Posted by

Health Savings Accounts (HSA) are only available to people with high-deductible health plans. A high-deductible health plan must have a minimum annual deductible of $1,400 (individual coverage for 2020) and $2,800 (family coverage for 2020). If you have this type of health plan through work, you may want to consider contributing to an HSA. For 2020, the maximum contribution amount for an individual plan is $3,550 and $7,100 for a family plan. Also, if you are over age 55, you can contribute an additional $1,000. There are three tax benefits to this type of account – the money you contribute is pre-tax, it grows tax-free, and if it is distributed for qualified medical expenses, it remains tax-free. Unlike a Flexible Spending Account (FSA), the money does not need to be spent by the end of the year; you can keep rolling the balance. Another great benefit that is gaining a lot of popularity is using this account as part of your retirement funds. The money within an HSA can be distributed for any reason (not just medical expenses) after you reach age 65, without penalty. Keep in mind that if the account is used for non-qualified expenses before age 65, a 20% penalty will be applied.

Click Here to Read

You may also like:

Looking For More Resources?

Download our free resource which explains 10 key principles to improve your odds of investment success.
Download The Resource