We wanted to bring your attention to a recent CNBC article discussing tax advantages offered by Health Savings Accounts (HSAs) and the potential for optimizing their use.  To be eligible for these advantages, the individual must be currently participating in a High Deductible Health Plan (HDHP) that qualifies for HSA accounts.

According to a survey by the Plan Sponsor Council of America, only 19% of HSA participants are currently investing their account assets, missing out on significant growth opportunities. HSAs, with their triple tax advantage, provide tax-free contributions, tax-free investment growth, and tax-free withdrawals for eligible medical expenses.

The key insight is that many account holders treat their HSA as a simple bank account, parking their money in cash rather than leveraging the full potential of this investment vehicle. Some financial experts recommend a strategic approach: holding cash in the account equal to one’s annual insurance deductible and investing the remainder for future growth.

By paying for current health costs out of pocket, when possible, individuals can allow their HSA to accumulate wealth for future health expenses or even retirement. This approach aligns with the efficient use of HSAs as a long-term investment, like a 401(k) plan.

If the insured is participating in an HDHP either through their employer, private insurance, or through the Marketplace, there are options to open an HSA account to access these investment opportunities.  Not all insurance plans qualify, so be sure to confirm with the employer, insurance agent, or Marketplace that your plan qualifies.

If you have any questions or would like to explore how to optimize your HSA for maximum benefit, please feel free to reach out.