Health

How Does an HSA Help People To Save Money?

A Health Savings Account (HSA) is a great way to put your money away for medical bills and other health-related expenses.

In this article, I will show you how an HSA can help you save money.

What Is an HSA?

An HSA is a savings account that you can fund through tax-deductible contributions. These contributions reduce your taxable income.     

Another good thing about an HSA is that anu withdrawals used for qualified medical expenses are tax-free.

How Can an HSA Help You To Save Money

The money in an HSA can be invested, allowing it to grow over time. This growth is tax-free as long as the funds are used for qualified medical expenses.

Another way an HSA allows you to save money is that unlike flexible spending accounts (FSAs), funds in an HSA roll over from year to year, so you don’t lose any unused money at the end of the year.

Portability

HSAs are portable, meaning you can keep the account and use the funds even if you change jobs or health insurance plans.

Covering Medical Expenses

Using an HSA to pay for medical expenses can help you avoid using high-interest credit cards or dipping into your emergency savings.

Retirement Savings

 Once you turn 65, you can withdraw funds from an HSA for non-medical expenses without penalty (though you’ll pay income tax on the withdrawal). This can make an HSA a useful retirement savings tool.

Final Word

An HSA is a type of savings account that can help you ward off medical expenses.

Your contributions are tax-free and if you wait until retirement age, your withdrawals are too. What’s not to love?

Read more in our Money Section.

James Johnson

James Johnson is a writer originally from New York City. She has lived in the South for the last 15 years and enjoys Creole cooking and shrimp and grits.

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