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What is the Long-Term Value of an HSA?

3 min read

30 sec brief

Health costs are rising. Over time, these costs experience compound growth. How can you save for today to combat that cost growth? A Health Savings Account. An HSA is the only dedicated health account that can help you save or invest money for the long-term. In fact, the long-term value of an HSA is not…

Health costs are rising. Over time, these costs experience compound growth. How can you save for today to combat that cost growth? A Health Savings Account. An HSA is the only dedicated health account that can help you save or invest money for the long-term. In fact, the long-term value of an HSA is not just limited to dedicated health savings, it is actually another IRA hiding in plain sight. Let us show you how to take advantage of your HSA benefits.

Dedicated Savings for Health Costs

Adding money to your HSA is not just securing savings for this year. An HSA creates health savings for years to come. How? Unlike an FSA, your HSA funds will never expire. You own it. You can take it from job to job. You can spend whenever you need it or invest it, even if you don’t have a qualifying HSA health plan (Like a HDHP)? Yes, really!

Once you contribute to your HSA account (qualifying HSA health plan required), you can use it even after you switch to a non-qualified plan as long as you use it for qualified out-of-pocket medical expenses. Save funds in your HSA today and use them whenever you want. This strategy ensures you have dedicated health savings to pay for rising health costs in the years to come. A small investment today could make a big difference tomorrow.

General (non-health specific) Retirement Savings

One lesser known perk of the HSA is that after 65 years of age, you can use your HSA for anything, not just qualified out-of-pocket medical expenses. It’s just like your 401k or IRA. This means you have a new tax-free growth account for long-term savings. On top of that, no mandatory distributions enhance the HSAs savings value into retirement so your account can grow well into your 70s, 80s and 90s. HSAs aren’t just for health savings anymore! Their tax advantages make them a not-so-secret retirement savings account just like a 401k or IRA.

Tax-Free Earnings

In addition the pre-tax contributions, that are a clear short-term value of an HSA, you can earn tax-free earnings from HSA interest-rate or investments. This means any pre-tax funds you contribute can grow tax-free through interest-rates. If you want more risk, you can invest your HSA funds. Any HSA investment growth is also 100% tax-free (very few states don’t allow for tax free gains so be sure to consult with a tax professional). Using an HSA helps you Invest in your health®.

The long-term value of HSA benefits are becoming more clear to consumers, this is likely why HSA investments grew 53% from 2016 to 2017. You get to decide if you want to use your HSA funds today or save for tomorrow. HSA benefits create flexibility for your health and financial needs.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

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Lively

We are HSA Experts! Lively is a Health Savings Account (HSA) platform for employers and individuals. A 401(k) for healthcare.

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