5 Benefits of Opening a Health Savings Account

The tax advantages of a healthcare savings account are like those of a traditional IRA, a Roth IRA, or a 529 college savings plan.

The account can be used like a checking account to pay for medical bills as they arise, as an investment account to grow funds for health care costs down the road, or as a combination of the two.

Below are five reasons why an HSA might be the right option for you.

HSAs cut taxes now

An HSA is a savings account that lets you save pre-tax dollars to pay for health care expenses. Contributions are pretax and reduce your taxable income.

HSA funds grow tax-free

When used to pay for qualified medical expenses, HSA withdrawals are tax-free. However, to qualify for an HSA, you must have a high-deductible health plan (HDHP).

Medical savings

You can use your HSA funds to pay coinsurance, copays, and your deductible (all tax-free).

You can also use HSA funds to pay for some costs your plan doesn’t cover, like dental care, orthodontia contacts, and eyeglasses. If you use HSA money for non-eligible expenses, you will pay taxes and a penalty on the money you took out, unless you are over 65 years of age.

You’re in control

The money in your HSA account earns tax-free returns and any unused HSA funds are carried into future years when you need them. Plus, you can use your HSA to save for retirement.

At age 65, you can use the funds for any purpose without a penalty. The money you take out to pay for eligible health care expenses continues to be tax-free. You also can take money out for other reasons without paying a penalty.

It’s your money!

You decide when and how to spend or save the money in your HSA. The money is yours forever. It doesn’t expire, and you can take it with you if you change jobs or switch to another high-deductible health plan.

Your investment can grow

Just like a brokerage account or an IRA, you’ll need to put money into the account before you buy investments. Then, after you fund the account, you can start investing.

Some HSAs offer tools that help you choose your investments and provide automatic rebalancing, so your portfolio stays within your preferred allocation. Others allow you to select from specific investments, such as stocks, bonds, mutual funds, and ETFs.

Whatever method you choose, investing your money through an HSA will likely allow it to grow faster than by saving alone. If your HSA is offered through an employer, you may have fewer options for how you can invest your money.

Test Your Financial Advisor’s Loyalty with These Simple Questions

You have a financial advisor in order to make certain you have budgeted your money correctly, have planned for future financial needs, and, in some cases, to turn some of

Sell Puts the Smart Way: Get Out Before Expiration Nears

Selling put options can be a great way to help increase the value of your portfolio without taking on too much risk. At its core, a put sale allows investors

refinancing

4 Pros and 1 Con of Refinancing Your Home

Two years ago the 30-year fixed mortgage rate was 4.6%. Today it is 2.9%. If your mortgage is in the high threes, you should consider refinancing. Refinancing would lower your

Easy Finance Tip: How to Calculate Your Net Worth

To calculate your net worth, just subtract your liabilities (what you owe) from your assets (what you own). While the equation is simple, it's important to get a snapshot of

Just a Few Bad Market Years Can Slam Your Retirement: How to Cut Your Risk

I believe one very underappreciated risk for investors preparing for retirement is the concept of “sequence of returns.” Sequence of return risk is the danger that the timing of withdrawals

Tai Chi Can Benefits for Those with Chronic Diseases

The Chinese martial art of tai chi can be beneficial to people suffering with chronic illnesses, according to research in the British Journal of Sports Medicine (2015), conducted by Dr.

Two Measures of Options Volatility That Matter

Most people often have a notion of what volatility means. They understand, at least conceptually, that it has to do with data of situations that vary over time. Weather is

3 Financial Habits to Adopt Before You Retire

Nobody wants to work until the day they die. We all want to get to a point where we can simply sit down, relax, and enjoy life.  Consider adopting these

11 Ways Eating Limes Can Protect Your Eyes, Heart, Joints and More

Most of us hear lime and think Corona beer or ceviche. Surprisingly, this little bright green fruit has many excellent benefits for your health and wellness. Limes are often overlooked

Why You Should Take Social Security Early and Invest

Social Security is a government program, so it is unnecessarily complicated. Working or retired? Married or divorced or both? Disabled? Private or public employer? All these factors affect your Social

5 Benefits of Opening a Health Savings Account

The tax advantages of a healthcare savings account are like those of a traditional IRA, a Roth IRA, or a 529 college savings plan. The account can be used like

A Simple, Easy Way to Lower Your Blood Pressure

According to the American Diabetes Association, one in three Americans have high blood pressure, and this condition may lead to other chronic diseases like heart disease and diabetes. There are