In May 2017, the Federal Reserve published that 44% of Americans would not be able to pay a $400 unexpected medical bill. Anne Marie Hollands from Quest IRA talks about the basics of Health Savings Accounts and how you can take advantage of it for unexpected medical expenses. Anne Marie explains basically the HSA works as a plan where you can pay for your medical expenses tax-free. In order to qualify for it, you have to have a high deductible health plan which has to be HSA compatible. Find out what HSA plans you qualify or don’t qualify for, the health coverage you can structure, the contribution limits, and everything else the HSA has to offer so you can properly take advantage of its benefits.
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Health Savings Accounts with Anne Marie Hollonds from Quest IRA
One of the great things about doing this show is that you love having people on a regular basis who provide a ton of great content. People that have a great big heart for helping their clients and those out there. We are always honored to have Quest IRA. We’ve got the smart, intelligent, beautiful Anne Marie Hollonds from Quest IRA joining us to talk about a little bit about their upcoming schedule and also the power of HSA. Welcome, Anne Marie.
Thank you for that nice introduction.
Glad to have you on here. It’s been few weeks since I’ve been out gallivanting across the globe, but excited to have you back on here. Let’s start it off with going through Quest IRA is because we do have some new readers. Let’s talk about who Quest IRA is and we’ll go from there.
Quest IRA is a self-directed IRA provider. What that means is that we provide you a retirement account, just like a mainstream company would, like a Charles Schwab or an Edward Jones. We provide you the exact same type of accounts with all the great tax benefits except that it’s completely self-directed. You’re the one choosing the investment and it’s into all types of private assets. With the Charles Schwab, the more mainstream companies, your options are all in the publicly traded space. That’s the thing that you hear most Americans doing, it’s the stock market, mutual funds, annuities, CDs, bonds.
Whereas at Quest, same types of accounts with all those tax benefits that everybody knows about except that it’s all private. It can be real estate, and that’s anything from wholesaling a property, buying commercial properties, residential, notes. Things like private companies as well. Some of those are doing real estate types of deals and then you can do off the wall thing. One of the ones that we like to talk about because it’s unusual is we have a client that invests in a company that produces toy pop bottles. Self-directed IRAs are taking your knowledge, what you know about your expertise, and finding your own field to benefit your retirement.
That’s a great mention that you do a lot of creative things there. There are only a few things you can’t do with self-directed IRA or self-directed accounts. What are some of those things? Collectibles is one of those things or collecting wine or something like that, even though you want to drink up the profits, but that’s okay. You can invest in a winery business with your IRA, but you could buy collectibles of wine collection?
Basically, the things that you can’t do with an IRA is you can invest in life insurance and you can invest in a collectible. With a piece of real estate, for example, you can get an appraisal. We know how much that property or that land is valued at. If we’re talking about wine or we’re talking about art or jems, things like that, it’s more of an opinion-based thing, so they don’t let you invest in that.
You do a tremendous amount of education. That’s why you were the industry leader in what you guys do, not only here in Texas, but all across the country. Why don’t you share a lineup that you guys have as far as events. What’s on tap with Quest IRA?
We do about 650 across the United States. The bulk of them that we throw are down in Texas because that’s where we’re based. Our offices are in Houston, Austin, and Dallas. That’s where the bulk of the events are. At the end of the month, we have the Dallas Trillion Dollar Mixer going on. We’ll have our third ever Trillion Dollar Mixer in our Houston territory and we will have the one and only Scott Carson.
I’m excited to be speaking there. It’s been a while since I spoke in Houston. Houston is our largest demographic market, our number one market across the country based on note investors and real estate investors for us. I’m going to do something a little bit different this time around than what I usually do with the three S in investing. I’m going to do something a little bit different because Houston has a pretty educated crowd. You’ve got something big going on. It’s your biggest event you’re hoping for the year. Let’s talk a little about that.
Our big event that you’re talking about is our big trade show, the Quest Expo. We’re having it in Dallas. We’re experienced at doing events, whether they’re ones that were just flying, attending and being a speaker at or we’re holding our own. It’s a natural progression after a trade show that we went to last time. We’re like, “We can totally do this. Why aren’t we doing that?” Certainly self-directed IRA companies out there that are putting on events, but there are not a whole bunch of self-directed companies that are putting on a big trade show. We decided that we would take the plunge. We’ll be the first ever company to do a big trade show that’s self-directed in Dallas.
