The Benefits of a Health Savings Account
The benefits of health savings accounts are numerous. One of these accounts is tax-deferred, meaning that contributions are pre-tax and the money grows tax-free. The other great thing about HSAs is that you can use the funds to pay for qualified medical expenses in the future, such as high-deductible health plans. For more information about the benefits of HSAs, read the following article. Then, decide whether they are right for you.
A HSA is a tax-free nest egg for health care expenses. Funds are invested in mutual funds, which can be used for a variety of expenses, including dental care, vision care, and prescription drugs. The money in an HSA stays in the account owner’s name, making it easy to access and use when needed. However, some HSAs can only be used for out-of-pocket health expenses, while others allow contributions to be invested in other types of investments.
Another advantage of a Health Savings Account is the ability to make pre-tax contributions and grow their earnings tax-free, while receiving tax-free distributions for qualified medical expenses. In addition, you can use these funds for any type of health expenses once you turn 65, and the funds in the account will be tax-free. Finally, unlike a 401(k), HSAs don’t pay ordinary income taxes. HealthEquity Advisors has two powerful advisory tools.
If you don’t have health insurance, consider using a health savings account (HSA). This type of account is tax-deferred. The money contributed to an HSA is not taxed, and if you have a CDHP, the employer will make a monthly contribution for you. With an HSA, you can use the money to pay for qualified medical expenses, such as deductibles and copays, as well as services not covered by your health insurance. Your HSA can include the spouse and other tax dependents.
The most obvious advantage of an HSA is its tax benefits. The money you invest in your HSA grows tax-free, making it a great option for retirement savings. Most HSAs are linked with a high-deductible health plan, which makes it more flexible. Many companies are now offering high-deductible plans with HSAs as a part of their benefits. It is not surprising to see the increase in their use as a retirement vehicle.
Another benefit of HSAs is its portability. You can use your HSA to pay for qualified medical expenses, including those for dependents and for yourself. The good news is that you can use HSA funds for medical expenses after retirement. As long as you pay your premiums for qualified medical expenses, your HSA funds can go a long way. In other words, HSA funds are tax-deductible.
Another advantage of an HSA is that contributions are tax-deferred. While many people choose to have their contributions deducted from their paycheck, others make one-time contributions. Employer-sponsored healthcare plans can deduct contributions pre-tax, while private health insurance plans offer tax-deductible contributions. Contribution limits to HSAs are set by the Internal Revenue Service each year. For individual and family accounts, the annual contribution limit is $3,550 for individuals and $7200 for families.