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The benefit of a health savings account is that you can save money on your medical expenses with tax free cash. The disadvantage of a health savings account is that it locks out many people who have lower incomes and investments are limited in this type of account. To learn more about the benefits and disadvantages of a health savings plans, read on for more information.
Health Savings Accounts Explained
What are the benefits and disadvantages of a Health Savings Account ?
The benefit - Health Savings Accounts allow consumers to put pre-tax income into an account where those funds can grow without losing their earnings due to taxes.
The disadvantage - The HSA only kicks in for $3,400 of expenses that year, not including the deductible – which may not be so much when annual premiums are taken into account. The plan also requires an individual to have investment income and a high deductible health plan with an annual maximum benefit.
A health savings account is also a tax-advantaged way to set aside money to pay medical expenses before taxes. It is created by setting up an HSA with a qualifying high-deductible health plan (HDHP) offered through a health insurance provider. The account requires individuals to pay out-of-pocket charges before they pay any federal income tax on their contributions.
Health Savings Accounts Explained
What are the benefits and disadvantages of a Health Savings Account ?
The benefit - Health Savings Accounts allow consumers to put pre-tax income into an account where those funds can grow without losing their earnings due to taxes.
The disadvantage - The HSA only kicks in for $3,400 of expenses that year, not including the deductible – which may not be so much when annual premiums are taken into account. The plan also requires an individual to have investment income and a high deductible health plan with an annual maximum benefit.
A health savings account is also a tax-advantaged way to set aside money to pay medical expenses before taxes. It is created by setting up an HSA with a qualifying high-deductible health plan (HDHP) offered through a health insurance provider. The account requires individuals to pay out-of-pocket charges before they pay any federal income tax on their contributions.
