Redding CA Bookkeeping and Tax Service

HSA Accounts – Did You Know?

Health savings accounts or HSAs are often referred to as another form of retirement plan for those with access to them. An HSA is a medical savings account that may offer triple tax advantages. Contributions are pre-tax, the money can be withdrawn tax-free to pay for qualified medical and related expenses and any interest earned is tax-free as well.

For those who can afford to allow their HSA to accumulate for retirement, they can be used to pay for Medicare premiums and other healthcare costs in retirement as unused funds can be carried over year-to-year. If you are over age 65, withdrawals for non-qualified expenses can be made without penalty, but subject to taxes just like an IRA

An HSA can only be opened in connection with a high deductible health insurance plan as defined by the IRS. Contribution limits for 2018 are $3,450 for single people and $6,900 (this was reduced to $6,850 in March but has since been restored) for families, with an extra $1,000 for anyone age 55 or over.

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