Health Savings Accounts (HSAs) have grown tremendously in popularity over the past few years, and for good reason.
You’ve probably heard of them or maybe your employer offers one. Read on to uncover answers to some common questions you may have regarding HSAs.
What’s an HSA?
A type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses.
Can anyone get an HSA?
In order to open an HSA, an individual must first enroll in a qualified high deductible health plan (HDHP).
I’ve heard HSAs have triple-tax advantages, what are they?
1. Contributions are tax-deferred and eventually even possibly tax-free (see #3).
2. Contributions can be invested and potentially grow tax-free (see #3).
3. Withdrawals aren’t taxed if used for qualified medical expenses.
If I change employers, what happens to my HSA?
HSAs are completely portable for employees, meaning you may take it with you if you change employers.
Do I lose my HSA funds at the end of the year?
No. The balance can grow and carry from year to year and can also be invested.
What can I pay for with my HSA?
Generally, HSA funds can be used to pay for anything that your insurance plan considers a “covered charge,” including charges not paid by your health insurance because they were subject to a co-pay, deductible, or coinsurance.
For more information, tune into this brief video from Summit FinWell which illustrates the benefits of HSAs.