HSAs - The Ultimate Tax-Advantaged Investment Vehicle
Health Savings Accounts (HSAs) are powerful tax-advantaged financial tools and health care solutions that cut across all income levels and lifestyles.
They offer TAX-FREE savings to a growing number of health care consumers who reject traditional health benefits in favor of low-cost, "HSA-qualified" high-deductible health insurance...
covering mainly catastrophic expenses.
These folks are able to deposit money into their HSAs free of income taxes and withdraw those funds tax-free to pay whatever medical expenses their high-deductible plans don't cover.
Balances not spent on health care can be carried forward tax-free.
No wonder HSAs are often described as "IRAs on STEROIDS!" With a traditional IRA or 401(k), you can deduct your contributions from taxable income each year, but any money withdrawn is taxed...
with a 10% penalty on IRA earnings taken before age 59½.
On the other hand, with an HSA you receive all of the same benefits of an IRA or 401(k), except...
you NEVER have to pay income taxes on distributions used for qualified medical expenses...
and you can take these tax-free distributions without penalty...
ANYTIME! IMPORTANT POINT: The HSA is the only tax-advantaged investment vehicle that provides a PERMANENT rather than a temporary escape from income taxes! The fundamental problem with American health care today is that people have TOO MUCH insurance! Coverage for minor medical expenses has become a standard feature of traditional health insurance and encourages people to consume more health care than they need...
and pay more for health insurance than they should! "True insurance", in the form of coverage for catastrophic health events has become the exception.
Pre-paid health care, in the form of low-deductible, copay coverage is the rule.
HSAs combined with high-deductible catastrophic insurance give people more "skin in the game" and cause them to be more responsible.
By having higher deductibles and eliminating first dollar copay coverage, people pay more of their minor medical expenses out-of-pocket, tax-FREE...
in exchange for dramatically lower premiums! The premiums for high-deductible, HSA-qualified health insurance are usually less than half the cost of traditional copay plans...
saving thousands of dollars every year that can be contributed tax-free to your HSA! And there's NO TIME LIMIT on how long you can wait to reimburse yourself with funds from your HSA, as long as the medical expenses were incurred after you opened you HSA.
That's right! You're allowed TAX-FREE withdrawals from your HSA at any time for unreimbursed qualified medical expenses...
all the way back to the day you opened your account...
even if it's 30 years or more later! Now, just imagine all that accumulated, compounded TAX-FREE interest and appreciation! HSA contributions and earnings...
allowed to compound tax-free...
have the potential to grow exponentially into a significant supplemental retirement nest egg.
They offer TAX-FREE savings to a growing number of health care consumers who reject traditional health benefits in favor of low-cost, "HSA-qualified" high-deductible health insurance...
covering mainly catastrophic expenses.
These folks are able to deposit money into their HSAs free of income taxes and withdraw those funds tax-free to pay whatever medical expenses their high-deductible plans don't cover.
Balances not spent on health care can be carried forward tax-free.
No wonder HSAs are often described as "IRAs on STEROIDS!" With a traditional IRA or 401(k), you can deduct your contributions from taxable income each year, but any money withdrawn is taxed...
with a 10% penalty on IRA earnings taken before age 59½.
On the other hand, with an HSA you receive all of the same benefits of an IRA or 401(k), except...
you NEVER have to pay income taxes on distributions used for qualified medical expenses...
and you can take these tax-free distributions without penalty...
ANYTIME! IMPORTANT POINT: The HSA is the only tax-advantaged investment vehicle that provides a PERMANENT rather than a temporary escape from income taxes! The fundamental problem with American health care today is that people have TOO MUCH insurance! Coverage for minor medical expenses has become a standard feature of traditional health insurance and encourages people to consume more health care than they need...
and pay more for health insurance than they should! "True insurance", in the form of coverage for catastrophic health events has become the exception.
Pre-paid health care, in the form of low-deductible, copay coverage is the rule.
HSAs combined with high-deductible catastrophic insurance give people more "skin in the game" and cause them to be more responsible.
By having higher deductibles and eliminating first dollar copay coverage, people pay more of their minor medical expenses out-of-pocket, tax-FREE...
in exchange for dramatically lower premiums! The premiums for high-deductible, HSA-qualified health insurance are usually less than half the cost of traditional copay plans...
saving thousands of dollars every year that can be contributed tax-free to your HSA! And there's NO TIME LIMIT on how long you can wait to reimburse yourself with funds from your HSA, as long as the medical expenses were incurred after you opened you HSA.
That's right! You're allowed TAX-FREE withdrawals from your HSA at any time for unreimbursed qualified medical expenses...
all the way back to the day you opened your account...
even if it's 30 years or more later! Now, just imagine all that accumulated, compounded TAX-FREE interest and appreciation! HSA contributions and earnings...
allowed to compound tax-free...
have the potential to grow exponentially into a significant supplemental retirement nest egg.
Source...