This month I’m covering health savings accounts (HSA). HSAs are only available if you have a high-deductible health insurance plan (HDHP). They are a rare breed in terms of tax-advantage accounts and are triple tax free! Your HSA contributions are pre-tax (tax deductible), it grows tax free (there’s no tax on investment gains or interest earned) and there’s no tax on withdraws as long as it is a qualified medical expense.
HSAs are a great tool for paying medical expenses with pre-tax dollars but did you know they can be a backup for your retirement account? HSAs aren’t like Flex Spending Accounts (FSA) where you must spend your balance or risk losing it. With an HSA you can keep building your unused balance. You can also invest this balance and purchase stocks, bonds, ETFs, REITs and other funds.
If you have built a sizeable balance you can use your HSA as a long-term care investment tool. While this idea might equal a dent in your overall long-term care bill, something is better than nothing. Moreover, your HSA can also be used to pay your Medicare Advantage premiums.
There are a lot of advantages to an HSA and most HSA providers can be linked to TD Ameritrade and Schwab. Please call if you would like to learn more.
