A planning topic we are working on with clients with right now is Health Savings Accounts (HSA) and the best strategies for using them. In short, an HSA is an account you can use if you have a high deductible Health Insurance Plan. The annual amount you can put into your HSA is $3,450 ($6,900 for couples). This is tax deductible from your current income. Sometimes your employer will cover some of the contribution also. You can only use the funds for medical costs. However, and this is the great thing, the amounts can roll forward from year to year. So, if you do not use all of the money, you can use it in a future year.
The planning strategy relates to whether you should use this as a tax deferred savings vehicle (like a Roth) or use it to pay for current medical costs the year you fund it. As a rule of thumb, my recommendation would be to fund it and let it grow year over year only if you have available cash flow and you are already fully funding all of your other tax deferred options. If funding it and letting it grow causes cash flow problems, just use the amount you put in during the year to pay the medical bills.
As always, we are available and happy to help you work through the best strategy for you.
Live Fully. Plan Wisely.
This commentary was created by Aspire Planning Group and is for informational purposes only. The views expressed are based on current market conditions and are subject to change. There are no assurances that the techniques and strategies discussed herein are suitable for all investors or that the predicted results will occur. The commentary herein does not constitute investment advice, tax advice, or legal advice. Past performance is no guarantee of future results.