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June 04, 2009
What Health Savings Accounts Can Do For You
Health Savings Accounts were introduced in 2004 and allow individuals to pay for medical services upfront through funds they deposit tax-free into their personal Health Savings Account. A required insurance policy then kicks in for catastrophic expenses. Any unused funds build up from year-to-year and collect interest in the process.
Put simply, no other investment account has the tax advantages that Health Savings Accounts do. Throughout the life of a Health Savings Account its owners can withdraw funds for qualified medical expenses tax-free. Because of this, taxpayers should consider fully funding their Health Savings Accounts first, before any other type of retirement accounts.
With health care costs continuing to outpace wage increases and companies trimming retiree health benefits, financing health care has to be central to retirement planning.
The beauty of Health Savings Accounts is that they can be used to pay Medicare premiums, out-of-pocket expenses, long-term care insurance premiums, and many long-term care expenses, say researchers. Even better, Health Savings Accounts can do all of this tax-free.
However, if you don't end up incurring these types of expenses, you can still use your HSA funds for other purposes and pay only regular income tax on your withdrawals after age 65.
Learn more about Health Savings Accounts and their benefits at HSA for America.
Posted by Wiley Long at June 4, 2009 11:42 AM