It’s more on a national scale. We’re expecting about 500 attendees. We’re seeing people sign up that are not just coming from Dallas or coming from Texas. They’re coming from all over the United States. It’s because we’ve got many speakers. We have more than 30 speakers from all over the country coming. We got word from the Westin because we’ve had so much feedback from potential sponsors. We had to turn people away. We hit 32. We heard from the Westin to say that we got additional space. We’re hoping to bring down more sponsors so that people can get more exposure to all these great companies and the education that they provide. We’re hoping to even expand it further. It’s a whole weekend. We’re jam packed. It’s 9:00 AM to 7:00 PM both days. We’ll have plenty of snacks, drinks, and all that good stuff.
We are excited to be a part of this that we tweaked up our Mastermind and moved our Mastermind to the Thursday, Friday before at the same hotel. We got our own room blocked for that. Our Mastermind members, when I brought it up at our last event here in Cape Coral, they were like, “Yes, let’s do it. Let’s pack it up that way I go and buy one round of tickets in and out. Hang out with 500 plus real estate, note investors or private investors is phenomenal besides being in a course or a note mastermind.”
If you go to QuestExpo.com, you’ll be able to register. You’ll be able to check out some of the panels, all of our great sponsors, get a feel for the event. You’ll see on there that there are different ticket options. They’re pretty reasonably priced for the huge amount of education and all the great things that come with it. It’s $150 for general admission and $350 for VIP, which, in my mind, is a better deal. If you’re going to head out there, if you’re going to take the time from your weekend and go out there, you want to do the one that’s going to give you the best value. That one’s great because they’ll get a nice plated lunch both days. It’s nice not to be running around with your hour break. They get special presentation that nobody else except the VIPs will get access to. They also get a recording of the event, which is great to go back and reference, to take notes and all of that. There’s a whole bunch of other things if you go to QuestExpo.com.
If you’re reading this on our blog, we’ve got a code for you. You can still go to QuestExpo.com and use the code WCNEXPO and it’ll get you 25% off discount towards it. You’ve got myself and Eddie Speed. Who else do you have coming in that’s going to be speaking there?
A lot of people think self-directed IRAs and they may think real estate, but the most prominent investment that we hold is notes. We’re going to be highlighting that. We’ll highlight other things. We’ll talk about IRAs, we’ll talk about multifamily, flipping or holding properties, how to find deals, technology, we’ll talk about everything, but we are going to be focusing a lot on notes. We’ve got Scott, Eddie Speed, Bob Zachmeier, we have the Note Queen, Dawn Rickabaugh. We’ve got a good group. I’m probably missing some people because that’s one of our biggest panels. We have something for everyone. A lot of people in the note space are more advanced, so we’ll have definitely some advanced education. We’re trying to attract new people too, so we’ll even talk about things like technology you need to know about, how to find better deals, some of those important things as well. We’ll have something for everybody.
Besides having a trade show where you’ve got sponsors there and you got great all cast of speakers, it’s also the networking. That’s the big thing you have to realize. You could literally go into this event and we have a ton of people and secure all the private funding that you need for the next year or forever for your business. When I talked with Jason Bible, Jason’s going to be speaking there too from Right Path Real Estate. All you need somewhere between twenty and 40 people to help you fund all your transactions going forward. That’s the thing whether you want to leave your job, still working full time or want to do something. That’s a drop in the bucket of the people that are going to be at the Quest Expo at the Westin Galleria in Dallas.
The cool thing about the Expo is a lot of times at events, it’s the people doing the keynote presentations, sometimes you come away from it and like, “It’s great education but I didn’t understand something, or I need more information on that.” The cool thing about the Expo is we’re going to have some keynote speakers. We’ve picked some of our favorite people and you’re doing one. Jason Bible is going to be doing one, and a whole bunch of other people. The great thing is for all of those different things that I talked about, notes, multifamily, how to find deals, we have those structured at panels. We’ll certainly have questions that we will give to the panelists. We’re going to have mics set up, so if you have questions, what other time would you be able to ask all these real estate, all these note types of gurus from all over the country to ask them your question? Definitely we’re trying to make it different and fun from all the other trade shows.
