Search News Posts
A health savings account (HSA) combines the immediate benefits of a flexible spending account with the retirement strategy of a 401(k) … and offers more tax advantages than either.
The Triple Tax Advantage for HSAs:
Grow Your Savings
The money in your HSA rolls over year after year (it’s not use-it-or-lose-it like a flexible spending account). Plus, you can invest your HSA funds and let them grow long-term like an IRA or 401(k).
Pay for Your Family
You can use your HSA funds to pay for your spouse or tax dependents’ qualified medical expenses tax-free, even if they’re on different health plans or ineligible for HSAs. Qualified medical expenses include doctor’s visits, prescriptions, dental bills, and more.
Take Funds With You
Because HSAs are individually-owned, they stay with you when you change jobs or retire. And even if you become ineligible to contribute to your HSA, you can continue to pay for qualified medical expenses tax-free from the funds currently in your account.
When you contribute to your HSA via pre-tax payroll withholding through your employer’s Section 125 plan, you don’t pay FICA taxes on those contributions (an extra 7.65% back in your pocket!).
A high deductible health plan (HDHP) is a health plan that typically has a higher deductible than other health plans, and the individual is responsible for paying medical expenses until their deductible is met. Yearly exams and preventative care are covered 100% through an HDHP, so the individual generally pays for treatment, prescriptions, etc. outside of annual prevention. To determine if you have an HSA-qualified HDHP, contact your health insurance provider.
If your spouse is your beneficiary, the HSA becomes his/hers and can still be used tax free for eligible medical expenses.
If your spouse is not your beneficiary, the HSA becomes part of your estate, and fair market value is calculated on your date of death.
You are responsible for determining whether you are eligible for an HSA, whether your contributions/withdrawals are qualified and for seeking tax, legal and/or investment advice as needed.
NOTE: Our office will be closed for Good Friday on Friday, April 19. The NYSE will also be closed and trading will resume on Monday, April 22.