7 Reasons Why You Should Consider A Health Savings Account (HSA)

There are many benefits to Health Savings Accounts, the least of which involves tax deductions. And with flexible spending accounts becoming more limited, an HSA may be a better option. Here, we’ll quickly go over some of the benefits of Health Savings Accounts.

1. You can always use the money in your HSA to pay for qualified medical expenses, or unexpected health expenses. You are also permitted to use the funds in HSAs to pay for expenses that incurred between retirement and Medicare benefits.

2. It’s very convenient to pay for qualified expenses from HSAs. Most financial institutions allow you to use checks, debit cards, and online banking with your HSA.

3. The portable nature of the account means you will own it for perpetuity. This means that nothing like marriage, divorce, unemployment, periods of being uninsured, moving, or any other major life change will affect your account status.

4. You can use withdrawals to pay for qualified medical expenses for you, your spouse, or your dependents. None of these expenses will be taxed.

5. When you earn interest in your HSA, it is tax-deferred, meaning it accumulates at a high rate. When you use the funds to pay for medical expenses, this money won’t be taxed.

6. You don’t have to spend the money, and all of your deposits that sit in the account can stay there indefinitely.

7. If your employer makes contributions, these contributions are not included in your gross income. This basically means you can spend these funds without being taxed. Also, all contributions that you make to the account are tax deductible.

These are all in addition to the big one – HSA’s allow you to set aside pre-tax money for health expenses. If you haven’t considered it before, now might be a good time to see if your employer offers an HSA.

Other Resources:

Wikipedia: How HSA’s Work

This is a guest post by Victoria of Ratelines, a place to find great cd rates and other money market rates.

Related posts:

1. 6 Ways to Use Your FSA Dollars Before the Year Ends