If you already have a Health Savings Account, you likely appreciate it’s unique characteristics that are unlike any other type of account you could possibly have.
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?
Yes.
To use to pay for Long Term Care Insurance?
That too.
It’s pretty obvious that 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.