A retirement savings account can include health savings accounts
By Hook Law Center
HSAs can also be used as a stealth individual retirement account, but the majority of people are unsure of how to inquire about them. While flexible spending accounts (FSAs) allow users to put away a maximum of $2,500 in pretax dollars every year for medical bills, HSAs do the same but with a higher maximum amount. In 2014, HSAs permitted individuals to set aside a maximum of $3,300, and families a maximum of $6,550, as well as a $1,000 catch-up contribution for people ages 55 and older.
Any remaining funds in the HSA will be rolled over each year and grow tax-free. You can withdraw funds on a tax-free basis from the HSA to cover medical bills at any age. But if you withdraw funds after you reach age 65 for other reasons, the amount will be subject to tax at normal income tax rates.
However, HSAs are not always affordable. They are normally combined with high-deductible insurance plans, which provide lower premiums, but call for greater out-of-pocket payments prior to the time at which coverage becomes effective. In 2014, the minimum deductible for one person was $1,250, and for a family, $2,500. The maximum out-of-pocket expenses for one person was $6,350, and for a family, $12,700.
Even when HSAs are within your budget, you should carefully examine the investment choices offered by an HSA. The majority of the time the funds are invested in money market accounts. It is advisable to first use plans that have greater yearly contribution limits, such as 401(k)s and IRAs.