Table of Contents:
The 7 Benefits of Health Savings Accounts You Need to Know!
Health Savings Account FAQs
The Take Away
The Powerful Benefits of Health Savings Accounts
Why does it seem like some people get ahead in life while others struggle? The answer is knowledge. Having the right information and using it leads to success. At Tri Cities Credit Union, we exist to do just that - provide you with information that can help you achieve financial success.
A health care savings account (HSA) is an effective tool, and if you learn about it, you’ll have the right information to get ahead. We’ll show you how it can help you gain peace of mind about your healthcare costs. But beyond that, we’ll see how it can put you on the path to financial success.
The 7 Benefits of Health Savings Accounts You Need to Know!
What comes to your mind when you think of a health savings account? Many think it’s an optional health benefit. But an HSA offers much more than that. Let’s look at 7 of the most powerful HSA benefits.
It’s your money, and it moves when you do.
HSA funds are portable, meaning that they can be moved. Funds in your HSA belong to you - not your employer. If you leave a job, you take the balance in your HSA with you. This is entirely different from other employer-provided benefits, such as flexible spending accounts. When leaving a job, the funds in that account are surrendered. With an HSA, that isn’t the case. The funds belong to you, and you can transfer the balance to a new HSA with your new employer or to an HSA you set up yourself. This puts you in the driver's seat! [2]
No magic tricks - your money doesn’t disappear every year.
Most health accounts have a “Use-It-Or-Lose-It” rule that requires funds to be spent within a calendar year, or they are forfeited. It’s like a magic trick where leftover funds are present one day, and then, at the stroke of midnight on New Year’s Day, they disappear. That unused money is lost. An HSA allows you to carry over any unused balance year after year. That means you never lose any of your money! And with careful management, you can develop a balance in your account that grows larger every year, like a snowball rolling down a hill. Now is the time to set up an HSA and build momentum with a growing account balance. [1]
HSAs can be used for dependents, providing added protection.
Most people view their HSA as a resource to cover their medical expenses. Additionally, it can provide an extra layer of protection for your family. That is because HSAs allow you to cover the qualified medical expenses of your spouse and other dependents. Imagine if your child needs eyeglasses or your spouse has an accident and has to go to the ER. You can pay those bills out of pocket and watch your bank account dwindle. With an HSA, you can pay those same bills for your loved ones with the funds in your account. [3]
Your Employer Might Offer Free Money - Don’t Leave It on the Table
Many employers will contribute funds to your HSA. They do this for several reasons. First, it encourages employees to plan for their own healthcare costs. It also provides a value-added benefit that helps retain employees. It allows employers to treat their contributions as a tax deduction. We would love to have you open an HSA at Tri Citie Credit Union, but if your employer offers HSAs and makes contributions to them, that is FREE MONEY! We encourage you to take advantage of that opportunity. This is another great benefit of an HSA. [4]
The Triple Tax Advantage.
HSA tax benefits are truly amazing! The contributions you make to your account are tax-deductible. That means they will lower your overall taxable income and the amount of taxes you owe each year. But on top of that, the growth of the funds in your account created through interest and earnings is never taxed. Finally, you pay no taxes on withdrawals for qualified medical expenses. [5]
It Grows Like an Investment Account - Build Wealth While You Can!
Many HSAs offer investment options that are very similar to those of 401(k) or IRA plans. Whether investing your contributions into an interest-bearing account, bond fund, mutual fund, or ETF, your account balance can grow significantly over time. The reason is the power of compounding interest, which helps investments grow exponentially. An HSA puts this power in your hands, and again, all of that investment income is tax-free. If you’re not investing in an HSA, you’re missing out on the opportunity to build wealth. [6]
It Becomes a Retirement Fund - Create Another Way to Pay Yourself!
When you reach the age of 65, you can use your HSA not only for medical expenses but also make withdrawals for any reason without any penalties. Essentially, it becomes a retirement account that provides an additional source of income, like a Roth IRA or a 401(k). Developing multiple revenue streams in retirement is a key strategy for success. Take advantage of an HSA to build another powerful way to fund your retirement! [7]
Health Savings Account FAQs
These are the powerful benefits that an HSA offers to you, but they lead to a couple of important questions:
What are the HSA eligibility requirements?
There are 4 main qualifying factors. First, you must be in a high-deductible health insurance plan. Second, you cannot have other health coverage, such as a non-HSA-eligible plan through your spouse. Third, you cannot be claimed as a dependent on someone else’s tax return. Finally, you cannot be enrolled in Medicare (you may have an existing HSA account, but you cannot open a new one and make contributions). Don't let eligibility requirements hold you back from moving forward! Reach out to us today, and a representative will be happy to discuss eligibility requirements and the steps to open an account. [8]
What if my employer doesn’t offer an HSA?
If your employer doesn’t offer an HSA, that is not a problem – set up an HSA with us. Tri Cities Credit Union offers HSAs with a wide range of investment options to fit your needs. Depending on your goals and risk tolerance, an investment mix can be tailored to suit your needs. Setting up an HSA yourself puts you on a path to greater control over your healthcare and retirement planning. That is a liberating experience that you can be proud of! Talk to us about starting this journey, and we will help you make it a reality.
The Take Away
We began by discussing the power of knowledge and how having the right information drives success. Understanding the benefits of health care savings accounts provides you with powerful information that can help you worry less about healthcare costs. It can help you chart a course to a more secure financial future. But that is only possible if you act on this information.
Schedule a consultation with an HSA specialist at 308-946-8232 (Monday through Friday, 8:00 AM - 5:00 PM).
Now is the time to discuss setting up an HSA with Tri Cities Credit Union.
We would love to help you start experiencing these benefits as soon as possible!
Resource List
https://www.benefitfocus.com/resources/blog/hsa-rollover-what-tell-your-employees
https://www.healthinsurance.org/other-coverage/top-10-reasons-to-use-health-savings-accounts/
https://www.peoplekeep.com/blog/using-hsa-funds-for-dependents-individual-health-insurance-expenses
https://www.basiconline.com/blog/do-employer-contributions-affect-hsa-limit-2/
https://www.natptax.com/news-insights/blog/health-savings-accounts-and-their-triple-tax-benefits/
https://www.aarp.org/money/retirement/hsa-secret-tax-weapon/