Making The Most Of A Health Savings Account
Health savings accounts are a relatively new innovation in the field of medical insurance. Essentially, your employer or insurance provider sets up special savings account for you as part of an insurance plan, typically one with a high deductible, and the purpose of this account is to save money with which to pay this deductible and other health care costs. In fact, even if your plan doesn’t come with its own HSA, you can create your own if your plan has a high deductible.
An HSA plan isn’t for everyone, particularly those who expect to pay all or most of their deductible each year, but there are many benefits associated with using a health savings account.
- The money you contribute to an HSA is tax-exempt, and the money you take out to pay for medical and dental expenses remains untaxed.
- If you got an HSA through your employer, they can also contribute money to your account.
- You can invest your HSA funds in the market, much like any retirement savings account, and your earnings are also tax-exempt on the federal level.
- The money in your HSA is yours to keep. While you can only add so much per year, everything that’s already in your account will stay there year after year and you are free to withdraw it whenever you wish (although you’ll take a 20 percent tax penalty if you withdraw funds before you turn 65).
- Although you can no longer contribute to your HSA after you enroll in Medicare, you can withdraw money for any purpose without penalty, and if you use your HSA money for medical purposes it will continue to be tax-exempt.
Overall, setting up a health savings account is much like setting up a traditional IRA, but with two important differences: first, the money you withdraw from your HSA to pay for your health care remains untaxable income, and second, you must continue to have a high deductible health plan in order to contribute additional money. While an HSA should not replace your existing retirement accounts completely, establishing and using a health savings account can provide you with some much-needed financial help, especially as your health care costs go up with age.
Still, since you are still paying a high deductible and high out-of-pocket rates, it’s important to know that you’re spending your money wisely, and that’s where the USA Rx pharmacy discount card comes in handy. Without paying us anything, you’ll be eligible for incredible discounts on prescription medication at over 60,000 pharmacies nationwide. If you’d like to know more, you can email us at [email protected] or else call our toll-free number at 888-277-3911.