Security – High deductible insurance and HSA protects against high or unexpected medical bills.
Affordability – Lower health insurance premiums by switching to health insurance coverage with a higher deductible.
Flexibility – Use the funds to pay for current medical expenses, including expenses insurance may not cover, or save the money future needs, such as:
- Health insurance or medical expenses if unemployed.
- Medical expenses after retirement (before Medicare).
- Out-of-pocket expenses when covered by Medicare.
- Long-term care expenses and insurance.
Savings – Save the money for future medical expenses and grow
the account through investment earnings.
Control – Individuals make all the decisions about:
- How much money to put into the account.
- Whether to save the account for future expenses or pay current medical expenses.
- Which medical expenses to pay from the account.
- Which company will hold the account.
- Whether to invest any of the money in the account.
- Which investments to make.
Portability – Accounts are completely portable,
individuals can keep their HSA even if they:
- Change jobs.
- Change medical coverage.
- Become unemployed.
- Move to another state.
- Change marital status.
Ownership – Funds remain in the account from year to year, just like an IRA. There are no “use it or lose it” rules for HSAs.
Tax Savings – An HSA provides triple tax savings:
- tax deductions when contributing to the account;
- tax-free earnings through investment; and,
- tax-free withdrawals for qualified medical expenses.
Next: What Happens to an HSA at Death?
Previous: Using Your HSA
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