One Of The Best Tax Shelters For Americans!
Tax Deductible Contributions, Tax Deferred Growth and Tax Free Distributions!
What exactly is an HSA and what are the rules for qualifying?
A Health Savings Account, or HSA, is a very efficient way to save money for medical expenses, and/or accumulate money for retirement.
In order to be eligible for an HSA you must be enrolled in a high-deductible health insurance plan (HDHP). This is a health insurance plan with a high enough deductible, and tagged “HSA-eligible”. There are no other requirements for eligibility and no income limitations.
These plans can be invested in many different ways, including stocks, bonds and mutual funds.You may be able to enroll through a work based plan, however they are also offered at many different HSA custodians that are not through employers.
The tax benefits of an HSA make them very attractive for paying healthcare expenses. As a matter of fact you can pay for a lot of healthcare related expenses with money that will never, ever be taxed.
Another great feature of an HSA is that they are not “use it or lose it”. Should you use money for things other than medical expenses you will only pay taxes (so long as you withdraw the money after age 65) on the distribution. In essence it will behave a lot like a 401(k) if you use the money for non medical expenses. You won’t pay penalties, only taxes.
The HSA could be another great tool to use for improving your financial situation. There are many benefits, however when it comes to financial decisions never say “never”, never say “always”, it depends!