Open Enrollment for 2016 healthcare plans are around the corner and we don’t want you to miss the benefits that a Health Savings Account (HSA) can offer you. An HSA is a tax-exempt trust of custodial account that can be set up to pay for future medical expenses. This type of plan is incredibly beneficial who are looking to save money for retirement and here is why.
HSA accounts allow you to put tax deductible contributions into your account up to $3,300 for an individual or $6,550 for a family. If you were 55 or older in 2014 you can add an additional 1,000 dollars to each of those numbers. The money you contribute accrues interest and the earnings are tax-free and you are able to pay for your qualifying medical expenses out of that account also tax-free. This can be a wise way for both older and younger individuals looking to invest, that know their investment capital is around the maximum contribution allowed or less. If the ability to contribute more than the maximum contribution amount you might want to look at an IRA instead.
Another great bonus to an HSA account is that the funds remain in your account year after year even if you do not use them for medical expenses that year. Once you hit retirement age you can withdraw those funds tax-free even if you are not using the funds for a medical expense. The stipulation to have an HSA is that you must be enrolled in a high deductible health plan. That said in order to take advantage of the tax breaks this plan works best if you are relatively healthy and have low medical expenses. It can also save you money on taxes if you are spending significant dollars annually on healthcare.
This year when you are looking at plans for yourself or your family make sure to ask your broker about Health Savings Accounts and if it would be a wise choice for you. Are you already familiar with HSA’s or is this something new for you?
Read the full article on U.S. News HERE