Many people are totally unaware of the benefits of Health Savings Account. Certainly, this new act of Affordable Health Care, which is also known as Obamacare is a bit confusing. However, it will be important to know for all of us that HSA is most powerful and well-designed health care policy.
Here are 7 key benefits of opening your HSA online i.e. Health Savings Account before it is too late:
Often people think that it is necessary to be a business owner for opening HSA, which is not true. Anyone who gets any type of insurance can buy an HSA.
Also, your employer need not set up HSA or even contribute to it but only need to offer HSA-qualifying insurance, or you will be enrolling in one of your own.
- Tax deduction
All your HSA contributions will be deductible from your total pay, or any business income, which is on the front page of the tax returns. This will give you a very powerful tax deduction. Also, may even potentially put you into lower tax bracket.
- Tax-free growth
Your funds will grow tax-free and this is not “use-it or lose-it” type of plan. Your HSA account will grow and build for future healthcare needs. Your investments are not counted towards your contributions either.
So, you win big by investing with HSA and “Pass Go” every January and then make another contribution.
- Tax-free withdrawals
With HAS, you are allowed to spend money tax-free for medical expenses like eye-care, dental, chiropractic, acupuncture, etc. Also, you can take out money immediately.
You can make your deposit in HSA then pay your bill with HSA card and generate write-off on the same day. Just check IRS Publication 502 to see list of hundreds of expenses related to medical expenses that you may pull out from your HSA tax-free.
- The self-direct option
Inside your HAS, you can also “self-direct” all your investments which means you are not stuck with a mutual fund option as provided by the bank. It is possible to invest in real estate, restaurant or even in Super Bowl tickets.
For self-direct facility, place the HSA funds with “custodian” that will allow for self-directing instead of your local bank.
As you turn 59 years and 6 months, you can withdraw money for any non-health care expenses. Your HSA will work like a traditional IRA. This will protect you from your worst fear that “What will happen if I don’t require money for my health care”?
The simple answer will be, “Don’t worry. You may use it like IRA in future.”
- Easy set-up
Insurance has nothing to do to set up the HAS as they do not administer them but only sell insurance. You have 2 options for setting up your HSA.
- Set it up by contacting your local bank either physically or online. No major paperwork is involved, but check proper boxes, sign your form and make deposit.
If you prefer your money to ride and do not want to pull anything out now then you may use your second option as IRA custodian.