Health Savings Account (HSA) Details
Health Savings Accounts (HSA) is a powerful financial planning tool to help you manage your healthcare expenses. A Health Savings Account is a tax-advantaged account that can be used to pay for current or future qualified medical expenses.
Similar to a retirement savings plan, you contribute a portion of your paycheck into this account before taxes, subject to certain limits, reducing the amount of federal income tax you pay for the year. Then, you can make tax-free withdrawals to pay for qualified healthcare expenses such as:
- Office visit co-payments
- Insurance deductibles
- Eligible Prescriptions
- Dental care
- Eye care; including glasses, contacts, and more
- Triple Tax Benefits - (1) The HSA can be funded on a pre-tax basis, (2) distributions made from the HSA for qualified medical expenses are tax-exempt and (3) investment income in the HSA grows tax-defered and distributions of income for qualified medical expenses are tax-exempt.
- Roll Over - With an HSA money left over in your account at the end of the year rolls over into the next year
- Portability - You can continue your acount even if you change places of employment.
- Control - You own your account and decide how to spend your healthcare dollars.
- Flexibility - At age 65, or when you become covered by Medicare, the money in your account can be used for any reasons without penalty. You still pay income tax on these distributions if they are for non-qualifying medical expenses.*
*Distributions for non-qualifying medical expenses prior to age 65 or the time you become eligible for Medicare will be subject to ordinary income tax,as well as an additional 10% penalty.