Top 5 Benefits of a HSA

April 26, 2017

A Health Savings Account (HSA) may sound like something you don’t need... You have enough financial commitments that require immediate attention, so do you really need to save more money for health care expenses? HSAs are special savings accounts you can use to pay medical, dental and vision expenses, now or in the future. Only you can decide what’s right for you, but if you have the opportunity to participate in a High Deductible Health Plan with a HSA, here are five reasons you should take advantage of it.

#1: Triple tax advantage.

HSAs are unique in that contributions you make to the account are not taxed, earnings you realize from investments in your account grow tax free, and withdrawals are not taxed (as long as you use the money for a qualified health care expense). The savings are significant. Put simply, it’s like buying health care services during a 30% off sale.

#2: Money rolls over from year to year.

There is no “use it or lose it” rule like Flexible Spending Accounts have, so you can grow your account year after year and save the money for when you really need it. You may want to save money for expenses you anticipate later in life, such as after you retire.

#3: You are in control.

You decide how much to contribute (up to IRS limits of $3,350/individual coverage, $6,750/family in 2016). You can change your contribution amount during the year if you choose. You can decide which financial institution to go through (some employers set up an HSA for you, which makes it ever simpler). You choose how your account is invested (see #5). You decide when to use the money — for current health care expenses, down the road, or both. You can even pay for qualified expenses your dependents incur, even if they are not covered on your health plan. It’s up to you.

#4: Your HSA is portable.

, meaning you can take it with you if you leave the company. The account belongs to you. You can change health plans or even change employers and keep your HSA. (You must be enrolled in a High Deductible Health Plan to contribute — but you can use the money already in your HSA if you’re in a different kind of health plan).

#5: You can invest the money in your account.

To help it grow over time through earnings, you can invest money into your account. Investment options vary by financial institution, and some HSAs have restrictions on the amount of money you must have in the account before you can begin investing it. Check with your HSA bank for the details. Don’t miss out on this additional way to grow your account. Remember, investments grow tax free.


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