Healthcare Spending Accounts (HSA) are growing in popularity. At one time these accounts were merely perks offered by employers, sometimes with matching contributions. Now, they’re more widely available to the general public, thanks to the availability of high deductible health plans. If you have the means to put some cash aside, you should definitely put some of your money into a HSA. Here’s why.
The money you put into an HSA is tax-free. It comes out of your paycheck before taxes and goes into a special account with a debit card you can use to pay for deductibles and other medical expenses. Not having to pay tax on the money you put into the HSA can add up to a savings of up to 20-30% per year.
Some employers do offer additional contributions as an employee benefit. These are over-and-above your own payroll deductions and are considered an extra employee benefit. Consider it free money towards your healthcare.
The Money Can Accumulate
You are the sole owner of the money you put into a HSA account. You don’t lose your money at the end of the year if you don’t use it. It can simply roll over year-after-year, ensuring you have a little bit of tax-free money set aside if you end up struggling with illness at a later point in time.
Believe it or not, any money in your HSA when you turn 65 can be withdrawn without penalty for any expense you’d like, not just medical. The money sitting in the account accrues interest, so you’re saving additional money, completely free of tax, for your retirement.
~Here’s to Your Financial Health!