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IRA Financial Blog

Help on the Way to Pay for Your Medical Bills – Episode 410

Adam Talks

In this episode of Adam Talks, Adam Bergman, Esq. discusses new legislation, the HSA Modernization Act and HSA Improvement Act, which would double the amount you can contribute to a Health Savings Account.

Help is on the Way to Pay for Your Medical Bills

Adam Bergman discusses the new HSA Modernization Act, which aims to increase contribution limits for Health Savings Accounts (HSAs) starting in 2026. The legislation seeks to make HSAs more appealing by doubling the contribution limits from $3,500 to $7,500 for individuals and from $7,500 to $15,000 for families. HSAs are tax-deductible accounts that allow individuals to save money for medical expenses and invest those funds without being taxed.

Bergman highlights the benefits of HSAs for individuals across different income levels and emphasizes the flexibility of using the funds for various medical costs. He also mentions the growing popularity of high deductible health plans, which make individuals eligible to set up an HSA. With healthcare costs on the rise, over 55% of Americans are enrolled in these plans. Contributing to an HSA provides a tax deduction and allows individuals to grow their savings tax-free for future medical expenses. Any unused funds in an HSA can be rolled over and used for medical expenses later in life.

The HSA Modernization Act is a bipartisan bill that has been passed by the Ways and Means Committee. It has received support from various politicians, including Bill Blumenhauer, a Democrat from Oregon, and Lloyd Smucker, a Republican from Pennsylvania. The estimated cost of the bill is approximately $70 billion over ten years. While there has been criticism that the bill may primarily benefit higher-income individuals, the overall importance of saving for medical expenses remains significant.

Bergman also discusses how deductible accounts, specifically HSAs, can be utilized to pay for medical expenses. He mentions that IRA Financial takes care of all the IRS documentation and that traditional and alternative investments can be made with HSAs. The Monetization Act allows flexible savings accounts to be converted to HSAs, and there is a possibility of aggregating spousal catch-ups into one account. The bipartisan nature of the bill is highlighted, showing that government can work together for the benefit of the American people.

Bergman emphasizes the advantages of paying for medical expenses through a deductible account and receiving deductions for contributions. However, it is important to be part of a high deductible health plan. He suggests reaching out to administrators, HR departments, or employers for clarification. The majority of plans are high deductible due to rising healthcare costs, making it the only viable option for small to mid-sized businesses. He commends the bill’s bipartisan nature and highlight the success of utilizing the retirement system, such as HSAs, to save for retirement and healthcare. He expresses hope that government cooperation and problem-solving continue in other areas and mention that if the bill passes, it will not go into effect until January 2026, allowing sufficient time for preparation.

To learn, be sure to listen to the whole podcast.


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