Health Savings Accounts – The Other Retirement Plan

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A Health Savings Account (HSA) can be considered as “the other retirement plan”. An HSA can help serves as an additional retirement savings along with your IRA or 401(k).

HSA accounts can only be used in conjunction with a high-deductible health insurance plan; money goes into the account on a pre-tax basis. The account is separate and can be accessed by the employee or private policy holder in order to pay for healthcare expenses throughout the year. But if you are healthy, there is no requirement that you have to withdraw healthcare expenses from the HSA – allowing the account to grow.

Money can be withdrawn tax-free (for qualified healthcare expenses), and the money is transferable when you leave an employer. The definition of qualified medical expenses is broad including vision and dental care, prescription drugs, Medicare premiums and more.