Health Savings Accounts (HSA’s) have been around since 2003, however, their use is still not well understood. If you are enrolled in a high-deductible health plan (more than 40% of workers are), then you are eligible to contribute to an HSA.
HSA’s offer three tax advantages:
- Pretax contributions
- Nontaxable gains from investment
- Tax exempt withdrawals if used for qualified medical expenses
In addition, any unused balances can be carried over, the funds never expire, and the balance can be passed to a beneficiary upon death.
If started early enough, HSA balances can build to substantial amounts. A recent survey calculated that an average 65 year old couple will need almost $300,000 to cover out-of-pocket costs in retirement.
HSA contribution limits are $3,500 for single coverage / $7,000 for family coverage in 2019.
If you have any questions or would like to discuss this further, please contact us.