Health Savings Accounts (HSAs) help those enrolled in high-deductible health insurance plans (HDHPs) pay for qualified medical expenses. But 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. (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 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.)
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