Back in 2004, President Bush introduced Health Savings Accounts (HSA). Only individuals or families covered under a high-deductible health insurance plan during the year are eligible to contribute to an HSA. There are minimum annual deductible amounts in order to qualify as a high-deductible plan. So if you haven’t boned up on HSAs yet, here are a few factoids for you:
- Money contributed into an HSA is tax-deductible. Either you contribute into an HSA on your own, or your employer contributes on your behalf.
- Money invested within the HSA is your money and grows tax-deferred. Unlike Flexible Spending Accounts (FSA) offered to you as part of your employee benefit package where you set aside a set amount of money to pay for your family's healthcare costs with pre-tax dollars, there is no "use it or lose it" pitfall with HSAs.
- Money can be withdrawn tax-free from your HSA at any time to pay for your family's healthcare expenses.
- Any money remaining in your HSA upon your reaching the age of 65 is available to subsidize your retirement.
For more information about HSAs, check out IRS Publication 969.
