How to Save $$ on Your Colonoscopy!

We love saving here! And what better way to save money than to benefit your health?

Welcome to the HSA (Health Savings Account)!

When it comes to managing your finances, it's essential to explore options that not only benefit you financially but also contribute to your overall well-being. Your HEALTH!

We’ll dive into the advantages and disadvantages of HSAs, and if you should consider one being the intelligent saver you are!

The Advantage? Taxes.

HSAs offer a triple tax advantage. What the hell? TRIPLE? Yup, triple.

Contributions made to an HSA are tax-deductible, meaning you can reduce your taxable income by the amount you contribute
Those funds grow tax-free, so the accumulated savings grow without the tax burden
Qualified medical expenses paid using HSA funds are also tax-free

Queue the game show host:…”But wait, there’s more!”

Unlike other healthcare options, HSAs provide individuals with greater control and flexibility over their healthcare decisions. An HSA provides the freedom to choose where and how you spend your healthcare dollars. This means you can opt for alternative treatments or preventive care that may not be covered by traditional insurance plans. (It’s time I visit that witch doctor I want to see.)

One of the best advantages? Our favorite: long-term savings!

Unlike flexible spending accounts (FSAs) that require you to use the funds within a specific period, HSAs allow unused funds to roll over from year to year. This means you can build up a substantial nest egg for future healthcare expenses or even retirement.

It’s Not All Roses

It all sounds great! Where do I sign?

Well, not everything is rosy in HSA land.

To open an HSA, you must have a high-deductible health plan (HDHP). While HDHPs generally have lower monthly premiums, they come with higher deductibles.

This means you will need to pay a significant amount out of pocket before your insurance coverage kicks in. This requirement may not be suitable for individuals who anticipate frequent medical expenses or have chronic health conditions - yikes.

Photo by Tom Claes on Unsplash

There are also limits on how much you can contribute each year. For 2023, the maximum contribution for an individual is $3,850, and for a family, it’s $7,750. These amounts may not be enough for some who anticipate multiple hospital visits.

Think you can outsmart our government? Think again, because if you use those contributions for non-medical purposes before the age of 65 you will be subject to income tax plus a 20% penalty. I guess that Bora Bora trip will have to wait.

The Skinny

Triple tax advantages, flexibility, and potential for long-term savings make HSAs pretty sweet, but one has to consider the disadvantages, such as the requirement for a high-deductible health plan and limits on contributions.

From a tax strategy perspective, HSAs provide an excellent way to reduce taxable income, grow savings tax-free, and pay for medical expenses without incurring additional taxes. You can take control of your healthcare decisions while enjoying some sweet financial benefits. And who doesn’t like that?

Just don’t go spending all that HSA money on Botox and lip injections!

Save On,

Chris