Get marked down on your calendars and get scheduled, RSVP now so you can take advantage of this special discounts and the room blocks and start planning your domination of the event. That’s what you want to do. Go into that event and dominate the rest of your year. We’re also here to talk about a special little subject like we always do. We’d gone through a variety of different topics. Tax advantages, educational savings accounts, we talked a little bit last time. This time, we want to talk about health savings account or HSAs.
I see statistics online all the time because we’re doing research and staying abreast of everything. We do offer HSAs, and I saw a statistic that was scary. It was from May 2017 that the Federal Reserve published, but it said that 44% of Americans would not be able to pay a $400 unexpected medical bill. I found that to be shocking and because of all of that, we wanted to do a revamped HSA class. That’s a scary statistic.
$400 isn’t much. That’s the thing to keep in mind. Everybody gets used to being budget mindset of living paycheck to paycheck, which is unfortunate. There was an article out last time that we shared about how if people aren’t making at least $20 an hour. They’re below the poverty line here. They can’t afford to live here in Texas and it’s scary across the country where the number had to be roughly $15 on a minimum or $32 an hour if you’re living in California or those places. A $400 bill, let’s talk about that. That could be going for emergency, fever, kids, sprained ankle, busted bone. A broken bone will be a whole lot more than a sprained ankle.
$400 when we’re talking about medical expenses, that’s not going to get you too far. The average ambulance bill is about $1,000.
There are some specifications for having an HSA and things that you can use for it and things you can’t use for it. Let’s talk about the basics of HSA. Share with us first and we’ll go from there.
The HSA works as a plan where you can pay for your medical expenses tax-free. In order to qualify for it, you have to have a high deductible health plan, has to be HSA compatible. If you’re wondering if you do have that, it’s not necessarily based on the exact number. You’ll have to call your health provider and say, “Do I have the type of high deductible plan that is HSA qualified?” What it’s saying is you’re going to usually have lower monthly premium. You’re going to have a higher deductible. You’re essentially offsetting it because all that money that’s going in there in your HSA, you’re doing assessments, you’re making profit. That’s all going in there tax-free.
When it is time to go to the doctor, you break a bone, you have a surgery, whatever it may be, you can start taking those tax-free withdrawals for all of that. Definitely a powerful account. Other big qualifiers that you can’t be enrolled in Medicare. If you’re over the age of 55, generally that won’t work for you. As far as for the younger people in our audience, you can’t be claimed as a dependent on someone’s taxes, but you can have a dependent. If you got kids, you’re claiming them, that’s fine. You can cover them on your HSA. If you’re a little bit younger, you’re still being claimed by your parents. You can’t have your own HSA.
Nathan told me that you can have one HSA for a household with kids. As long as they’re not claimed on their insurance or non-Medicaid, they can all be on that one HSA in the household?
Yes. It depends on the way your health coverage will be structured. If it was you and your spouse are both covered by your work on different plans that the other one would not be on for example, then you would have a single HSA. Where if it was a full family type of plan, that you’re going to have a family account but everyone would be covered and there’s different contribution limits for those.
What’s the contribution limits? What are the bits that people can contribute to on an annual basis?
If it’s not a family plan, it’s going to be significantly lower. Whereas if it’s a family plan, it’s quite high, it’s $6,900 for a family plan. If you’re over the age of 55 you get an extra $1,000, just a nice little incentive there. I believe the number for the single is $3,450.
It’s $3,450 for an individual, $6,900 roughly if you’re a family, extra $1,000 kicker if you’re over 55 but not on Medicare already. To do that, you’ve got to have a qualified high deductible insurance plan as well, make sure that it’s eligible for that. Let’s talk about how it works because it’s a little bit different than a traditional IRA. People put their money in and it’s pre-tax or post-tax dollar.
