A Health Savings Account (HSA) is a plan designed to help you manage the rising cost of health care by allowing you to set aside money to pay for out-of-pocket medical expenses and save for retirement. You must be covered under a high deductible health plan (HDHP) in order to participate. In this article we’ll touch on three ways you can save by participating in a Health Savings Account.
Tax free contributions
The funds you contribute to your HSA are tax-free! The amount that you elect to contribute will be automatically withdrawn from your salary before it is taxed. Unlike an FSA, the funds you contribute will carryover from year to year and the account is yours so you can keep the account even if you change employers.
Tax free earnings from investment or interest
Comparable to a 401(k) or IRA, a Health Savings Account offers great investment potential. Surency now offers an individual brokerage account investment option, powered by Charles Schwab. Members who have a cash balance over $2,000 in their Health Savings Account can use their excess funds to purchase investments like stocks and bonds. Another way your funds can grow is by earning interest on your unused funds.
Tax free withdrawals for eligible expenses
Several common household items such as pain reliever and allergy medications are considered HSA eligible expenses. That means, when you use your HSA funds to purchase these items, you won’t have to pay taxes on those items. You can use this list to determine what items and services are eligible for reimbursement with your Health Savings Account.
If you’d like help figuring out how much you should elect to contribute to your HSA, use our Election Worksheet to estimate your health care costs.