An HSA, or health savings account is a type of savings account for medical-related expenses. Often offered by employers through a high-deductible health insurance plan, HSAs are tax-free accounts. An HSA is so much more than a savings account though, it can provide a lot of benefits to you and your family throughout your life.
Healthy, Single People
If you are healthy and single, an HSA can provide you with a lot of benefits. The first is in tax savings. The money you put in your HSA lowers your taxable income, which can save you in taxes. Your HSA earns tax-free interest that you can rollover. If you are healthy, your health-related expenses are probably low, but there is a lot you can spend your HSA money on from fillings at the dentist, to allergy medicine, to over-the-counter medication. Putting money into an HSA is an easy way to build savings for the future.
HSAs are also helpful to young families with medical expenses. You can save up money in an HSA to pay for braces for your kids. You can expect to pay thousands of dollars for braces for your teens. You can also use the funds for other dental expenses teens have, like wisdom teeth surgery. It is a good idea to have savings specifically for medical-related expenses for your kids in case of an accident. Active kids who are involved in sports, dance, or other activities, are more likely to suffer injuries that could end up costing you. Many employers will contribute to HSAs, and you can also put your own money into them whenever you want.
Older people can also benefit from an HSA, especially if they have been saving for many years. HSAs can cover many of the extra medical expenses older people tend to have that insurance may not cover. HSAs are great for retirees because after the age of 65 you can use your HSA funds for anything you want, not just medical expenses. The downside is you can only contribute to an HSA until you sign up for Medicare.
No matter what stage of life you are in, you can probably benefit from an HSA. They are a great way to save money for retirement and can help you afford unexpected medical expenses. The opportunity to contribute to an HSA should not be missed.
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