Usually when you’re making a contribution, you get to take a tax deduction. Internally, we call it the best of both worlds with the HSA because they’re getting those benefits of the traditional IRA. Once you’re doing your deal, you’re making your profit, whether that be publicly traded, whether you’re doing stock or whether you’re self-directing it and putting it in something like notes, real estate, something like that, all your profits are growing in their tax-free. As long as you’re taking your distributions for something that’s a qualified medical expense that is all going to come out tax-free. If you could buy a television with it, you can do that, but you’re going to be severely penalized.
Let’s say I drop my $3,400 into it for the year. I use it in an option or I buy a note, the investment pays an HSA of say $5,000. My $3,400 is now $8,400 on a profit side or roughly use those numbers. I can use that $8,000 to pay off medical expenses, as long as I keep the receipts?
Yes, exactly. There’s not necessarily a timeframe that you have to do it. For example, let’s say I set up the HSA and I made a contribution in there. Later on, I needed to have a surgery a few months later. My HSA didn’t have enough money for me to do that. I can hold onto that receipt for the surgery and over the course of the next two to three years, I’ll say I do some of the deals and I now have that money in there. Now I’m able to go ahead and take that distribution from my HSA. You can keep holding onto those until you can pay for those sorts of items.
Basically reimbursing yourself tax-free without being penalized, like a 20% withdrawal like you would on a traditional IRA?
Exactly. Nathan has this funny story. He’s like, “Does anyone want to know how I bought an airplane engine with my HSA?” He’s like, “You might not want to buy an airplane engine.” He wants to fly and that’s his hobby. He was telling the story previously to his ex-wife. She needed to have some type of dental work and it was exactly the scenario I said. They have the HSA, but they didn’t have to full amount in there to pay for that. They paid for an out of pocket and kept the receipt. Nathan was able to invest the HSA, get a whole bunch of profit in there and he was able to take the distribution for the amount of that dental work that his wife needed to have. That has already been long paid for from their personal money. He was essentially getting this reimbursement and have all this money that he could use for fun now. On paper and formulated governmental standpoint, we’re using it for the dental work. In reality, you could be using it for whatever. He bought an airplane engine but insert whatever nice toy that you want.
He bought the airplane engine with the proceeds from his HSA because he had an investment that paid off, substituted, let’s say $5,000 in dental bills, used the receipts, get reimbursed back then pay engine off of that. Can they set up an HSA now even if they don’t have their high insurance deductible plan? Do they need to have that insurance plan in place if they’re working with somebody before they set up an HSA?
We definitely encourage you to already have it set up, but you can technically set up the HSA. It would be that you wouldn’t be able to make contributions, things like that. If you’re going to be changing your plan or something like that, you could definitely get set up with us just to have it in place. We have a promotion where you can set up unlimited accounts for $100. Each account you established for yourself and your family counts as an entry to win a free trip to that trade show or Quest Expo. Nice little incentive there but if you’re going to be changing, you can definitely get it set up but you want to make sure that you have that high deductible plan when you’re making a contribution.
You’ve got to have the plan for that before you can make a contribution. You go ahead and open the account, especially if you’re starting a new job and you get a 90 day window before you get the insurance kicking in with your job but set it up, get it going then put the money in. As you have expenses up to a few years out, you then save that kind as you’re lucky lottery ticket in case you need to pull some money out of it, tax-free, to pay off a trip, travel, whatever you need to do as long as you’ve got the expense and the receipts from that to help out.
It’s pretty broad. We talked about if you need to get dental work done. You can get surgery, if you need medicine. You can get contacts or glasses from it. It’s definitely the everyday that you would need, but it even goes into things that you might not be thinking of. In your old age, you have a nurse that you need to come out as a caretaker. You can have those sorts of things. We had an employee that worked at Quest that had back issues and they got a note from their doctor saying medically that they needed to be in a hot tub, essentially for their back issues. They were looking for a hot tub at their house, tax-free massages, all the holistic type of medicine. It’s very broad. Even if you’re young, even if you don’t have health problems, as you start aging, even past 65, you can still use the plan. You wouldn’t be able to set it up past that age. If you’re in your 80s, 90s and you start running into these medical expenses, you’ve got that nested there, tax-free.
