What Is A Health Savings Account?
A Health Savings Account (HSA) is a way to save for medical expenses and reduce your taxable income. Individuals can set an HSA up with them as the sole beneficiary or one can be created for an individual and spouse and/or dependents.
Who Is Eligible For A Health Savings Account?
Individuals who are eligible for an HSA have to be enrolled in a High-Deductible Heath Care Plan. These plans may have high deductibles, but typically the monthly premiums are much lower than plans that have lower deductibles. They cover health expenses such as illness or injury and your annual deductibles have to be met before any plan benefits are paid.
Benefits Of Health Savings Account
- Tax Deduction: Health Savings Account are deductible from your gross pay or business income. This is beneficial because it gives individuals a large tax deduction and can even put you in a lower tax bracket.
- Tax-Free Growth: An HSA account allows you to grow and build funds for your future healthcare needs.
- Tax-Free Withdrawals: The money that you put in your HSA, can also be spent on tax-free qualified medical expenses. Individuals can also take out money right away. Click HERE to see a list of medical expenses that you can use your HSA that are tax free.
- Convenience: When an individual sets up their HSA, they can go to their local bank and set one up either physically or online. Often time, individuals will get a debit card for their HSA. This allows you to be able to pay for your medical expenses right away. If you won’t be using the money right away, you can get the help from an IRA custodian.
- Portable: Your HSA is available even if you change your health insurance plans, change employers, or retire.
- Retirement: Once you turn 59.5, individuals can withdraw the money from their HSA to non-heath care expenses and then pay federal income taxes on it. The HSA will be treated more like an IRA.
The Family Credit Union
The Family Credit Union is here to help our customers learn more about savings. Contact us today and we will be happy to assist you with all of your money management needs! We look forward to serving you as the #1 choice for credit unions in the Quad Cities area.