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Are Health Savings Accounts (HSAs) Right for You?

Are Health Savings Accounts (HSAs) Right for You?

July 06, 2023

Increasingly, clients are asking our team for more information on High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs). Many of you are likely familiar with the terms but may question whether they’re right for you and your family. I’m sharing some high-level information in case this is a topic you’d like to learn more about.

Highlights of HSAs and HDHPs

  1. HSA eligibility: You can only open an HSA if you’re enrolled in an HDHP offered by your employer or through the Affordable Care Act’s marketplace exchanges. You are not eligible if enrolled in Medicare or are claimed as a dependent on someone else’s tax return.
  2. Triple tax advantage: Employees make contributions with pretax dollars, the potential for tax-free growth of the account, and tax-free withdrawals for qualified medical expenses.
  3. Investment: Funds in HSAs can also be invested after your account balance reaches a certain limit.
  4. Rollover: Unlike a Flexible Spending Account (FSA), which is funded with pretax dollars but must be used by a specific deadline, any money in an HSA that is not used in the current year can be used in the future.
  5. Portability: You can keep your HSA if you change jobs.
  6. Lower premiums: HDHPs typically have lower monthly premiums compared to other health plans, which may make them attractive to some people.

Important Facts about HDHPs and HSAs, 2023

If you're interested in learning more about HSAs and HDHPs and whether they might be a good fit for your financial situation, please feel free to reach out. We may have some material that can help you do a more in-depth evaluation of the pros and cons of an HSA.

Managing healthcare expenses is a key part of your overall financial strategy, and we’re here to offer you guidance so that you can make decisions for yourself and your family.