Many people believe that having good health insurance will cover everything should the worst happen, but, unfortunately, some learn the hard way that insurance can fall short. Medical expenses are a significant factor in Americans’ debt load, and sustaining severe injuries in an accident can happen in an instant. Having a health savings account (HSA) can go a long way toward helping out with medical bills, and many health insurance plans offer the option to have such an account. Here’s why you should take advantage of an HSA if it’s available to you.
Preparing for the Unexpected
Those who have experienced a medical emergency will tell you that often there is no warning. We all know of a seemingly healthy person who had a sudden heart attack or got into a car wreck. According to The Patel Law Firm, people who suffer from severe injuries such as burns often require lengthy medical care, and the expenses can mount quickly. A health savings account, often available to those with high-deductible health plans, can help defray some of those costs.
A great feature of health savings accounts is that contributions, whether they come out of your paycheck or you handle them yourself, are not taxed, according to Doughroller. Withdrawals for medical reasons are also not taxed, and after you turn 65, you can withdraw funds for non-medical reasons as well, albeit with taxes applied. Because of this rule, many utilize health savings accounts as an additional retirement income source, particularly if they are also maxing out IRAs and 401Ks.
Not Only for Emergencies
You sit on your prescription glasses and break them. Maybe you’re interested in getting some cosmetic dental work done, or your child needs antibiotics for strep throat. Health savings accounts can help with these smaller expenses as well, according to Gravie. Get into the habit of carrying your HSA debit card with you to take care of the little things. Even something like a box of bandages or over-the-counter medication can be charged to the health-savings-account debit card with no tax penalty to you. It’s also a boon while traveling to give you peace of mind should you suddenly get the flu or injure yourself and need medical supplies or care.
Using a health savings account makes good financial sense, not just to cover medical expenses, but also as an investment vehicle. The money you save now could make a massive difference in your future.
Here’s another article you might enjoy: Planning Your Schedule to Encourage a Fit Lifestyle