What’s the deal with HSAs?

Here’s what a health savings account is — and how it can help you [Image] ThePennyHoarder.com August 1st, 2019 Want to hear something that’s going to make you feel a little, well, old? Earlier this week, a young person on the internet noticed something happening throughout the hit show “Stranger Things” and asked, Why do they go into a red room and dunk photographs under water? Yikes. Ouch. Oof. Ow. That one stings a little. Of course, they were referring to the nearly obsolete practice of using a darkroom to develop film — and the realization that there’s a whole generation of people who have now grown up in a digital era was a little jarring to some. Today, as we ponder the passage of time, we’re talking about HSAs, HDHPs and how bonus income is taxed. Because why not? But first… Informally Speaking… We can all use a little help with budgeting now and again, and if there’s one undeniable truth about the internet, it’s that it’s a great place to crowdsource ideas. Don’t fire your financial adviser, but if you’re looking for some informal money advice online, [these six Reddit budget forums are great resources](. This Job’s Got Your Number Customer service doesn’t need to be a dead-end gig. Software company 15Five is hiring a work-from-home rep who’ll start by answering customer questions but will be writing articles as a product expert by the end of the first year. Add in the health insurance benefits, [and you have a job with real growth potential](. HSA: The MVP of the HDHP [What is an HSA?]( Boy, that’s a lot of initialisms. But the first thing you should know about an HSA (or a health savings account) is that you need to have an HDHP (high deductible health plan) in order to qualify for one. (Fun fact: It’s only considered an acronym when the letters are spoken as a single word, like NASA. “HSA” is technically an initialism. But, uh, back to what we were talking about…) Another thing to keep in mind is that an HSA isn’t like a regular savings account. For one thing, there are a bunch of rules around how you can contribute and spend the money. But it can be a very useful and convenient way to set aside money for medical expenses while potentially saving you hundreds or even thousands of dollars in the long run. How? [Allow us to explain](. [Image] WORD OF THE DAY Supplemental income (n): Money you earn above your regular salary or wages. The IRS counts commissions, overtime pay, prizes, retroactive pay increases — and those sweet windfalls known as bonuses. When you earn money (in pretty much any form), you know you’re going to pay taxes on it. But when it comes to paying taxes on bonuses, [the rules are a little different](. The good news? You don’t have to worry about your bonus catapulting you into a higher tax bracket, because even if it does, only the money above that bracket threshold will be taxed at the higher rate. No matter how it’s taxed though, a bonus is basically free money you weren’t expecting. So while it can be frustrating to see part of that check disappear into the ether, focus on the positive: more money in your pocket that can go straight toward your financial goals. [The Penny Hoarder] [Facebook]( [Instagram]( [Twitter]( [YouTube]( The Penny Hoarder | 490 1st Ave S, Suite 800 | Saint Petersburg, Florida 33701 | United States You can [update your mailing preferences here]( or [unsubscribe]( from all email from The Penny Hoarder. Questions? View our [Privacy Policy](. Having trouble reading this email? You can [view it online](.