We chat Good Cents with Colin Anawaty, First Dollar's Co-Founder & CPO Colin Anwaty, and learn how he optimizes his HSA to save on healthcare for his family.
Name: Colin Anawaty
Industry: Healthcare & Financial Technology
Age: 39 forever
HSA Type (Individual, Family): Family
I’m a native Texan with a family of six if you include our 3 dogs. For the last 20 years, I’ve dedicated my career to being anywhere technology is acting as a disruptive force from the early days of the web and eCommerce, to online education, to video games, to where I am now which is a foot in healthcare and a foot in finance.
Admittedly, I feel like I’ve been on the lucky side of having good health. My chronic conditions are fairly common so in our case the HDHP still works out because HDHP still includes coverage for preventive care like PCP visits, my prescription is generic and I cash-pay to get steep discounts, and thyroid labs are fairly cheap. I often just pay for expenses on my AMEX and then shoebox the receipt for withdrawal from my HSA later so my investments can continue to grow. So, we almost never hit our deductible because of that – except the time we had a baby!
I try to avoid being dogmatic about any one thing in life so we do a bit of everything in our HSA. We save, we spend, and we invest – all tax-free. That’s also what makes it the perfect vehicle for young people to begin investing for the future because you have optionality with your money, unlike 401Ks or IRAs.
My dentist surprised me when he told me to consider Invisalign to fix an issue from having braces as a child. And after two shoulder dislocations, my physical therapist recommended the Theragun. Both were items I was able to save more than 35% off by effectively paying for them with pre-tax HSA dollars.
Our goal is to max out our HSA accounts first because we have the freedom to spend it at any age on our family’s health if we had an emergency. IRAs and 401Ks don’t let you do that without a significant penalty and so a lot of young people avoid investing out of fear of needing the money. But at 39, 32, 1.5 years old respectively, our family has a long road ahead before the magic age of 65.
We spent some of our HSA on things for our first baby but provided we stay healthy, then the money we save and invest will continue to grow tax-free until retirement at which point the HSA doubles as another IRA in your portfolio. So, if technology and science cure most of our issues over the next 20 years, then the money we’ve invested in our HSA can be used on our dream retirement home without penalty. It’s truly the best benefit for affording healthcare costs now and tomorrow that remains limited by an antiquated definition of “HDHP” from 10 years ago.
We max out our HSA every year with pre-tax payroll contributions and then I self-manage our other retirement accounts which is a portfolio of real estate and a handful of popular equity ETFs, and then my higher-risk angel investments from a self-directed IRA.
I feel taking the time to learn about the HSA will give you more confidence overall in how you approach retirement planning at a young age. The HSA is the only multi-purpose account that meets the needs of increasing costs of healthcare today – you can spend on health and wellness tax-free – while providing an easy path to investing that’s also tax-free.
In 2020, the CARES Act expanded the list of eligible tax-free expenses to include OTC medication and feminine products in addition to 30,000 other items and services. It’s like walking into your favorite health & wellness store and most everything is 20-38% cheaper depending on your tax bracket. That’s huge savings that you won’t “see” at the cash register but is realized through the spending power of using pre-tax dollars.