Recent changes to health savings accounts (HSAs) make them much more attractive. These accounts double as health insurance and a retirement account. Previously, they only allowed smaller contributions each year, but the limit has been raised for 2024.
Money contributed to a health savings account is tax deductible. It enables money to be available for HSA-qualified expenses (the annual deductible), which are tax-free, and you can withdraw the money in retirement for any purpose without having to pay taxes on them.
The Savings Element of HSAs
A health savings account gives you the opportunity to save money and earn interest tax-free. The money still in the account at year’s end rolls over from one year to the next, unlike a flexible savings account (FSA), which loses all remaining funds at year’s end.
HSAs Must Be Attached to a High-Deductible Health Plan (HDHP)
One of the best HSA benefits is the lower premiums. They are lower because you will pay a higher deductible when there is a medical need. The minimum out-of-pocket deductible amount for an HDHP in 2023, says
Finance. Yahoo, is $1,500 for an individual and $3,000 for a family. In 2024, individuals must have a minimum deductible of $1,600, and families must have a minimum deductible of $3,200. In addition, most HDHPs also require a co-pay. You will also pay an additional 10–20 percent copay whenever you receive medical care.
The Medical Advantage of an HSA
An HSA gives you some advantages over traditional health insurance plans. It helps you save money in advance for potential medical needs and earns interest. You also save money in the cost of premiums because they are lower.
