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Self-Directed Health Savings Account (HSA)

Health Savings Account

The IRA Financial Trust Company offers one of the country’s only “Checkbook Control” Self-Directed Health Savings Accounts (HSA). With IRA Financial Group & IRA Financial Trust Company, you can establish and fund a Health Savings Account while gaining the ability to invest in what you know. This includes real estate, notes, private businesses, options, and even cryptocurrencies.

What is a Health Savings Account?

A Health Savings Account (HSA) is a tax advantaged savings account for medical expenses.  The IRS has come up with the HSA for qualifying taxpayers to receive a tax benefit for medical expenses paid whether you itemize or not.

You can open a Health Savings Account if you have a qualifying high deductible health plan. You can keep the Health Savings Account forever, whether you leave your job or change insurance plans.  Contributions, earnings, and qualified withdrawals are all tax free.

What is a High Deductible Health Plan?

A High Deductible Health Plan (HDHP) is a category of health insurance plans available from your health insurance provider.  They have lower monthly premiums and a higher yearly deductible than regular health insurance plans. An HDHP has a higher deductible than most health plans, and a maximum limit on the sum of the annual deductible and out-of-pocket medical expenses that you pay. You can set up a self-only (one person) or a family (more than one person) coverage plan.

Does your Plan Qualify as a HDHP?

A qualifying HDHP must have a minimum deductible, which is set each year by the IRS. This means that the plan can’t have a deductible that is less than the below figures. If the plan does, it is not a qualified plan for the Health Savings Account:

  • Self-only coverage: $1,500
  • Family coverage: $3,000

In general, high deductible plans have some of the following characteristics:

  • Can cost less than other health plans.
  • Provides quality health insurance.
  • One calendar-year deductible per family.
  • Can pay 100% of covered expenses after deductible is met.

Self-Only vs. Family Coverage

If you are married and either you or your spouse has a family HDHP, then both of you have family coverage. This is true even if one of you has a family plan and the other one has a self-only plan. Each of you can have a Health Savings Account. This means that together you can contribute up to the family limit.

However, you can’t each contribute up to the family limit.

  • If you each have a self-only plan, then you can each contribute up to the self-only limit to your respective HSA.
  • If you have a family plan with a deductible for each person, you can still contribute only up to the family limit. For example, you have a $6,000 deductible for each person. You and your spouse are on the plan. The contribution limit for the two of you is the family limit for the year. Between the two of you, you can contribute up to that amount.

However, if you and your spouse are filing jointly and either of you have a family coverage plan, you can both receive the family coverage plan (even if one of you has a self-only plan).

2023 Health Savings Account Contribution Rules

The 2023 annual contribution limit that individuals with single medical coverage can contribute to a health saving account is $3,850. The annual HSA contribution limit is $7,750 for those covered under qualifying family medical plans. But if you’re 55 or older in 2023, you can contribute an additional $1,000, or total of $4,850 to an HSA for singles and $8,750 for families per year.

How does an HSA work?

Think of a Health Savings Account as a bank account that you can open if you have an HDHP.  You can contribute money to this account, tax free.  You can invest this money so it grows and compounds over time, tax free.  If you need to pay for a qualified medical expense (QME), you can withdraw money from your HSA, tax free. The self-directed tax specialists will assist you with this process.

Benefits of using an HSA

There are numerous benefits of HSA plans in comparison to regular health insurance.  You save money each month because the premiums are lower, and you receive insurance against catastrophe.  Your HSA savings account has high tax advantages. Additionally, the funds grow tax-deferred. The Health Savings Account is also a great savings plan that you can use for medical expenses, emergencies, job loss, or retirement.

Below are some of the main benefits of establishing an HSA:

  • Ability to claim a deduction for contributions you make that are not pretax or made by your employer, even if you don’t itemize your deductions on Schedule A.
  • NEVER taxed when used for qualified medical expenses.
  • Contributions made on your behalf by your employer, including any pretax contributions you make through a cafeteria plan, are generally not taxable.
  • Contributions you don’t use remain in your account from year to year.
  • Interest, income, and gains you earn on the account is usually tax-free.
  • Distributions used to pay for qualified medical expenses are tax-free.
  • Your account stays with you even if you leave your employer.

Withdrawing Funds from an HSA

In general, any funds you withdraw for non-qualified medical expenses will be taxed at your income-tax rate, plus 20% if you’re under 65.

How to set up a Health Savings Account

Establish a Self-Directed Health Savings Account with IRA Financial Trust Company. Remember, one can open an HSA if you have a qualifying high deductible health plan. One can contribute to the plan annually on a tax-free basis through your employer, or you contribute on your own and receive a tax deduction on Form 1040, line 25. As you need the funds to pay medical expenses, you receive distributions from the account.

Taking a distribution is quick and easy. As long as the distributions pay medical expenses, there is no tax effect. Simply complete an HSA Distribution Request form and the distribution will be sent to you ASAP. The beauty of the plan is that you get the tax benefit up-front when you contribute to the plan. Any unused funds carry over from year-to-year until you need them.


  • Used to meet your deductible.
  • Tax deductible off of gross income.
  • Grow tax-deferred.
  • Self-directed options – real estate, notes, private business, options, cryptocurrencies & more.
  • Roll over year after year – no “use it or lose it”.
  • Portable, goes with you wherever you go.
  • Health insurance premiums when you’re between jobs.
  • Qualified long-term care premiums.
  • Medicare premiums and out-of-pocket expenses.
  • Living expenses after age 65 (pay ordinary income taxes).

What Investments are Prohibited with an HSA?

The Internal Revenue Code does not describe what a Self-Directed IRA or Solo 401(k) Plan can invest in, only what it cannot invest in. Internal Revenue Code Sections 408 & 4975 prohibits Disqualified Persons from engaging in certain type of transactions. The purpose of these rules is to encourage the use of retirement accounts for accumulation of retirement savings and to prohibit those in control of retirement accounts from taking advantage of the tax benefits for their personal account.

In general, as long as one does not use the Health Savings Account funds to buy life insurance, collectibles, or engage in any transaction that directly or indirectly involves or benefits a disqualified person, the transaction will not violate the IRS prohibited transaction rules.

Can I get Checkbook Control with an HSA?

Yes. With a “Checkbook Control” Self-Directed HSA, the HSA holder (you) will have total control over your HSA funds and you will no longer have to get each investment approved by the custodian of your account like in a custodian controlled Self-Directed HSA. Instead, all decisions are truly yours. When you find an investment that you want to make with your HSA funds, simply write a check or wire the funds straight from your Self-Directed HSA LLC bank account to make the investment.

Under the checkbook control format, the Health Savings Account is set up as a self-directed account that’s capitalized by funds that roll over from your current retirement account. Then, a LLC is created. Your new HSA purchases all the membership units/interests. Now, your money is in an LLC and you are ready to invest at your discretion. A “Checkbook Control” Self-Directed HSA allows you to eliminate the delays that come with an HSA custodian, enabling you to act quickly when the right investment opportunity presents itself.

With a Self-Directed Health Savings Account, when you find an investment that you want to make with your funds, simply write a check or wire the funds straight from your Self-Directed HSA LLC bank account to make the investment.

For more information, contact us @ 800.472.1043


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