I have a confession: I love my HSA. What’s an HSA, you ask? It stands for Health Savings Account and your employer may already be offering one that you don’t even know about.
But don’t feel too bad, because I actually went two full years at my current company before I even knew it existed. If you’re on a High Deductible Health Plan (HDHP) where you pay a lower premium but have a higher deductible, this option is for you.
I personally (luckily) don’t get sick too often so I decided to go with an HDHP, which enabled me to (finally) opt into my company’s HSA. That’s when I found out that my employer contributes free money to all HSAs. So basically I could have had triple the amount of money if I had just known my HSA existed when I first started with my company. Now, I know I’m lucky that my employer contributes to my HSA (because I haven’t had to contribute a cent), but I really think more companies are headed this direction. This could be a good solution for rising health care costs.
The cool things about HSAs is that the balance rolls over each and every year. So even if you don’t spend a single dollar one year, all of the money stays in your account. This is a big contrast to Flexible Spending Accounts (FSAs) where you lose the money if you don’t spend it in the allotted time period. So, if you’re relatively healthy like me, all this money can keep adding up until you really need it. It just keeps rolling over each year, growing tax-free, until you reach retirement age. Then it’s all yours.
I like to think of it as another way to save for retirement, just like a 401k or IRA. However, it’s nice to know that if I had a serious medical emergency, my savings wouldn’t be drained. And it’s not just for emergencies. It can be used on almost any out-of-pocket medical, dental, or vision costs. This includes acupuncture, dental fillings, lasik eye surgery, hearing aids and even prescription sunglasses.
How does it work? You get a card in the mail that acts like a debit card and you just take it with you to any medical appointments. It’s very easy to set up and you can track the balance on your provider’s app.
So let me sum it up:
- Your employer may contribute free money to your HSA
- The balance rolls over each year and grows tax-free
- You collect all of the remaining money upon reaching retirement age
- You can use it on a variety of different out-of-pocket medical, dental and/or vision costs
- It’s very easy to use and keep track of
What’s not to love?