Looking for a way to save on taxes?
As the end of the year approaches and your looking to renew health insurance coverage, you might consider a high deductible health plan with a health savings account.
A Health Savings Account (HSA) is like a personal checking account that earns interest, but the money you put in is tax-exempt (you don't pay taxes on the amount going into the account) and you can use it to pay for qualified medical expenses for you or your family.
Some benefits that make the account advantageous are:
- The actual costs of a high deductible health plan generally cost less than traditional health care coverage. Money saved on the insurance can be put into your HSA.
- HSAs have multiple tax benefits. Contributions to an HSA are 100% deductible from your federal gross income. Here are contribution limits. Interest on savings also accumulates tax deferred.
- Use the pre-tax funds in your HSA to pay for current medical expenses or expenses that your insurance may not cover including dental, vision, and long term care. See publication 502 on the IRS website for a complete list of qualified expenses.
- This is not a use it or lose it account. The funds you save stay in your account from year to year. Even if your HSA compatible coverage ends, you can still use the funds tax free for qualified expenses.
- Build savings for retirement. This type of account isn't just a right-now health savings tool. It can also serve as a retirement fund like a 401(K) or IRA. You can grow your HSA balance just like your other retirement accounts
- After age 65, HSA funds can be used for non-qualified expenses without penalty. Only income tax is accessed.
- You are in control of your HSA. Funds belong to you even if you switch jobs, become unemployed, or change medical coverage.
- HSAs promote healthy habits. With the increased awareness of healthcare costs, you may make healthier lifestyle choices too.
Click here for complete details on Flatwater Bank's HSA.