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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F5 Financial is a fee-only wealth management firm with a holistic approach to financial planning, personal goals, and behavioral change. We provide insight and tailored strategies that inspire and equip our clients to enjoy a life of significance and financial freedom.
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