Heath Savings Accounts have gained popularity over the last few years. These accounts combine high deductible health insurance with a tax-favored savings account. Some experts aren’t sure HSAs are living up to their potential.
The recent up spike in popularity is in part due to employers adopting high-deductible health insurance plans. These plans make the employees more responsible for medical costs. They pay for most medical expenses out-of-pocket until it hits a certain deductible. To combat trying to pay out-of-pocket for medical expenses, they save money in a Health Savings Account.
Just like a Traditional IRA, contributions are 100 percent deductible. Unlike a Traditional IRA, distributions can be taken out tax-free at any time to pay for qualified medical expenses.
An Employee Financial Wellness Survey revealed that only 16 percent of employees with HSAs are planning on using it for healthcare costs in retirement. Also, only five percent have invested their HSA. They are being used more for short-term purposes of paying for medical expenses now instead of saving them for retirement.
The truth about retirement is, there will probably be a lot of medical costs. With age comes more risk of having medical issues. By contributing to a Health Savings Account and investing, retirees could grow a healthy amount of money to help with medical expenses and long-term care costs that might be necessary down the road.
Interested in contributing to a Health Savings Account? Contact Mountain West IRA.