The tax & planning benefits of health savings accounts (HSAs).
Do you have a Health Savings Account (HSA)? If not, you may miss out on a tax benefit & an excellent planning opportunity for the future. HSAs are a type of savings account that you can use to pay for many health care costs, now & in the future.
HSAs offer a triple tax advantage. The contributions and growth are tax-free. The withdrawals are not taxed as long as they are used for qualified healthcare expenses. Qualified healthcare expenses include doctor visits, dental care, acupuncture, medications, and more. If you have a high-deductible health plan (“HSA-Eligible Plan”) & are not enrolled in Medicare, you are likely eligible for an HSA.
Although similar to FSA (Flexible Spending Account), an HSA has several differences. The unused balance is rolled over each year, the funds can be invested in stocks & securities, and HSAs are fully vested and “portable,” meaning you can take it with you if your employment changes.
The 2023 maximum contribution for an HSA is $3,850 for an individual & $7,750 for a family. If you don’t need the money in your HSA for current healthcare expenses, you can save it, invest it, & roll it over until you do. As we age, our medical expenses will likely go up. HSAs offer a tax-advantaged way to save for & grow funds for future healthcare costs.
Not sure if you qualify for an HSA? Talk to us today to see if your specific tax & income situation make you a good candidate for an HSA. If you already have an HSA, we recommend fully funding it annually.