With the rising costs of health insurance and medical premiums, a Health Savings Account (HSA) may difficult to fund. In this post, I will spell out exactly what is an HSA and if you should add it to your already thin budget.
A Health Savings Account (HSA) is a vehicle that allows you to use tax-free money to pay for eligible medical expenses. Think of it as a separate saving account that you can use for medical related costs.
In order to use an HSA, you need to be signed up for a high deductible health plan.You are required to pay out of pocket for all medical expenses until you hit a predetermined amount based on your insurance company.
As your money continues to grow in your HSA, it can help you out down the road in retirement. For instance, if you reach the age of 65 and still have money in your HSA, you can draw from the account like a regular IRA.