Scott Horstman, Product Development Manager | September 4, 2018
For those HSA-eligible and enrolled in a High Deductible Health Plan (HDHP), any qualified medical expenses beyond preventive – which are already covered at 100% – may be paid through a health savings account (HSA) that’s coupled with the plan. Contributions to your HSA can be made by the plan, and you may make tax-free deposits as well.
Best of all, there are many financial advantages to having an HSA; some of which even extend beyond paying for health care.
One of those advantages is the ability to invest dollars in the HSA. For instance, many HSAs provide access to mutual funds and other investment options, similar to an IRA. And, like an IRA, money in your HSA will grow tax-free.
Tax-free withdrawals from your HSA can be made at any time for qualified medical expenses, which are listed in Section 213(d) of the Internal Revenue Service Code as well as IRS Publication 969.
There are a few basic rules that govern HSA eligibility. For example, once you start Medicare you may continue to participate in the HDHP, but can no longer make contributions to an HSA. At that time, your plan might use an alternative account such as a Health Reimbursement Arrangement (HRA) for your use.
If you participate in an HSA, you decide whether you make withdrawals for qualified medical expenses or pay out-of-pocket and allow your balance to grow. It’s your money!
Information shared in this article should not be taken as legal or tax advice as HDHPs may not be the best choice for everyone. To help you determine if an HDHP is right for you, consult with a trusted tax or legal adviser and review IRS publications 502 and 969.