Linda M. Tuttle

3 Advantages of a Health Savings Account

I love to share information about the Health Savings Account because I believe they are one of the best tax planning tools out there?  Why?  Let's discuss.

First, medical expenses now and especially in your retirement years can be one of your biggest expenses.  So using this tax-advantaged tool can really be beneficial.

Here are three reasons HSAs are so great:


1. Tax Deductible Contributions at any income level


Yes, if you are on a high deductible health savings plan, you can make tax deductible contributions to a health savings account, no matter your income level.  As it is open enrollment season for health insurance now, keep this in mind and speak to your tax advisor to see if this makes sense for you.

 
2. Tax Free Growth:


Funds that you contribute to a Health Savings Account can grow within the fund Tax Free.  I know it is tempting and sometimes necessary to use the contributed funds to reimburse yourself for current medical expenses.  But if you are in a position to be able to, don't do an immediate reimbursement to yourself.  Funds in an HSA don't expire.  They aren't "use it or lose it" so they can continue to grow over time.  If you have health insurance through an employer you can still set up your own health savings account.  You get to keep those funds even if you stop working for an employer.  If you are able to let your HSA account grow, you can make some smart investment decisions with these funds and the growth within the account is all tax free!

 
3. Tax Free Distributions for Qualified Medical Expenses at Any Age

You don't need to wait until retirement age to use the funds in a health savings account.  If you have a big medical expense you can use the funds at any age for qualified medical expenses.  So long as you take a distribution to reimburse yourself or pay for medical expenses for you or your dependents, you don't pay any tax on the distribution.


Contribution limits for 2023 are $3,850 for single and $7,750 for married or family.  If you are age 55 you can contribute an additional $1,000.  You can't make contributions after the age of 65.


Did you know you can invest the funds in your Health Savings Account to really grow your account?  You can invest in stocks, bonds, mutual or indexed funds, or you can take it a step further and move your funds to a self-directed account with a custodian and even invest in real estate, notes, businesses, crypto.  Think of the power of making tax deductible contributions and investing in vehicles like this to grow your account tax free.

With every episode of Linda Tuttle Adventuring Accountant TV, I like to equip you with a free resource that goes with the episode for the week.  

This week's episode is all about how owning your business can be a good thing for your life.  I talk about converting personal expenses into business expenses.  I put together a new free resource called 10 Essential Tax-Saving Strategies for Entrepreneurs.  I'm excited to share this with you.

After going through this guide, you will have some real strategies you can implement in your business right away.

You can download the FREE resource by clicking the orange button above.

Linda M. Tuttle

3 Advantages of a Health Savings Account

Conclusion:

Health Savings Accounts can be a great tax planning vehicle and I love to share more information about them.

If you'd like to learn more about if you are eligible to contribute to a health savings account, options for investing your account, and more about setting up a self-directing your HSA funds, book a call with me HERE.  

Resources

Profit Booster Crash Course - Learn More Here

Tanya's Ultimate Branding Blueprint Program - Learn More Here

Entrepreneurs Calendar - Learn More Here

You can download this FREE resource by clicking the yellow button below


Linda Tuttle
Linda Tuttle

I hope you found value in this post. I share a new weekly training here on the blog each week for you, with different topics to help you grow your business and maximize your income so you can live the life you want as you prepare for retirement. If there are topics you would like me to cover, let me know.

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