Should You Get an HSA?

If you’re looking for a benefit option that helps you save on both current and future healthcare expenses, look no further than a Health Savings Account (HSA).  HSAs continue to grow in popularity for a reason – with unique savings perks, these accounts are a great option for Americans who are looking to invest now and help their nest egg grow into retirement.  But what exactly makes them so special?   Let’s unpack why you should consider an HSA.

First, Let’s Review.  What is an HSA?

An HSA is a special savings account where your contributions can be used now or during retirement.  When you enroll, your account can be used to pay for eligible medical, dental and vision expenses with tax-free dollars.  There are some criteria you must meet to participate, like enrolling in an HSA compatible high-deductible plan (HDHP).  You can review the requirements here.

Now, let’s dive into the benefits of an HSA.  Here are six reasons why you should consider enrolling in one.

Special Tax Advantages

Unlike other benefit options, HSAs have a triple tax-advantage.  That’s right – these accounts come with powerful savings opportunities, giving account holders three separate ways to maximize savings by participating.

• Contributions are made with pre-tax dollars, like an FSA. For a side-by-side comparison, check out our HSA vs. FSA article.
• Funds earn interest tax-free. Participants can invest their funds – tax free – and grow their account like any other typical investment account.  Plus, if you start contributing early, you can experience compound growth over a period of time.
• Withdrawals for qualified expense are tax-free. After you reach 65, you can use the account for non-qualified medical expenses without a penalty, however, you still must pay regular income tax on non-qualified medical expenses.

You Own the Account

HSAs are portable, so if you leave your job, you can take the account with you. Typically, you can transfer your account to a different administrator, or in some cases keep the account open with your prior vendor for a small fee.

Unused Funds Rollover

While most benefits forfeit unused funds at the end of the plan year, HSAs are designed to save and grow your funds. There is no cap on the amount of funds you can roll over year-to-year. And, by saving contributions, participants can build a nice nest egg for retirement.

Variety of Eligible Expenses

HSA eligible expenses are considered all expenses that fall under section 213(d) of the Internal Revenue Code (IRC). In other words, you can use the account for medical, dental, vision, and over-the-counter expenses.  Browse HSA eligible expenses at HSA Store.

If your employer offers an HSA and you haven’t signed up yet, consider enrolling in one during your next Open Enrollment period – and start saving money on your healthcare expenses.  For more information, please visit https://padmin.com/participants/reimbursement-accounts/health-savings-account/.