What are the benefits of an HSA?
Health Savings Accounts (HSAs) may help those enrolled in high-deductible health insurance plans (HDHPs) pay for qualified medical expenses. When you’re no longer contributing to the HSA in retirement, it can complement Medicare Supplement policies by helping manage out of pocket expenses. In addition to paying expenses, you can also use an HSA as a savings vehicle. Here are six ways to make the most of it:
- Roll over remaining funds year-to-year. Yes, you can do it indefinitely. The interest accrued on your savings balance is tax-deferred.
- Contribute until tax day. If you haven't met the annual contribution limit, you may contribute through the tax filing date the following spring.
- Move funds if you want to. Your employer may have created your account when you signed up for the HDHP. However, if you'd prefer to use a different HSA, you can arrange to transfer funds. (An HSA is all yours, regardless of whether an employer - present or past - sponsors it.)
- Maximize your contributions. Contribute the annual limit so you can claim the maximum tax deduction. If you're 55 or older, you also may make a catch-up contribution.
- Invest with your HSA. Some HSAs allow you to invest the money in mutual funds and stocks, which may generate a greater return. You may need to maintain a minimum amount in the account, but if you can afford it, it's an option to consider.
- Wait to meet your deductible. If your medical bills are infrequent or you can afford to cover the costs, let your savings continue to grow tax-deferred in the HSA. (If you pay some expenses yourself, keep your receipts so you can request reimbursements once you've met the deductible.)
With a health savings account, the money in an HSA is yours to save. You control how the money is spent and you keep any interest and investment earnings from the account.