HSAs are designed to work with high-deductible health plans (HDHPs) so you have more control over your health care dollars. The money in your HSA can be used for current medical expenses. But that’s not all!
You can use an HSA to pay for medical expenses anytime in the future. An HSA can ramp up your retirement savings, too. Perhaps you’re already saving in a retirement plan at work and/or an individual retirement account (IRA). An HSA provides another option for taxadvantaged savings in the long run. Think of it as an IRA for your health.
HSA Funds Are Flexible
Are you making the most of your HSA? Consider saving more money in your HSA to take full advantage of the tax benefits now and in the future. The contribution limits in 2015 are $3,350 for individuals and $6,650 for families, plus a $1,000 catch-up contribution if you’re age 55 or older.
Use it now: A health savings account can be used to pay for costs for you and your family — it’s there if you need it. For example: You go to the doctor and submit the expense for reimbursement (or pay with a debit card linked to your HSA, if you have one). The money you take out of your HSA is tax-free when it’s used to pay for qualifying health care expenses for you and your dependents.
Save it for later: You can sock away money that can be used for health care expenses later in life. There are no “use it or lose it” rules as there are with flexible spending accounts (FSAs), so your unspent balance in an HSA accumulates from year to year. You own the account, which means you can take it with you even if you change health plans or leave your employer.
Spend it in retirement: HSA funds can be used tax-free to pay for qualifying health expenses before and during retirement. After age 65, HSA funds can be used for expenses other than health care without penalty (though ordinary income taxes will be due).
Talk to a financial advisor at NCU Wealth Management to create a financial plan that addresses your retirement goals and future health care expenses. To Schedule your appointment, call 228-474-3427.
HSAs offer tax benefits including pretax or tax-deductible contributions, plus tax-free earnings and tax-free distributions when used for qualified medical expenses.
- Tax-deductible contributions. The money you put into your HSA may be tax-deductible.
- Tax-free growth: Earnings in the account are not taxed.
- Tax-free distributions: The money you withdraw from your HSA is not taxed (if used for qualified medical expenses).