been hearing a lot about health savings accounts ––
a sort of stealth retirement savings vehicle from which
investors can withdraw money tax-free for medical
worth a look, although they’re not for everyone.
you’re covered by a qualified high-deductible health
plan, you can contribute pre-tax income to an
employer-sponsored health savings account or make
deductible contributions to an HSA you set up through a
brokerage firm. Qualified plans have an annual
deductible of at least $1,350 for an individual or
$2,700 for a family, according to Healthcare.gov.
savings account is an investment account, which can bear
interest or be invested in the markets, similar to an
the upside: Withdrawals for qualified medical expenses
are tax-free, and you can carry over a balance from year
in March 2018 issued guidance for 2018 HSA contributions
of $3,450 for individuals and $6,900 for those with
family coverage ($7,900 for HSA owners age 55 or older),
according to the Isdaner & Co. accounting firm in
Bala Cynwyd, Pa.
drawback: If you’re enrolled in Medicare, you can’t
contribute to an HSA. However, you can create one before
you enroll in Medicare and still take tax-free money out
for qualified medical expenses.
adviser and tax expert Sarah Brenner created a helpful
list of all the things you can pay for using money
withdrawn tax-free from your HSA:
Qualified medical expenses, including doctor and
hospital bills, medical supplies, prescriptions,
co-payments, dental care, vision services, and
Your spouse or child’s medical expenses, even if they
are not covered by your high-deductible health-insurance
plan. Even after your death, your spouse can use the
money tax-free for qualified expenses.
Medical expenses in a previous year, as long as expenses
were incurred after you established your HSA. That means
you do not have to withdraw money from an HSA every time
you have a medical expense. You can pay out of pocket,
and let your account grow, or reimburse yourself in a
later tax year.
Qualified medical expenses incurred even after you no
longer have a high-deductible health plan and no longer
contribute to your HSA.
Certain Medicare insurance premiums after you turn 65,
but not Medigap premiums.
everyone is a fan of HSAs, including investor Lisa
personally think HSAs are not worth the bother unless
someone is so healthy and has so much extra money that
all they really need is catastrophic health
insurance,” she said. “People who hawk these often
forget to say that HSA plans only come with very
high-deductible health insurance. They are fine for
young people without health issues, but for people who
actually go to the doctor or have regular medications,
they are a waste of money,” she said.
idea (of HSAs) is that you don’t pay for insurance you
don’t need and can save the rest tax-free, but I’d
rather pay less for my health costs now and put the
money from a lower deductible and health expenses into
an investment account.”