HSAs’-How to make Smarter Decisions for Tax-Deferred Savings on Healthcare Costs

As healthcare expenses continue to rise, it’s more important than ever to find tax-efficient ways to prepare for medical costs—both now and in the future. One powerful, often underutilized tool is the Health Savings Account (HSA).

If you’re enrolled in a High-Deductible Health Plan (HDHP), you may be eligible to contribute to an HSA, which offers three significant tax advantages:

1. Tax-deductible contributions
2. Tax-deferred growth
3. Tax-free withdrawals for qualified medical expenses

That’s a rare trio in the world of financial planning! But as with any retirement-style account, understanding the rules is key to maximizing your benefits and avoiding costly missteps.

How to Get Started with a Health Savings Account:

• Determine eligibility: You must be enrolled in an HDHP. (Note: You’re not eligible if you’re enrolled in Medicare.)
• No income limits apply: Unlike IRAs, there’s no income cap to participate, and even those not currently working can contribute.
• Know your contribution limits: Limits are adjusted annually and depend on whether you have individual or family coverage. Those 55+ can make an additional catch-up contribution.
• Invest your HSA funds: Some custodians allow you to invest your balance in mutual funds, stocks, or bonds—growing your savings just like a retirement account.
• Meet the deadline: Contributions can be made up to the tax-filing deadline (April 15, the previous tax year).

An HSA could play a valuable role in your long-term financial plan, especially when it comes to managing rising healthcare costs during retirement. We’ve prepared a handy guide, “Contributing to a Health Savings Account in 5 Easy Steps.” You can download it below.

Financial success doesn’t happen by chance.

If you’d like help determining whether an HSA fits into your overall strategy, we’re here to guide you. Call our office, 940-464-4104, to schedule a time to discuss your HSA account questions. You may also book a virtual consultation online.