A Health Savings Account (HSA) is a type of savings account designed to help individuals and families save money on their health expenses and reduce their future tax bill. To be eligible for an HSA, you must be enrolled in a high-deductible health plan (HDHP), which is a type of health insurance that has a higher deductible but lower monthly premium.
An HSA offers several tax benefits, including tax-deductible contributions, tax-free investment growth, and tax-free withdrawals for eligible medical expenses.
The following are some of the key benefits of an HSA and how you can use it to help reduce your future tax bill:
Tax-Deductible Contributions
One of the primary tax benefits of an HSA is that contributions to the account are tax-deductible. This means that you can lower your tax bill by the amount you contribute to your HSA, up to the maximum contribution limit for the year.
For the tax year 2023, the maximum contribution limit for an individual is $3,850 and $7,750 for a family. If you are over the age of 55, you may also be eligible to make catch-up contributions of up to an additional $1,000 per year.
Tax-Free Investment Growth
Another benefit of an HSA is that any interest or investment growth in the account is tax-free. This means…(click here to read full article)