Leveraging an HSA for your Financial Future

Preparing for future medical expenses is a crucial part of financial planning, especially given rising medical costs. In determining how to prepare for your financial future, consider how investing in a Health Savings Account (HSA) can maximize your long-term savings.

A Health Savings Account allows individuals to invest funds for future qualifying medical expenses. An ideal vehicle for financial growth, an HSA combines tax-deductible contributions and tax-free growth. Additionally, HSA funds roll over each year, regardless of your health plan, employer, or other evolving factors, so you can accelerate your health savings over time.

To qualify for an HSA, a high-deductible health plan must be your sole form of health insurance. Depending on whether you open an individual or a family account, you can invest up to roughly $4000 or $8000 each year as of 2023—along with an additional $1000 once you are over 55. Invested funds can prepare you for nearly all medical expenses, covering everything from prescriptions to surgeries to psychiatric care.

While individuals often view the Health Savings Account as a short-term tax-advantaged tool, covering year-over-year medical expenses, HSAs optimize savings when viewed as a long-term investment. When taking advantage of compounding returns and investing yearly contributions like a 401(k), an HSA can play an integral role in preparing for long-term financial health.

Start a conversation with a KMG advisor to determine how an HSA can play a role in your comprehensive financial plan.