Tiger1
Well-Known Member
Tax advantage
Nearly all HSA accounts are used in combination with a type of health insurance known as a high-deductible health plan. As their name implies, HDHPs have high deductibles, often $1,200 or greater for a single person, or $2,400 for a family.
HDHPs provide coverage for medical emergencies, leaving the day-to-day health care costs to the employee. HSAs can be used along with a HDHP to help offset those day-to-day costs.
When used correctly, HSAs can also provide a triple tax advantage, something even a 401(k) or IRA cannot do. The money put into an HSA is not subject to federal income tax, and if the money is invested, any growth is tax-free as well. Any money used toward eligible medical expenses can be tax-free too.
If your employer hasn’t offered an HDHP yet, it’s only a matter of time. By next year, 80 percent of all large employers will offer an HDHP, according to a 2013 employer survey by Towers Watson. The vast majority of those HDHPs will include an HSA, according to the survey.
If you get an HSA, it should not be used the same way as an FSA, experts say.
FSAs are designed to be used up each year. While it’s OK to spend a part of your HSA, the long-term goal should be saving for future medical expenses.
Experts warn that HSAs are not a good choice for individuals who are chronically ill because those people will burn through the money, eliminating a chance to invest it.
Once the HSA reaches the $2,000 threshold, it can be invested. However, it’s important to invest HSA savings more conservatively than in an IRA or 401(k), experts say. Medical expenses can come up unexpectedly, and you may need the money quickly.
http://www.tennessean.com/viewart/2...ings-accounts-offer-investment-tax-advantages
Does anyone on this site have a HSA and can provide some feedback?
FSA's don't roll over year to year. You normally have to use it up during the first 3 months of the following year or cash it out.
Nearly all HSA accounts are used in combination with a type of health insurance known as a high-deductible health plan. As their name implies, HDHPs have high deductibles, often $1,200 or greater for a single person, or $2,400 for a family.
HDHPs provide coverage for medical emergencies, leaving the day-to-day health care costs to the employee. HSAs can be used along with a HDHP to help offset those day-to-day costs.
When used correctly, HSAs can also provide a triple tax advantage, something even a 401(k) or IRA cannot do. The money put into an HSA is not subject to federal income tax, and if the money is invested, any growth is tax-free as well. Any money used toward eligible medical expenses can be tax-free too.
If your employer hasn’t offered an HDHP yet, it’s only a matter of time. By next year, 80 percent of all large employers will offer an HDHP, according to a 2013 employer survey by Towers Watson. The vast majority of those HDHPs will include an HSA, according to the survey.
If you get an HSA, it should not be used the same way as an FSA, experts say.
FSAs are designed to be used up each year. While it’s OK to spend a part of your HSA, the long-term goal should be saving for future medical expenses.
Experts warn that HSAs are not a good choice for individuals who are chronically ill because those people will burn through the money, eliminating a chance to invest it.
Once the HSA reaches the $2,000 threshold, it can be invested. However, it’s important to invest HSA savings more conservatively than in an IRA or 401(k), experts say. Medical expenses can come up unexpectedly, and you may need the money quickly.
http://www.tennessean.com/viewart/2...ings-accounts-offer-investment-tax-advantages
Does anyone on this site have a HSA and can provide some feedback?
FSA's don't roll over year to year. You normally have to use it up during the first 3 months of the following year or cash it out.