THIS
DEFINE: SOME HEALTH INSURANCE DEFINITIONS.
Health insurance is very complicated. Understanding the key terms makes it a lot easier to navigate. This helps us choose the best policy for us and navigate the insurance we have. Here are some of the common health insurance terms you’ll see.
DEDUCTIBLE. Applies to all types of insurance. How much you pay on your own before your insurance kicks in. If you have a $500 deductible and get charged $400 for a doctor’s visit, you’ll pay the $400 and all other charges up until you pay $500 in total. Once you hit your deductible ($500 in in this case), your insurance starts to help with your bills. The exact amount insurance covers will depend on your insurance.
CO-PAY. For health insurance specifically. Sometimes annual check-ups and visits with certain doctors cost a flat-fee called a co-pay. They may also be covered and cost you $0.
IN-NETWORK vs. OUT-OF-NETWORK. Because health insurance companies pay for large groups of people’s medical bills, they negotiate discounted rates with doctors and hospitals (which helps them keep their own costs down). These doctors and hospitals are considered “in-network.” Doctors and hospitals that don’t have a deal or negotiated rate with the insurance, hospital and/or health system are “out-of-network” and insurance companies typically don’t cover our appointments and expenses with those doctors (until you hit your out-of-network deductible!).
OUT-OF-POCKET-MAX. There is usually an in-network and out-of-network max for the year. If you are thinking “are you kidding me with these terms, Ashley?” Sadly, no I’m not kidding. The max is the most you can pay out-of-pocket in total (on your own). Your in-network max is typically lower (sometimes much lower) than your out-of-network max.
COINSURANCE. Where you share the cost with the health insurance company. That might look like an 80/20 split - where the insurance company pays 80% of your bills and you pay 20%.