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Ask Dave

HSA and the Budget

Michael says his company gives him $2,000 a year toward his HSA. He isn't sure how that should play into his budget.

QUESTION: Michael in Boise says his company gives him $2,000 a year toward his health savings account (HSA). He isn’t sure how that should play into his budget. He’s been paying medical bills out of the account and has $300 left to go toward $1,000 in medical bills.

ANSWER: Basically, we’ve got to pay that $1,000 either through this or not, right? So let’s run it through this because it’s tax-free. You just budget your normal $96, which affects your take-home pay, basically, but then you don’t have to deal with the $1,000.

But then adjust it. Once you kind of get past this event that you’ve had and life returns to a little bit more of a normal pace as far as medical bills, you maybe can adjust down and you don’t have to put that much in there. Just kind of judge it based on what you’re projecting into the future, but right now, we’re kind of in the hole. If we go $96, that’s you putting in $200 and they’re putting in $150, that’s $350 every month going toward this. In three months, it clears this $1,000 balance.

Run your medical through the HSA because we’re going to let the government—because it’s tax-deductible—basically, the government is paying a third or a fourth of the bill that way. You’re right on track. Good thinking. Well done.