Gen Z Guide to FI

The Health Savings Account (HSA) helps you with taxes but did you know you can use it to travel the world for $FREE.99. This isn’t a scam I promise. I just started this journey and it is a sweet ride.

So first, why should you get an HSA?

Do you want to reduce your taxable income? Get an HSA.

Do you want to have an emergency fund for medical expenses? Get an HSA.

Do you want to take out tax free money? Get an HSA.

As of 2023, the annual contribution limit is $6500. An HSA is offered with most employers. To use an HSA, you have to enroll in a high deductible health insurance plan (basically spend $1500 annually before insurance kicks in and covers the rest). It is an incredible opportunity to save money on taxes in a similar way to the 401k. I went into greater detail on how the 401k saves you money on taxes in How to get the most out of your bonus.

I was initially terrified about pulling out money from my HSA because I was worried that I would be arrested for tax evasion or some other financial crime. The IRS is fucking scary. After filing my taxes this year, my tax prep guy Willie asked me why I don’t use my HSA to reimburse myself on medical expenses. I was like bro I already use the HSA debit card so why would I need to reimburse myself. This was the conversation after:

Willie: No, if you pay with your personal credit card, you can reimburse yourself with the HSA account and it will help you claim more money in your next year tax return.

Me: wtf bro, why would I go through that drama if I can just use the HSA debit card to pay my medical expenses in the first place.

Willie: you do you bro.

Ok he didn’t call me bro. But I think you get the point. Anyway, I started looking into all the non traditional things that my HSA covers. That is when I discovered that therapy is covered per my Mental Health and Money post. I also found out that the HSA covers sunscreen, menstrual products, lip balm, laxatives (a girl’s gotta shit am I right) and a bunch of other things (click here for more) that I spent after tax dollars on.

From that rabbit hole, I experimented and bought some sunscreen just to test how fast I could reimburse myself with my HSA. I didn’t need a receipt or anything to reimburse myself. BUT I definitely would still keep my receipts because you never know when the IRS could come your way. I just put my checking account information and the money was deposited the next day.

The next phase of this experimentation was using my new travel credit card to pay my large medical/dental bills (e.g annual check up tests, teeth cleaning & therapy). I opened a new travel credit card for United in March so I have about 90 days to spend $3000 so that I can get my 50k bonus miles. I will use these health expenses to cover about $1000 of the $3000 required. Then, I will reimburse myself with my HSA baby.

Looking forward to traveling for free using my HSA!!!

XOXO gen Z Fire Baby 🙂