Another Savings Option – Health Savings Accounts

Recently the IRS announced the inflation-adjusted limits for “Health Savings Accounts” or HSA’s for 2020. The limit moved from $3,500 for individuals to $3,550 and from $7,000 to $7,100 for families.

HSA accounts are available for individuals with high deductible health care plans (many of us these days!). They allow you to make pre-tax contributions and to use these contributions for qualified medical expenses. Essentially you pay your medical expenses with pre-tax dollars.

However, there is another “trick” that you can do to fully leverage these accounts—max out the accounts and use the accounts in the future/in retirement! You see, HSA accounts do NOT expire. Furthermore, they have some characteristics that make them superior to traditional IRAs.

Should you start/use and HSA? I cannot answer that question, as I’m not your advisor. However, I can offer that this is a conversation that you definitely should have with your advisor.

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