You may or may not have heard of an HSA. It’s also possible you have a HSA-compatible health plan and you don’t use an HSA. Regardless, they’re something you should consider. Now, an HSA plan isn’t right for everyone, so you should speak with a licensed agent to see if it’s right for you before jumping on an HSA plan.
What is an HSA?
An HSA – or Health Savings Account – is a special savings account that allows individuals enrolled on a “High Deductible Health Plan” to deposit money, tax-free, to pay for medical costs, they can help you make money while at the same time helping to lower your taxable income and help pay for things that your insurance didn’t cover.
Now, I’m going to repeat myself and say that there are some that should not enroll into a HDHP to open an HSA. You should really speak professional assistance before determining if this type of plan is going to be advantageous for you.
The Triple-Tax Advantage
An HSA can help you earn money while lowering your taxable income in three ways:
- Your contributions into an HSA are tax-free. You can contribute income, on a pre-tax basis, straight into your HSA. Your paycheck is subject to less taxes. You can contribute up to $3,450 as an individual or $6,900 as a family. There’s also an additional $1,000 you can deposit if you’re over age 55 due to the “catch-up provision.”
- Interest earned on an HSA is also tax-free. Any interest earned on an HSA account is tax-free. The interest earned tends to not be great, ranging from .05% to .35%.
- Health spending is tax-free: Any funds leaving the account to pay for eligible medical expenses (you can pay for dental and vision expenses as well) are not taxed.
- You can deduct approved medical expenses: You can also deduct your HSA-Approved medical expenses at the end of the year.
- Unlike some other types of tax-advantaged accounts, your funds in the HSA roll-over to the following year, so money doesn’t get lost.
- You can take your HSA with you. If you change employers or want to enroll into a different plan, your HSA account stays with you without the need for any changes on the HSA’s end.
How To Get Started
Want to see if an HSA is right for you? Click here to send me a message for a consultation at no cost to you!