Health Savings Accounts (HSAs) are an effective way of building tax-free savings to cover qualified medical expenses. Often used in combination with high-deductible healthcare programs, HSAs can be used to cover premiums, prescriptions and deductibles not covered by your standard plan.
Benefits of HSA Medical Expenses
If you’re contemplating whether or not to sign up for a health savings account, consider the following benefits.
- Extensive coverage: HSAs commonly cover a variety of medical expenses, including mental health costs (psychiatry and counseling), preventative and emergency dental costs, homeopathic care (acupuncture and chiropractic), annual physicals, over-the-counter medications, maternity costs, long-term care premiums and more.
- Potential roll-over programs: Many HSA programs roll over at the end of the year, rather than forcing the “use it or lose it rule.” This is not the case with all HSA administrators, however, so make sure you do your homework.
- Portability: Your HSA medical expenses are covered by your program no matter where you are, even if you’re out of the country or hospitalized while on vacation.
- Tax-deferred growth: Depending on your risk preference, you can achieve significant growth by opting for a health savings account that’s invested in mutual funds, bonds and stocks. If you prefer, many companies also offer a guaranteed rate of growth—without the investment risk.
Another advantage of owning a health savings account is that you can continue to cover HSA medical expenses when you’re laid off, between jobs, retired or receiving Medicare. In addition, HSA administrators make it easy to receive your savings through a debit card system, so you’re ready to pay expenses as they arise—without waiting for reimbursement.
