Retirement Tools: HSA Accounts
By Kathryn Barnett
When planning for retirement, most people do not realize their HSA account is more than a savings account for medical expenses. An HSA account is a triple-tax advantaged health savings account that an individual can use to pay for current or future medical expenses or upon turning 65, an individual may take withdrawals taxed as ordinary income. In other words, this account is versatile.
AN HSA ACCOUNT…
- Is a health savings account
- Is Triple-Tax Advantaged
- Pairs with a high deductible healthcare plan
- Is investable
- Can used for non-medical expenses once owner is over the age of 65
WHAT DOES IT MEAN TO BE TRIPLE-TAX ADVANTAGED?
- Tax-deductible contributions
- Tax-deferred growth
- Tax-free withdrawals (for qualified medical expenses)
HOW DO I CONTRIBUTE?
There are two ways to contribute –
- Make pre-tax contributions - Your contribution is automatically deducted from your paycheck.
- Self-funded contributions – You contribute post-tax dollars. (You can report this contribution on your tax return.)
WHY IS THIS A REITREMENT TOOL?
- HSA accounts give you the opportunity to save for medical costs down the road, which means the savings you are accruing now could fund some or all of your long-term care expenses in retirement.
- Additionally, if you are fortunate enough to remain in good health or switch to an insurance plan that covers more, you can access the funds in your HSA after the age of 65 for non-medical expenses. When taking a withdrawal for non-medical expenses after 65, you will owe ordinary income tax.
- HSA accounts are investable. Make the contributions and let your account grow tax-deferred.
WHAT ARE THE ANNUAL CONTRIBUTIONS LIMITS?
2025 Limits
Individual - $4,300.00
Family - $8,550.00
Catch-Up (55+) - $9,550.00
HOW SHOULD I START UTILIZING MY HSA ACCOUNT?
To figure out the best way to utilize your HSA account, reach out to your CPA and financial advisor. HSA contributions are a way to maximize your after-tax wealth, which is where working with a CPA and financial advisor ensures you are making the most of this tool.