5 Benefits of a Health Savings Account

Fall is normally the time of year corporations start gearing up for their annual benefit enrollment season. Senior management is trying to weigh which benefits are most cost effective while fishing for maximum coverage for employees and their families, Payroll and Finance departments are calculating ways to increase your take home pay without over extending departmental budgets, and you’re trying to figure out what all this stuff means to you and yours. Sound about right?

Over the years, Health Savings Accounts (HSAs) have become more and more popular amongst benefit offerings. Employers are doing a better job at educating employees on HSA benefits and the positive impact it can have on an employee’s short- and long-term financial goals.

Health Savings Accounts are only offered to employees with High Deductible Health Plans. They provide tax-free flexibility for contributions, earnings and withdrawals for qualified medical expenses.

 

Take Your Money with You

 

Breaking up with your employer after enrolling in an HSA? No problem, there’s an app for that! Not really, but keep reading. Health Savings Accounts are portable, meaning, if you leave your employer, you can take your HSA funds with you. There is no ‘use it or lose it’ provision with an HSA, like that of a Flexible Spending Account (FSA). If you don’t use the money in your account by the end of the year, it simply stays there and collects interest on a tax-deferred basis.

 

Convenience and Flexibility

 

In most cases, your HSA will come with a debit card that you can use when paying for qualified medical expenses. The card draws funds directly from your account for simple, tax-free spending.

 

Personal Investment Options

 

HSA funds can be used for making qualified investments. Be sure to connect with a certified professional who offers a range of investment options to suit your financial needs when exploring this option. The rules and the risk may be more than you are willing to take on. You’ll need to know full details on the terms, costs, and conditions of each option.

 

Simplified Paperwork

 

With all of your qualified medical expenses housed in one central account, tax preparation and billing inquiries can be concluded much faster. Itemized statements are provided for your records; making it easier for you to substantiate your transactions and prove compliance should an IRS audit arise.

 

Give Yourself a Raise

 

HSA contributions are usually pretax which can offer an immediate increase in your paycheck every pay period. They’re treated as savings accounts, with special withdrawal rules of course, so you can actually fund an HSA now to be used towards medical expenses during retirement.

 

An HSA could be a key part of your financial planning process. It’s never too late to take the fate of your money into your own hands.  What do you think? Does it sound like an HSA may be for you?

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