5 Benefits of a Health Savings Accounts (HSA)-
Ask any average senior about the most worrisome aspect of retirement; the answer often comes down to their concerns related to healthcare. Fidelity Investments estimates that a retiring couple may spend $285000 on their medical expenses throughout their retirement. In addition, other reports suggest even higher numbers on medical expenses.
If you are stressed about paying medical expenses throughout your retirement, then health saving accounts may offer you the ideal solution. A health savings account (HSA) is designed to help the working people to save for their medical expenses. For an HSA, you are required to have a high-deductible health insurance plan for single coverage of $1350 or have $2700 for your family coverage. Once qualified, you can contribute about $3500 and $7000 for individual and family coverages, respectively.
If you are confused about opening an HSA account, then read on to find out the benefits this account has to offer:
It is crucial that you claim every possible deduction to lower your tax bill. These deductions result in a significant reduction in your taxable income, which in turn pushes you in a lower tax bracket. A Health Saving Account (HSA) allows you to write off the amount you contribute every year.
For 2019, the individual coverage is set at $3500, and the family coverage is limited at $7000. People at the age of 55 or above can have $1000 with an HSA coverage.
You are given until the annual filing deadline to contribute for the last tax year. So, if you are looking for tax breaks, then HSA might be the ideal option.
Typically, when you contribute some money to any tax-advantaged account, you are required to pay taxes after you start withdrawing the money. On the other hand, when you use a qualified HSA account, you aren’t expected to pay any taxes.
However, if you start utilizing your Health Savings Account (HSA) for some other purposes, you will have to pay the regular taxes along with a 20% penalty. But for seniors age 65 or above are spared from the 20% penalty and only have to pay the tax at a regular rate.
Once you have signed up for a health savings account, you need to figure out the ideal way to invest your saved money. Depending on where you have opened your HSA account, you can avail of a wide variety of beneficial options. Selecting the right investments is crucial for your growing your savings and earnings.
One of the biggest advantages of HSA is that no matter how much the value of your account increases, it isn’t waived from taxes.
According to Fidelity Investment that a cost of retirement in a case where both spouses are 65 years old or above, is calculated to be $280,000. HSA funds can help retiring couples at such high costs. Payments for which retirees can withdraw HSA funds include:
-
Dental expenses
-
Prescription drugs and insulin
-
Hearing aids
-
X-rays
-
Hospital and therapy bills
-
Office-visit co-payments
-
Vision care
-
Medicare premiums
-
Wheelchairs and walkers
You can easily set up the HSA account even without the help of an investment company. You have two options to set up an HSA account, either you do it through a bank or do it online by yourself.
Most health saving accounts issue you a debit card so that you may be able to pay for the prescribed medications and other expenses quickly. If you cannot wait for the bill to come by mail, you can contact the billing center and makes payments through your debit card.
Where Health Savings Accounts offer you immense benefits, most people cannot select the right option for themselves. If you struggle with understanding the many leverages of HSA, then get in touch with LHUI in Seattle, WA. Our professionals help build your understanding, guide through the process, and design the right plan for you.
Don’t miss out on the leverages of Health Savings Accounts. Contact us to schedule a consultation today!