Mon Oct 28 2024, by Tyler Gardner

4 Cool Things About Health Savings Accounts You Need to Know

Here are the four coolest things about the Health Savings Account (HSA) that nobody really talks about. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to empower your financial decisions.

1. The Triple Tax Advantage

First up is the triple tax advantage. Contributions are tax-deductible, growth is tax-free, and withdrawals spent on qualifying medical expenses are also tax-free. That means no tax, ever. And yes, you’re going to get sick, so this will come in handy.

2. Investment Potential

You can actually invest your contributions. It’s just like a brokerage account, but most people don’t know that. Instead of having that money sit in cash, consider investing it in a low-cost index fund if you're comfortable. This lets you take advantage of 20 to 30 years of compound growth—a great gift for future Tyler and his ever-increasing health needs.

3. Reimburse Yourself Anytime

You can pay out-of-pocket for your health needs today and then reimburse yourself from the HSA whenever you want—just keep the documentation. By doing this, you allow the investments to continue growing tax-deferred and can reimburse yourself once the account is worth significantly more.

4. Post-65 Flexibility

And for those of you who still hate the idea that this is just some health account, don’t worry! When you turn 65, it essentially becomes a traditional IRA. You can spend the money on whatever you want, though you do lose the tax-free status on withdrawals.

If any of this information is helpful, please like and follow, and I’ll keep sharing insights to help you get one step closer to where you need to be.

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