Congratulations on opening your health spending account (HSA)! We want to help you maximize your account.
Many people who get an HSA with their job’s benefits package aren’t completely sure how they work. We can help with that.
Benefits of an HSA
An HSA is a savings account you own that you can use to help pay for many different types of medical expenses. When we say you own it, we mean just that. The account and the money in it, even if the money was contributed by your employer, is yours to keep, even if you change jobs or retire.
One of the main benefits of an HSA is that it can help you save money. Every dollar you contribute to your HSA, even if you don’t spend it immediately, reduces your taxable income. For example, if you earn $50,000 a year, every one of those dollars could be taxed at your tax rate, often about 20%. But if you contribute money to an HSA, that money isn’t taxed. So if you earn $50,000 but put $5,000 into an HSA, you will only pay taxes on $45,000.
If you spend your HSA money on qualified medical expenses, it will never be taxed. You can even save the money for retirement and use it to pay for Medicare premiums if you want to.
Whether or not you actively use your HSA as a savings account, you can still use the account to help save you money. Follow along with this series to learn more.