If you’re not familiar with the health savings account, it’s important to learn about this option and all the benefits that it can offer. These accounts are often called HSAs and they are basically a saving account that helps you pay for expenses that are health-related. Usually, these accounts are a part of health plans that have high deductibles. Pre-tax dollars are saved for medical expenses that are current or in the future, which can definitely offer a variety of benefits. Here is a look at just a few of the benefits you can enjoy with a health savings account.
Benefit #1 – Save on Health Care Costs
One of the top benefits of a health savings account is that it can help you save on your health care costs. These accounts usually are paired with health plans that have high deductibles. This way you lower your costs while making sure you have coverage if you encounter a huge medical problem. Your pre-tax dollars are used to pay off regular medical expenses and over time this can definitely provide you with a lower cost than high premium health plans usually offer you.
Benefit #2 – Great Tax Savings
Another of the benefits of these health savings accounts is that they offer you great tax savings. When you pay for most traditional medical plans, you pay with after-tax dollars. However, with these accounts, you can pay your health expenses with your pre-tax dollars. This helps you to lower your earnings that are taxable, which can help you save on taxes, especially if it helps you get into a lower tax bracket. With these accounts, you get great tax benefits on any medical expenses that are unexpected as well as routine health expenses.
Benefit #3 – Save for Retirement Too
You’ll also find that these health savings accounts offer the benefit of saving money for medical expenses that occur once you are retired. You’ll save money on taxes and you can keep money in these accounts until you need to use them, much as an IRA. You can often choose investment options to help increase the amount of money you have in these accounts, but you don’t have to worry about early withdrawal penalties or any limitations with these accounts.
Benefit #4 – Pay for Your Spouse and Dependents Too
Last, not only can you pay for yourself out of the money in your health savings accounts, but you can make the account one that will help to pay for the expenses of your spouse and dependents as well, even if your high deductible health plan doesn’t cover them. This way you can mix up the insurance options you have to get the lowest cost possible.