A health savings account (HSA) is a plan where, much like a 401k, you can pay into it with pre-tax contributions to pay for current and future health care costs. The nice feature of an HSA is that any unused money invested stays in the account and can grow tax free. If any money that is withdrawn is not used for health care related expenditures, you will be taxed on that money. Also, if you’re under 65, you will be subject to a 10% penalty.
In 2016, the max contribution per year is $3,350 per person or $6,750 per family. Once you reach 55, you can contribute an additional $1,000 per year. Another beneficial feature of HSAs is that anyone can contribute to the account, family, employers, and friends.
For more information on HSAs, contact our team. We’re happy to sit down with you and help you plan for your future!