5 Reasons Why You Should Open a Health Savings Account
Many reports in recent years place medical expenses as the No. 1 cause of bankruptcy in America – even for those who have health insurance. No matter what your insurance status may be, there’s no denying that medical costs are expensive.
One way to ease the burden is by opening a pre-tax Health Savings Account (HSA). While you should check with your employer or financial advisor, here are some reasons why an HSA may be a good idea, according to Optum Bank.
1. HSA contributions are tax deductible. This means you are actually receiving discounts on health care expenses. For example, if you receive a dentist bill for $400, when you pay with your HSA, you are saving between $100 and $140 dollars based on your tax rate.
2. Your HSA money is yours to keep. Any money deposited into your HSA, either by you or your employer, is yours to keep, with no deadline for spending the money. According to Optum, this makes an HSA a great way to save for retirement – any money you keep in your account will earn interest.
3. An HSA gives you a cushion for the unexpected. You never know when a big medical expense will hit, so having a cushion in your HSA account is extremely helpful. You can also reimburse yourself from your HSA account when you pay for medical expenses out of pocket.
4. You can use your HSA for anyone in your family. You can use your HSA to pay for the qualified medical expenses of anyone you claim on your taxes, even if you're only enrolled with single coverage.
5. Your HSA can be used for many drugstore items. You can use your HSA card to pay for many common items that tend to really add up, such as over-the-counter cold medicines, pain relievers, allergy medicines, first-aid items, etc.
A small, pre-tax contribution to your HSA every month can help you meet deductibles and provide some often needed peace of mind in today’s economic climate.