Is an HSA Right for Me?
In 2003, Health Savings Accounts were created to help individuals with high deductible health plans (HDHP) receive tax-preferred treatment of dollars saved for medical expenses. Today we now have multiple options to help individuals save for healthcare costs. As of 2018, over 50% of employers offered Health Savings Accounts to their employees according to Society for the Human Resource Management.
Health Savings Accounts (HSA) are a way to lower taxable income and save for future costs with healthcare services. Anyone who has a qualified HDHP can open an account. It does not matter if you get your insurance through the open market or an employer. Some employers make it easy to save by providing a payroll deduction from your compensation. Do not worry if your employer does not offer an HSA with their HDHP, contact your local bank to see if they offer these products.
Money placed in the account is not subject to income taxes. When it is taken out for a qualified medical expense, you do not pay taxes on the monies AND HSAs to have a unique feature where you can invest the funds. Speaking with your financial advisor and your tax professional is a great first step in seeing if HSAs can have a greater impact on your overall financial health.
Unlike other medical savings accounts that your employer can offer, HSAs are solely owned by you! That means if you retire or change employers the funds are yours to keep. There is no expiration date or rules of when you are needing to use your account.
Spending HSA dollars
HSAs are also flexible when deciding when to use them for expenses. There is no time limit on when the funds are needing to be used or how quickly you are needing to reimburse yourself from the account. Just be sure to keep your receipt! Be careful to use this account on qualified medical expenses. If you do not, you are subject to pay income taxes on the amount and may face a 20% penalty. Qualified medical expenses are defined by the IRS and continue to grow in products and services that qualify. To see IRS publication 502, click here.
At Schatz Benefit Group, they take an individual approach to your health insurance needs. They understand that each year is filled with new adventures and medical bills should not be one. If you are looking for a trusted resource to help navigate your options, contact them and they will simplify the process for you.