“In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.” —Peter Lynch
Access to affordable and quality health care is a huge topic in today’s society. Distractions such as fast food, prescribed medications, lifestyle choices, and environmental hazards all contribute to diseases and illnesses that many are plagued with today. Have you considered how your lifestyle would be impacted if you needed to have a major medical procedure today? Would you be able to cover the copay for your appointments? If not, it is definitely something to ponder.
What is a Health Savings Account?
A health savings account is a tax-favored savings account used to pay medical expenses that your insurance does not cover. These funds can be used to pay for copayments and coinsurance. Each HSA will provide the insured with a debit card or checks to write to pay for medical expenses. According to NerdWallet, “HSAs can be can be invested in mutual funds, stocks and other investment tools to generate more money.”
Annual Contribution Limits
According to CBS news, the IRS recently increased the limits for HSAs. The 2018 contribution limit for an individual is $3,450. The contribution limit for a family medical plan is $6,900. For those over the age of 55, you can add an additional $1,000 to each plan.
Getting Started
In order to qualify for an HSA, you must have a qualified high deductible health insurance plan. HSAs are often provided by a health insurance provider. One drawback is that you cannot be claimed as a dependent on another person’s tax return.
Benefits
Below are a few advantages for having a health savings account.
- 100% Tax Deductible.
- Withdrawals are tax-free if the funds are used to pay for qualified medical expenses.
- HSAs can lower the cost of health insurance.
- Unused funds will roll over into the next year.
- Investment options
- Interest on assets grows tax-deferred.
Wrap Up
Saving for medical emergencies early on will allow you to coast into your retirement. Take advantage of an HSA to cut down on out of pocket medical costs. Do not count on the government to pay your hospital bills. Start planning today for tomorrow.
