With the rising costs of healthcare and insurance premiums, many are electing to open a Health Savings Account (HSA), a smart financial move for those with high-deductible health plans. HSAs allow individuals to save money, tax-free, for out-of-pocket medical expenses.
Trying to decide if an HSA is right for you? Here are six benefits that current HSA users enjoy!
1. Money in Your Pocket
If you’ve chosen a health insurance plan with a higher deductible (the amount you pay for covered health care services before your insurance begins to pay), then you typically pay a much lower premium than other health plans. By electing for the high deductible, you can put some of that hard-earned money (tax-free) into your HSA to cover your out-of-pocket medical expenses.
2. Triple-Tax Savings
When you take advantage of an HSA, you are also taking advantage of three great tax benefits!
1. Pre-Tax Contributions – To prepare for out-of-pocket medical expenses, many individuals will make automatic contributions (deposits) into their HSA’s from their paychecks with pre-taxed dollars, giving you greater spending power on life’s unexpected turns.
2. Tax-Free Earnings – Since you only tap into your HSA when it’s needed, you can watch your money earn interest– tax-free! This means more money in your pocket for when you need it.
3. Tax-Free Withdrawals – Unlike a 401(k) or an IRA, when you withdraw money from your HSA to use toward medical expenses, you can rest easy knowing you will not be taxed when doing so.
3. HSA Funds Roll Over
Unlike funds in a Flexible Spending Account, which must be used within a certain time frame or forfeited, you can have peace of mind knowing the funds in your HSA are available when you’re ready to use them.
Funds in your account can be used to pay for a wide-range of medical, dental and vision expenses, or you can choose to keep the money in the account to grow for planned or unplanned future medical expenses. The decision-making is all yours!
5. Your HSA Goes Where You Go
If you find yourself transitioning jobs, the funds in your account will still be available to be used for qualified expenses if you change health insurance plans. You can even move your Health Savings Account from one financial institution to another.
6. Easy access
Using your Health Savings Account is easy. The best HSAs will come with a debit card and/or checks (your choice) so you can pay for eligible expenses on-the-spot or online.
Health Savings Accounts offer many advantages, and can have a big impact on your health and your financial well-being. Educating yourself is the best way to prepare when opting into a health insurance plan to discover all the ways you can keep more money in your pocket. Health is wealth and having a plan for expected and unexpected medical expenses gives you the advantage!