Should You Consider A Health Savings Account?
Income tax free has a great sound to it! Anytime you hear of a plan that allows consumers to pay for qualified medical expenses with pre-tax dollars, it needs to be considered as part of your overall personal financial savings goals.
Health Savings Account or HSAs are tax-favored savings accounts that are usually set up with eligible high-deductible health insurance plans, through your employer, bank or insurance agent. They are a good choice for people wanting to save on their health insurance costs by combining lower cost, higher deductible insurance plan with this tax-favored savings account.
Simple concept; the money you save on choosing a higher deductable health insurance plan can be deposited pre-tax into your account and withdrawn anytime in the future for qualified medical expenses. There are limits to what you can contribute each year and withdrawals can be made at anytime for non-medical purposes; you will be taxed as normal income and subject to a 10% penalty if done before you are 65 years old. Any HSA funds you do not use each year remain in the account and earn interest.