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Hi, I'm Kevin.

Hi, I'm Kevin. I write a free newsletter about money for 904 other Millennial parents. We talk about how to turn your money into memories.

No One Taught You to Use an HSA

Financially Well

February 28, 2024

A tax-free investment is like a deep breath on a stressful day.

Among your investment options, HSAs – Health Savings Accounts – are that full exhale and inhale. For HSAs, the IRS offers you tax benefits at three different stages. Less expansive investment accounts, like your 401(k) or IRA, can’t make such a claim.

But you’re probably not making the most of your HSA. Most likely, your approach is too narrow.

And most likely, no one ever taught you to do otherwise.

In his book, Breath, James Nestor describes how no one ever taught us how to breathe properly.

Centuries ago, our ancestors breathed easily. They had enormous forward-facing jaws, expansive sinus cavities, broad mouths. They even had straight teeth, with no orthodontist bills in sight.

Nestor writes that this “ability to breathe so efficiently in a wide variety of ways – consciously and unconsciously; fast, slow, and not at all – allowed our mammal ancestors to catch prey, escape predators, and adapt to different environments.”

Our efficient, expansive breath powered human evolution.

But as our brains developed, taking up more space, our airways became narrower. Our approach to breathing became flawed. And rarely did anyone have the awareness to teach us differently.

Narrowness emerged as an adversary to our health.

And to compensate for narrow nasal passages, humans began to rely on mouth breathing. The change made congestion more prevalent. From there, Nestor says, the problem compounded:

“When the nasal cavity gets congested, airflow decreases and bacteria flourish. These bacteria replicate and can lead to infections and colds and more congestion. Congestion begets congestion, which gives us no other option but to habitually breathe from the mouth.”

Later, he adds:

“Mouth breathing, it turns out, changes the physical body and transforms airways, all for the worse. Inhaling air through the mouth decreases pressure, which causes the soft tissues in the back of the mouth to become loose and flex inward, creating less space and making breathing more difficult. Mouth breathing begets more mouth breathing.”

Almost no one teaches us this about breathing.

Narrowness now plagues our experience with HSAs.

Many people (understandably) confuse HSAs with FSAs, or Flexible Spending Accounts. FSAs provide value, but only in the current year. You get an income tax break during the year you contribute to the account.

FSAs function like a short-term savings account. You must spend those dollars on qualifying purchases during that same year. When you don’t, you lose the funds. This isn’t true for HSAs.

Yet, almost no one teaches us this.

Expansive breath depends on nasal breathing.

Nasal breathing, James Nestor writes, “forces air against all those flabby tissues at the back of the throat, making the airways wider and breathing easier. After a while, these tissues and muscles get ‘toned’ to stay in this ‘opened and wide position.'”

Expansive financial stability depends on investing.

HSAs function like long-term investment accounts. You still get an income tax break during the year you contribute. But you don’t need to spend those dollars in the short-term.

Instead, you can invest your HSA contributions. And when you do, you avoid taxes on both future investment gains and the withdrawals. Your only task is to spend the funds on qualified health care expenses. Ideally, you wait to do so until later in life, maximizing the potential growth in the account.

Nasal breathing begets more nasal breathing. Investing your HSA funds begets more HSA funds. But these opportunities demand awareness, intentionality, and patience.

At least now we know.