Do you have any idea how much money has been deducted from your paychecks to help pay for your health insurance through your lifetime? What does your bank account have to show for it today? If you would prefer to keep a big chunk of that money for yourself to spend on health expenses or save it for the future, then you need to look into a Health Savings Account.
Do you have any idea how much money has been deducted from your paychecks to help pay for your health insurance through your lifetime? What does your bank account have to show for it today? If you would prefer to keep a big chunk of that money for yourself to spend on health expenses or save it for the future, then you need to look into a Health Savings Account.
HSAs can save you money on your medical care now, as well as provide an excellent way to save for future medical expenses. HSA funds can pay for expenses before you meet your deductible as well as help pay for services not covered by your health plan, COBRA coverage during periods of unemployment, medical expenses after retirement and long-term care expenses, to name a few.
Even if you get your high-deductible health plan or your HSA account through your employer, you own your account. You decide how much to contribute, how much of the account to use for medical expenses, and which medical expenses to pay from your account. You also choose whether to pay for medical expenses from the account or save it for future use. Even if you change jobs, your Health Savings Account is still yours.
You can keep the account even if you move to another state, and you can continue to keep it as you grow older. Regardless of where you get your health insurance plan, whether on your own or through your employer, your Health Savings Account funds are yours.
Money deposited into the account is 100% tax deductible (just like a traditional IRA) and can be easily accessed by check or debit card to pay most medical bills with tax-free money (even things not covered by insurance like dental and vision). What you don’t use for medical bills is yours to keep. Unlike other types of accounts, HSAs are not set up so you have to “use it or lose it.” You don’t lose your HSA funds at the end of the year – those funds stay in your account and keep growing on a tax-favored basis to cover future medical bills or to supplement retirement.
With traditional IRAs, you’re taxed on your money when you withdraw it. With Roth IRAs, you’re taxed on your money before you deposit it. With HSAs, provided you spend the money on qualified health expenses, that money is never taxed.
To sum up, the health savings account plan may offer:
- Lower premiums
- Lower taxes
- Freedom of choice
- More cash at retirement.
