Benefits Spotlight: Health Savings Accounts

Using an HSA can give you a triple tax advantage:

• Your contributions to an HSA are pre-tax, meaning you don’t pay federal income tax, Social Security tax, and in most cases, state income tax on the money you contribute. That can save you 30% or more on eligible medical expenses.
• Earnings on your investments in an HSA are tax-free.
• Withdrawals are tax-free. (This is true unless you use money from your HSA for something other than medical expenses; if you do that, you’ll have to pay federal income taxes and a 20% penalty tax. The rules change past the age of 65, but still allow you to use money for medical expenses without being taxed.)

With an HSA, you are in control. The account belongs to you – you decide whether to use the money now or roll it over to pay for medical expenses in the future. The account is portable, so you can move the money with you if you change employers or decide to change where the account is held. And, the money in your account often can be invested, earning you income on your savings – you decide how it’s invested.

To learn more about the HSA, click here.