by Jessica Goedtel, Senior Associate
If you are on a high deductible health plan, you may have access to a Health Savings Account (HSA). Recently these have become very popular due to their “triple tax exempt” nature. First, if you contribute to your account via payroll, contributions will come out pre-tax. Alternatively, you can make after-tax contributions but receive a deduction on your tax return.

Second, you are not taxed on any investment growth in the account. Some plans offer a variety of investment options, others may work as a simple savings account. Check with your plan administrator to see what options are available to you.

Third, any distribution for qualified medical expenses is not taxable. And, unlike a Flex Savings Account (FSA), the balance can be carried over each year. If you are nearing retirement this could be an excellent strategy to save for medical expenses.

The contribution limits for HSAs for 2018 are $3,450 for a single person plan, and $6,900 for a family plan. If you are over the age of 55, you can increase your contribution by $1,000. One important item to consider is that once you become eligible for Medicare at age 65, you can no longer make contributions.

If used correctly, an HSA can be a very powerful tool in your financial plan.