Health Spending Accounts are known for offering three major tax advantages. The contributions are made pre-tax, the growth is tax-free, and all qualified withdrawals used for healthcare expenses are untaxed as well. But that is only the tip of the iceberg when it comes to the advantages they offer.
On top of typical medical expenses, your HSA funds can be applied towards the cost of dental expenses, eyeglasses, and even contact lenses. You are eligible for travel reimbursements for mileage to doctors’ visits and even lodging if you are traveling out of state.
Typically, HSA accounts have no minimum deposit required and they allow you to invest your funds into the stock and bond market. Unlike a flexible spending account, you can change the amount of money differed into the account at any point and the funds will continue to roll over year over year.
The HSA funds not only benefit you, but they could benefit your family too. Any qualified medical expense for your spouse or dependent children can be paid, even if they’re not on your health care plan. HSA plans are completely separate from your insurance, so if you were to leave your job or change providers the account is portable.
The funds from your HSA can be withdrawn with no penalty when you turn 65. You do still have to pay taxes at your normal income rate which makes it very similar to other tax advantage retirement accounts. Unlike other retirement accounts, an HSA is not subject to required minimum distributions. Those who are 72 or older will not be forced to take a disbursement or else be penalized.
Paying Medicare premiums, buying medication and recurring out-of-pocket medical expenses can be potentially expensive. Investing into an HSA account could help save for unforeseen healthcare expenses. HAS’s may not be great for everyone but for example, people with high deductible health plans could benefit immensely. While HAS’s are not without a downside the benefits can be astounding.
Click here to learn more lifestyle tips to help you in your day to day life.
