October is HSA Awareness Month and we’re here to spread the word about health savings accounts (HSAs) and how they help people save for today and tomorrow!

When people think about HSAs, they often think of them as a short-term benefit where participants use their HSA funds to pay for the eligible expenses they need today. However, HSAs are also a great vehicle for saving and investing long-term.

Saving For Today

An HSA is a savings account that is paired with a high-deductible health plan and used to pay for eligible health expenses. The contributions made to an HSA are exempt from Federal, State, and FICA payroll taxes. This means that participants who use their HSA to pay for eligible expenses have approximately 30%* in immediate tax savings.

*This tax example is a broad approximation of tax liability. Further, your contributions may be subject to state income tax in some states. Your specific savings depend on your tax bracket. You should consult a tax advisor for help with your own situation. Current IRS tax laws control all pre-tax payment and contribution matters and are subject to change.

Saving For Tomorrow

Unlike a flexible spending account, unused HSA funds always belong to the employee and carry forward year after year. These unused HSA dollars help save money in the long-term because they earn interest over time. The best part about this is that this interest is not taxable income as long as the funds are used to pay for eligible health expenses, which means that HSA dollars grow tax-free. Participants can take their HSA savings a step further by investing their HSA. Once a participant’s HSA account balance reaches the minimum amount required, participants can invest their funds and watch their money grow even more.

When participants are ready to use their HSA funds down the line, they can withdraw their HSA dollars tax-free. Looking at the big picture, HSAs help participants save because they are triple tax advantaged. Money goes in, grows, and comes out tax-free.

Health care costs are continuously rising and it can be stressful to think and plan for these costs. Having and contributing to an HSA can help. An HSA is a great way to build a nest egg for unexpected health care costs or even retirement because of its tax-advantaged benefits. Many employees say that their HSA payroll deductions help them put money aside and grow their account balance easily.

Overall, HSAs are a great, competitive benefit because participants can use their HSA dollars when they need it most. Visit our website to learn more about the value of having and offering HSAs: www.ebcflex.com/HSAsavings