Health care costs are rapidly increasing and could put a dent in your wealth-planning goals during retirement. What if you could prepare for future health care costs while building wealth at the same time? The HSA makes this possible!
If you aren’t familiar with the Health Savings Account, speak to your trusted financial coach/advisor about your options and how this could fit into your wealth plan. An HSA is a tax-friendly health savings account used to pay for current or future health care expenses that you may incur during retirement. You can think of it as a personal savings account for medical expenses but with bonus benefits. You just have to use the money for qualified medical expenses in order to maximize your perks and avoid taxes.
Established in 2003 as part of the Medicare Prescription Drug, Improvement, and Modernization Act, the HSA has a reputation for being the most tax-beneficial account around town for people who have good health and an adequate savings rate. The money you contribute to an HSA is not taxed when it goes in, not taxed as it grows, and not taxed when it’s withdrawn for qualified medical expenses. You’re getting triple tax savings!
What’s the catch? You need an HSA eligible, high-deductible health-care plan. These are plans that allow you to pay lower monthly premiums but require you to pay a greater amount of your initial health care costs before your