If you have a Health Savings Account, you likely appreciate it’s unique characteristics that make it different than other accounts.
Health Savings Accounts are available when you have a High Deductible Savings Account.
There is a tradeoff though, in that deductibles are higher with High Deductible Savings Accounts than other types of plans.
The ability to save money, tax free, for health care costs?
Yes.
To get a tax deduction for your contributions?
That too.
To have the account have the same rolling balance attributes as any other account, where you own the funds, and they grow through time, contingent only on the withdrawals and contributions you make?
To use to pay for Long Term Care Insurance?
That too.
The benefits for having a Health Savings Account owe due consideration.
But there is a characteristic unique to them that differs from other tax free accounts:
If your beneficiary is someone beside your spouse, the account is distributed as income and is taxed as income that year.
This is a minor consideration, but if you have a Health Savings Account it’s worth noting when considering your beneficiary designations.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.