Health Savings Accounts (HSA) is a common platform that the family uses to save money for future use. It is pretty common; however, if you are using Health Savings Accounts, you should reconsider how you use that money. Many professional financial advisors advise their clients to consider paying for their medical and dental expenses with their after-tax savings and not through Health Savings Accounts funds. And there are various reasons why the experts advise this strategy to the clients. They believe that if you follow this approach, you can take advantage of the HSA tax triple play, which includes pre-tax deposits, tax-free growth, and tax-exempt distribution for the health care expenses. You can learn more about HSA strategies and tips from this article provided by personal financial advisors and Asset Management Companies Utah.
HSA Strategies That Allows Tax-free Retrieval- Experts are of the view that if you save healthcare-related receipts throughout the life of HSA, you can withdraw the funds to match the receipt amount at any time, including after the age of 65 years. The receipts can serve as IRS documentation in case of the adults, so make sure to keep the receipts instead of throwing them away.
After you turn sixty-five, funds can be withdrawn to pay for employee premiums of employee-sponsored health insurance if you postpone Medicare enrollment. Medicare allows HSA funds to pay for most premiums after the age of sixty-five. And if Medicare payments are withheld from your social security benefits, you can reimburse from the HSA account. Also qualified long-term care insurance premiums of the owner, a spouse, or a dependent can be paid anytime through the HSA account.
This strategy also allows you to take out extra appreciated funds without a penalty for any reason after the age of sixty-five. However, as many advantages as this strategy provide us, there are also some major disadvantages to this strategy, which you will find out as soon as you read along.
The major disadvantage is that, once you reach your sixty-fifth birthday, you can no longer contribute to your HSA account. And Medigap and Medicare are not eligible for HSA payments. The last major disadvantage is that, at the death, a spouse beneficiary can continue to withdraw tax-free from the account. However, if there is some other recipient other than the spouse for the HSA, the account, and its remarkable tax benefits cease to exist upon the death of the owner. This means that the entire inherited HSA amount becomes taxable to the beneficiary. So, if you own an HSA and you have designated someone other than your spouse as the beneficiary, you should prioritize withdrawing or changing the name.
Health Saving Account is a wonderful tax-free duration extended duration account that you can use after the age of sixty-five for Medicare premiums, long-term care insurance, and various other health expenses, but it has also got some major disadvantages. The best bet is to follow this advice or work with a Personal Financial Advisor Utah who can provide assistance.