James Brewer is the founder and CEO of Envision Wealth Planning. Investment News named him a 2024 Advisor of Year for ESG/Responsible Investing, Excellence Awardee. Envision Wealth Planning was once again named to Expertise’s Best Financial Advisors in Chicago for 2024.
A Health Savings Account is one of the most powerful yet underutilized tools in personal financial planning. Many people overlook the HSA , possibly confusing it with a Flexible Spending Account . However, an HSA stands out because it:
· withdraws tax-free when used for qualified medical expenses, making it a unique triple tax-advantaged account.The Short-Term Tax Advantages of Health Savings Accounts Who doesn’t appreciate a current year tax break? To take advantage of an HSA, you need to elect a so-called high deductible healthcare plan. That should also come with a lower monthly premium than alternative health plan options. Contributions to an HSA reduce your taxable income in much the same way as qualified retirement plans, effectively lowering your tax bill. For instance, let’s say your household income is $100,000.
Single individuals can also benefit. In 2024, they can contribute up to $4,150, or $5,150 if over 55. This reduction means paying less in taxes now while allowing your contributions to grow tax-free for future medical expenses.Alternatively, one could choose a non-high deductible health care plan, and add a healthcare, flexible saving account for up to $3,200. In 2025, that amount increases to $3300. This amount is the same no matter if you file Single or Family.
This tax-free growth is especially valuable if you’re a high-income taxpayer who might otherwise be subject to income or capital gains tax brackets. With an HSA, you avoid those taxes entirely—both while the money grows and when it’s withdrawn for eligible expenses.
Health Savings Account Healthcare Tax-Free Medical Costs Savings Investments Long-Term Planning FSA Flexible Spending Account
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