Using the proceeds of what you’ve contribute to it on an annual to help you grow your nest. Another valuable tool you want to have on your IRA tool belt. There’s another pot or a bucket that Nathan likes to talk about, different buckets to put your money into that you can use for different tools.
If you’re freeing up that money that you would have been otherwise using, the money that you’re being taxed on, the money that you’re earning from your job, you’re freeing that money up to do other things with it. By having this HSA, you don’t have to be worrying from the money that you’re making, “How am I going to save that up?” You’ve got this HSA. Definitely an account that everyone needs and a lot of employers are starting to move to that as an option. The cool thing about HSAs is you can make the contribution then as your employer as well, which is helpful. Quest is great. We do, as employees, have it. I use mine all the time. Every year when I need to go to the eye doctor, I’m able to pay for it all tax-free. It’s convenient and easy for all the basic things, all the way up to the larger scale medical stuff.
We’ve got a question here, “If you have a qualified insurance plan when you open an HSA, and then several years later you moved to a non-qualifying nonqualified plan, does your HSA become disqualified or can you continue to invest and grow it?”
You can no longer make contributions to it, but you can certainly still have the HSA. You can maintain the investments that are in there. If you find a new deal, you can certainly wrap it into that and would not be able to make those additional contributions in it.
Say you worked for three years, you dropped your $3,400 in there, it’s almost $10,000 over those three years and then changed to it. It doesn’t get disqualified. You just can’t contribute anything more until you get another high qualified insurance plan. That roughly $10,000 you contributed, you could still use that to invest options, notes, lending, whatever you need to grow. We have a question here, “If your dental and your medical isn’t covered under your insurance, can you still use this HSA to refund back your expenses from those things that aren’t covered by your medical plan?”
Yes, you can definitely do that. The one thing I will mention is you can’t pay like your insurance premium. You can’t pay that from the HSA unfortunately, but certainly if there are medical expenses that are not covered by the health plan, you could definitely pay for those from the HSA. The cool thing about it too, a lot of times people are familiar SSAs, a lot of employers have that. Some people will get them confused, but SSAs is use it or lose it. At the end of the year, you got extra money in there, it’s gone. The HSA never goes away. As long as you can keep investments in there and keep it growing, you’ll be able to use it for life.
You want to use it or lose it, you want to have it there and use it as long. If it’s $3,400 a year for an individual, it’s just over $250 a month. When you think about that, $125 a pay period roughly put it in there. If you’re looking at a family plan at $6,900 you said roughly, it’s about $500 a month, which is a pretty good chunk there for you. It’s important guys because we all know as you get older you’re going to have more medical bills. You’re not going to be the indestructible person that you once thought you were. All sorts of stuff creep up when you end up getting older. When you hit that 40 or 50, you definitely start seeing more things happen. This is a good question, “If I have an autistic child, can I use it for cost that my insurance doesn’t cover anymore for my autistic child, like for rehab?” Do you know by any chance?
I don’t know, but if I had to guess based on some of the other things relating to the education savings account, for that one, similar style. You’re using the money in their top three for educational expenses, but once the individual would get to the age of 30, they can no longer have that plan. However, if it is special needs, learning disabilities, anything like that, there are special provisions in there but they’re able to use it for the rest of their life. I’m not 100% sure. If you do want to do a little bit of research, there are IRS publications about all of these sorts of things. The two to check out are 969 and 502. One of those is going to give all the rules, that’s probably where you would find that. The other one, it lists in alphabetical order all of the medical expenses that are covered in there and all the ones that are not. Definitely check those out, 969, 502. That’ll give you the scoop. If I had to guess, I would say yes, there would be provisions but I’m not 100% sure.
Yes, two different publications.
Do you know the average age of an HSA holder that you have their request by any chance?
I don’t. We see a lot of younger people setting up HSAs too. You would think it would be people that are a little bit older, but it seems that people are trying to be more proactive about it. I was reading on USA Today when they had an article on there and it said that the number one reason why Americans go bankrupt is medical expenses that they cannot pay. By educating people, sharing these types of statistics, we’re not trying to scare people but it’s a reality that we’re seeing out there. If you’re proactive, if you’re taking the steps to make the contributions and set up an HSA when you’re in your twenties, by the time you’re starting to have kids, by the time you’re getting into older age, you will have money in there and you can partner it with your own account.
