Health savings accounts come with many tax benefits and contribution benefits that create a separation between these kinds of accounts and IRAs that are self-directed. What are some ways you can make the most of an HSA?
Investing your HSA
An HSA can be invested in the same things that other self-directed IRAs and 401(k) plans can be. Options like securities that are publicly traded or options of alternative investment are all things that HSA can be invested into. Doing this will allow you to get the same benefits of retirement investing that is self-directed. At the same time, you will be able to get the benefits that an HSA provides.
Qualified Medical Expenses
When you get an HSA, you are given many different opportunities. A lot of the opportunities are very unique. Some of the opportunities allow you to make contributions that are tax-deferred and make distributions that are tax-free, but you can only do these things if they are used towards qualified medical expenses, or if you are paying the holder of the account for a qualified medical expense that was original paid for using money that you have pocketed. A lot of these options can be considered a QME, but distributing money to items that do not fall onto this list will get you penalized.
HSAs will have the most chances to grow if the number of distributions are limited, just like any other investment plan. Try to personally pay for things like prescriptions or cheap QMEs, instead of using your HSA plan, as it will give your HSA more room to grow and more available for expenses that could come about later in life that are more expensive. It’s important to remember that you are not required to immediately distribute money from an HSA. You are allowed to delay the distribution to a time that you think will fit better.
Maximize Your Contributions
Using maximum allowable contributions to make your HSA stronger will make the potential for earning a lot higher and will allow you to take away an equal amount of your contribution from your taxes. A lot of employers are in the process of starting to offer HSA plans that are considered alternatives to PPO plans. Reviewing your options will be extremely beneficial to you, so definitely look into it and selected the option that has the capability to maximize contributions made by an employer.
With an HSA, it is important that you look into making comparisons between options for medical services and the costs of those so you can save money and help keep your HSA stable. It is recommended that you look into using services for preventative care that are free. It is also important to look into your health care habits and review those, so you can be somewhat prepared for how much of your HSA will be spent. Making positive changes to your life can also help you get a handle on HSA spending in the future.