Health Savings Accounts-Are they really that beneficial?admin
What are Health Savings Accounts (HSA) and how can they benefit you and your tax situation in
You may have heard of a 401(k) plan and other individual savings and retirement accounts. HSAs are similar in tax benefits but not as well-known. An HSA is a tax-advantaged medical savings account.
You Qualify For An HAS If…
- You are enrolled in a high deductible health plan.
- You do not qualify for any health coverage exemptions.
- You are not enrolled in Medicare.
- You are not claimed as a dependent on another person’s current-year tax return.
There are three main tax benefits for contributing to an HSA:
- Similar to an IRA, the contributions you make to the account are tax deductible. Employer contributions are not deductible, but in certain cases they may be excluded from your gross
- Any interest earned on an HSA account is tax-free.
- Money that you withdrawal is tax and penalty free if you use the money to pay for qualified medical expenses as explained below.
Other Advantages of HSAs
- There’s no “use-it-or-lose-it” limitations. The money remains in your account until you’re
ready to use it.
- The money stays with you and you’re not required to pull it out or roll it over to different
account if you change employers.
Not every medical expense qualifies, particularly expenses for over-the-counter medicines not prescribed by a doctor and expenses for items such as cosmetics, deodorants, baby items, etc. Qualified medical expenses include most services provided by licensed healthcare providers, as well as most prescriptions, lab fees, medical devices/equipment (i.e. crutches, wheelchairs, canes, etc.) and medical tests/treatments. To see if your medical expense qualifies, check IRS
To find out more on how an HSA can benefit you and your financial future in relation to taxes,
give us a call or contact us here to find out more!