Health Saving Accounts (HSAs) are very popular these days, because of the huge benefits that go along with maintaining them.
To understand the appeal of HSAs, you need to know exactly what they do for you and how they are a win-win proposition in so many ways.
The Benefits of HSAs An HSA is used in combination with a high deductible insurance plan.
Your company deducts an agreed amount from your salary and puts it in an HSA; this amount is tax deductible up to a limit.
The funds in an HSA are then used to cover any medical expenses not covered by your high deductible health coverage.
Because insurance premiums on high deductible plans are much lower, many opt to use the money saved into HSAs, Another great thing about HSAs is they are attached to an individual, not the company, and any unused money is rolled over, and earns interest.
Because they are held by individuals, they don't expire upon retirement.
HSAs as Investments HSAs are saving accounts, so if you have money in an HSA, you can actually use it for things other than medical expenses.
However, should you choose to do so, you will have to pay taxes on the money spent.
If you have an HSA and an IRA, you can fund your HSA from your IRA once.
Make sure you have a low premium health plan to so that you can maximize the benefits of your HSA, and always try to put in the maximum tax deductible amount.
At the very least make sure you make regular deposits into your HSA.