Triple Tax Benefit... What does that mean?
A Health Savings Account is a special type of account that can be set up in conjunction with a qualified health plan to pay for healthcare related costs with pre-tax money. These accounts offer a Triple Tax Advantage that makes them a great option for many consumers.
Goes In Tax Free
Contributions reduce taxable income in the year they are deposited. In 2017, Individuals can deduct $3,400 and families can deduct $6,750.
Grows Tax Free
The money inside the account can be saved in a savings account or invested. Any earnings on the account also grow tax free.
Comes Out Tax Free
Distributions from the account are tax free if used for HSA qualified expenses, or if withdrawn after age 65.
How It Works
- Individuals enroll in a qualifying health plan and HSA.
- Money is automatically deposited into the HSA from the individual’s bank account.
- The individual manages funds and investment options.
- The HSA is used to pay for out-of-pocket medical expenses that are eligible for reimbursement.
Why It Works
HSAs share a lot of similarities with individual retirement accounts (IRAs), such as:
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An HSA allows employees to save and grow money, tax-free.
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Employees can decide how to invest and grow their money.
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HSA funds can be withdrawn anytime for medical expenses.
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After age 65, the funds can be used for any purpose, without penalty.
Health care expenses are a growing concern for many—and a health savings account, or HSA, is an option becoming increasingly available to help workers set money aside. And there are tax advantages as well. In fact, a health savings account offers account owners a triple tax advantage:
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Contributions reduce taxable income.
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Earnings on the account build up tax free.
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Distributions from the account for HSA qualified expenses aren’t subject to taxation.