Healthcare can be expensive in retirement but also in the decades before — a Health Savings Account could help you save for current and future medical expenses. Do you get overwhelmed by your options during open enrollment? Cliff and Avery with Wyatt Insurance explain what a Health Savings Account is, how to get one, and why it is a one of the best tools available.
1. What is an HSA, what does it stand for?
A Health Savings Account, or HSA, is a way to save for medical expenses, reduce your health insurance cost and your taxable income. An HSA is an individually owned account designed for people to be able to use money for current and future medical expenses.
2. What type of medical plan do you have to have for an HSA?
Yes, the IRS requires a High-Deductible Health Plan to be eligible for a Health Savings Account. Often employers will offer different types of plans during Open Enrollment for employees to elect.
3. Does an HSA run out at the end of the year?
No! One beauty of a Health Savings Account is if you do not spend it, then you do not lose it. Your HSA balance rolls over year to year and you may contribute annually, thus reducing your taxable income. Also, you can earn tax-deferred interest on the balance and use it as an additional retirement account.
4. What can you spend your HSA on?
You can spend your HSA on anything covered by the medical plan, plus a long list of other “Qualified Medical Expenses”. Here are some of the Qualified Medical Expenses you can spend your tax-free HSA for you or any dependent, regardless if that dependent is covered by your medical plan:
- Medical treatment
- Dental treatment
- Vision treatment
- Doctor’s office visits and copays
- Prescription drugs and over-the-counter medication
Sorry, you cannot use your HSA on dancing classes or nail polish.
5. Why should you have an HSA?
A Health Savings Account is a great tool when looking for ways to save money on current and future medical expenses. An HSA will help you save on a pre-tax basis, reduce your health insurance cost, create a higher deductible plan, and prepare you for retirement.
If you want to learn more about a Health Savings Account and if it is the right fit for you, schedule a consultation in the form below. You can also follow us on Instagram at @wyatt.insurance or follow us on Facebook.