If you’re like, “I don’t have that much money in there. How can I realistically do a deal? You could be partnering it with your own account. You can transfer one time in your life money from a traditional IRA into an HSA. If you’ve already got a traditional, you don’t have extra money to make that contribution into your HSA, one time in your life up to the max your contribution limits, you can transfer that money over into the HSA and set it up. Definitely the government is trying to incentivize you to be saving, to be proactive, if that does happen.
They don’t want to pay the medical bills long-term for us old folks when we get older. How hard is it to set up an account? You guys are awesome about having auto fill documents where they can download it and it’s like DocuSign to get things set up.
We make it easy. If you go to our website QuestIRA.com, if you click on open an account or go to download forms, either option, you’ll find all the forms on there. You can do it online. If your old school, if you want to print it off, make your notes, review it with spouse and all that, you can definitely print out the PDF and email it into our new accounts department. It’s simple. Usually it’s $100 per account, but right now it’s $100 for unlimited. If you’re thinking about getting set up, it’s a good time. You could also win that trip to the Expo and it only takes 24 hours. We’re fast.
If they have a question about their insurance plan, they should not call you guys regardless. You should call their provider, correct?
Yes, we’d love for you to call us and give us the scoop, but we can’t look at your plan with you and let you know. The important thing is there are two ways you can look at a statement. Oftentimes it’ll say HPHP on your statement, so that would be your first tip. If you look at your statement and you’re not sure, you can’t tell, give your health insurance provider a call and ask them, “Do I have a high deductible health plan that’s HSA qualified?” and they’ll let you know.
We have a question, “If you find that you inadvertently contributed more than the annual amount allowed, can you request a refund of the excess contributions prior to having to pay the 6% excise tax on the excess contributions?”
Here is how it works. Yes, if you make an excess contribution to your IRA, it takes 6% penalty. You have a couple different options. If you catch it and realized before the tax filing deadline, you can take it out and then you won’t be penalized. That’s the easiest solution. If you don’t realize that, obviously you’re going to have that 6% excess penalty on there. However, if for the following year it offsets itself, the amount, you can use that towards next year’s contribution essentially as long as you could make that and have your high deductible plan and all of that. You’ll be good to go and you won’t have it if it’s not in excess the second year. Ideally, you’ll catch it before the tax filing, but if not, 6% not profitable, but it’s not the worst.
You can transfer it out to next year’s contributions or move it out to a different account would probably be the easiest thing to do. Let’s do a quick recap. We’ve got the Quest Trillion Dollar Mixture taking place here in Houston, Texas at the offices. We’ve got the Quest Expo taking place up in Dallas at the Westin. You can use the code WCNCREW to get 25% off. We’ll be running a great special, open all the accounts you want for $100. As always, I want to thank you for joining us here on The Note Closers Show.
Go to Quest IRA. Check out and get their accounts open that you need to get opened up there. Check out the Quest Expo at QuestExpo.com and take advantage of those specials to save you a discount on either of the general admission or the VIP tickets. Trust me, grab the VIP. You’ll love it. They’re doing lunches for the VIPs both days. That’s two full days, 9:00 AM to 7:00 PM. You want to have a VIP attitude while you’re there. Other than that, we’ll see you all at the top. Have a great day.
- Quest IRA
- Anne Marie Hollonds
- Trillion Dollar Mixer
- Eddie Speed
- Bob Zachmeier
- Dawn Rickabaugh
- Right Path Real Estate
- Form 969
- Form 502
About Anne Marie Hollonds
Anne Marie Hollonds is a Marketing Director at Quest IRA, the premier Self-Directed IRA company. After graduating from St. Edward’s University in Austin, Texas, Anne Marie joined Quest IRA as an IRA Specialist. In 2014, Anne Marie received the designation of Certified IRA Services Professional from the Institute of Certified Bankers, making her one of the youngest CISPs in the United States. Anne Marie regularly attends conferences, workshops and does local radio interviews, where she publicly speaks about the benefits of self-direction.