Health
IF YOUR BRAIN turns off at any point while you learn about health savings accounts (HSAs), you are certainly not alone. With the intricate reimbursement guidelines and cumbersome payment platforms, many individuals overlook the anxiety and frustration of HSAs entirely. However, I’m here to tell you that HSAs are worth it—perhaps just not in the way you’re accustomed to.
Just a little in case you’re unfamiliar, a health savings account is a combination that merges medical expense coverage with a 401(k)-style retirement account. These accounts were established back in 2004 and were designed to work alongside high-deductible health plans that place more of the financial burden on employees.To help ease the impact of additional expenses, some employers contribute several hundred to several thousand dollars annually. Another perk: That money carries over each year, unlike flexible spending accounts which have a use-it-or-lose-it policy.
And if all this is making you feel like you’re stuck in a corporate benefits meeting, let me introduce Andrew Giancola, host of The Personal Finance Podcast. Giancola refers to HSAs as “well-organized retirement accounts” that possess critically important advantages regarding taxes.
Especially since you incur no income tax on contributions made to your HSAs, the growth of those funds while they remain in the account, and when withdrawing for qualified medical expenses. Over time,these three benefits can accumulate into thousands of dollars saved on taxes.
Certainly, it’s possible for your small business HSA to evolve into an impressive retirement fund. If you’re lucky enough to be healthy and don’t need immediate access to those funds for medical expenses, you’ll have the opportunity to invest it—just like you would with an IRA or 401(k). additionally, since ther’s no deadline for submitting receipts for reimbursement related to medical costs, it allows you time to keep receipts for medical expenditures and reimburse yourself later. This means your HSA can grow while allowing tax-free withdrawals down the line.
If you’re concerned (and rightly so) about being stuck with subpar investment options within your HSA plan , rest assured most HSA plans allow investments similar choices available through your 401(k). This means you’ll be able utilize your HSA for stock market investments which historically yield strong returns—over ten percent during past fifty years .Admittedly , this approach requires some planning but it’s nothing Google can’t assist with.
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