Have you ever wondered what a health savings account is? Or maybe you know what it is, but you’re not sure if you need one. Perhaps you already have an HSA, but you’re not sure what’s so great about it. On episode 48 we discuss everything you need to know about HSA’s. A listener recently asked if they should contribute to a health savings account, and we are glad she did because this gives us the opportunity to share everything we know about HSA’s. Listen to this episode of Worth It to hear how to help maximize your health savings account.
A health savings account or, HSA, is a savings account used only for medical expenses. There are a couple of ways that you can set one up. Health savings accounts began in 2003 to help Americans with their medical costs. Individuals can add $3400 a year to their HSA and families can add $6900. One of the requirements of an HSA is that you have to have a high deductible health insurance policy. After you set up an account you’ll receive a debit card in which you can pay your health expenses. Listen to this episode to hear all about HSA’s and how you can make the most of your HSA.
All savings accounts aspire to be like the HSA. Health savings accounts are a diamond in the rough. They are the only type of savings account that has triple tax benefits. This account escapes payroll taxes as well as regular income taxes. When you pull money out of it you also don’t have to pay taxes, as long as it’s used for qualified medical expenses. Another benefit is that while your money is in the health savings account you can invest it tax-free. Are you intrigued yet? Hear about all of the benefits of HSA’s on this episode of Worth It.
There are a couple of different ways you can set up an HSA. You can have it deducted through your paycheck if your employer offers this benefit or you can set one up manually. HSA’s can only be used if you have a high deductible health insurance plan, though. If you are in the sign-up period it is a good idea to consider how much you spent on medical expenses during the last year to decide how much you would like to contribute. If you are able you should contribute the maximum amount possible to receive the largest tax benefits. Listen to this episode to hear how you can open your own health savings account.
With an IRA you get tax benefits either going into it or pulling money out of it. The HSA is the only type of account where you can receive tax benefits on both sides of the equation. Another benefit is if you can open an HSA up with your employer through a payroll deduction you receive added savings of not having to pay payroll taxes on that money. In addition to the triple tax benefits, you can use your HSA to cover many types of healthcare costs. Health savings accounts can be used for dental expenses and even eye exams. Listen to this episode of Worth It to hear about all of the benefits to HSA’s.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
What if you had a clear formula to help you figure out how much to save… while paying down debt and enjoying life? It is possible… when you know your numbers.
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