A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals and families set aside funds specifically for medical expenses. HSAs are available to those who are enrolled in a High Deductible Health Plan (HDHP), which is a health insurance plan that typically has a higher deductible and lower premium costs.
Below are seven significant advantages of establishing your own Health Savings Account before it becomes too late:
1. Accessibility
Who says HSAs are only for business owners? That’s a common misconception! Anyone with the right insurance (check the details below) can have an HSA. Don’t worry about your employer setting it up or contributing; they just need to offer an HSA-qualifying insurance policy, or you can enroll in one on your own.
2. Unleash the Power of Tax Deduction
Here’s where things get exciting! Your HSA contributions can be deducted from your gross pay or business income on your tax return’s front page. A powerful tax deduction like this could even lower your tax bracket. In 2016, singles could deduct up to $3,350, while families enjoyed $6,750. In 2017, it remains just as good—$3,400 for singles and $6,750 for head of household and married couples.
3. Watch Your Wealth Grow Tax-Free
No more “use it or lose it” worries! With an HSA, your funds grow tax-free, all set for your future healthcare needs. Even better, your investments won’t affect your contributions. You can be a smart investor, make contributions each January, and continue to grow your HSA funds.
4. Harness the Power of Tax-Free Withdrawals
This is where the real magic happens! Use your HSA funds tax-free for qualified medical expenses. It covers deductibles, dental, eye-care, chiropractic, acupuncture, and even hotel and lodging expenses while you’re at the hospital. And guess what? There’s no waiting period! Change your healthcare spending approach: deposit money into your HSA before your doctor’s visit and pay the bill with your HSA card. Voila! You just got a write-off on the same day. For more ideas, check out IRS Publication 502, which lists hundreds of medical expenses you can pull from your HSA tax-free.
5. The Self-Direct Option - Empower Your Choices!
Did you know that you can take full control of your HSA investments? Say goodbye to being restricted to a limited mutual fund option offered by your bank. With the self-direct option, the possibilities are endless! You can invest your HSA funds in exciting ventures like restaurants, real estate, or even Super Bowl tickets! Just find a “custodian” who allows self-directing and take charge of your financial destiny. Learn more about this empowering strategy here!
6. Retirement - Secure Your Future!
Imagine a worry-free retirement where you can access your HSA funds for non-health care expenses without any fuss. Once you reach 59 1/2, you can withdraw the money and pay federal income taxes on it. Similar to a traditional IRA, this allows you to use your HSA for non-medical needs. The best part? No mandatory disbursements usually required by IRAs! So, wave goodbye to concerns about unused funds for health care - your HSA can serve as an IRA alternative for a brighter financial future!
7. Easy Set-Up - A Breeze to Get Started!
Setting up your HSA is a piece of cake, but remember - DO NOT CALL your insurance company! They’re all about insurance, not HSAs. You’ve got two simple options for setting up your account. First, head to your local bank - either in person or online - and complete the hassle-free process with just a few checkboxes and your signature. Voila! They’ll even throw in a convenient Visa card for medical expenses straight from your HSA. Alternatively, if you prefer letting your money grow, choose the second option: an IRA custodian. We’ll provide you with a list of choices and assist you in setting up your LLC for your HSA - easy as pie!
It’s no wonder that the HSA remains one of the most underestimated gems in the world of tax strategies. Even President Trump recognized its potential, emphasizing its significance in healthcare legislation changes.
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