A Health Savings Account (HSA) Plan has two parts to it:
- A high deductible HSA qualified health plan
- A tax favored savings account
The 5 benefits to taking advantage of a HSA qualified health plan and opening up a Health Savings Account are the following:
- Health insurance premium can be less expensive than a traditional health plan because of the high deductible requirement.
- The money you put into your Health Savings Account is tax deductible and can be taken off the top of your income - for example, a single person who made $90,000 in 2016 and contributed the maximum allowable yearly amount of $3,350 can deduct that contribution amount and pay federal income taxes on $86,650 instead of the full $90,000.
- The money invested into an HSA account collects interest tax free.
- The money in the HSA that is used for a qualified medical purpose, such as paying toward the deductible when a medical bill is incurred, comes out tax-free.
- The money in your HSA account is always yours and rolls over year after year so you can really build a solid medical savings account to have available if you ever have a medical emergency or need.
Dan Fortier is a Wellness and Benefits Specialist at Fortier Insurance Services. Dan helps individuals and small business optimize their health and wellbeing one small step at a time. He can be reached at firstname.lastname@example.org