5 Benefits Of Health Savings Accounts

5 Benefits Of Health Savings Accounts

April 21, 2020

One of the simplest ways to save money on healthcare expenses and taxes at the same time is by using a Health Savings Account (HSA). If you just reacted with, “That sort of thing exists?” the answer is yes, it does. Keep reading to understand what an HSA is and how it could benefit you. 

What Is An HSA?

An HSA acts like a tax-deductible personal savings account that can only be used on qualified medical expenses. The only requirement to have this type of account is to also have a high-deductible health plan (HDHP). (1)

There are two kinds of people who benefit the most from this kind of healthcare and savings plan combination. If you rarely ever have to go to the doctor or spend money on alternative medicine for most of your medical needs, this is likely the best plan for you, and you will understand why very quickly. On the other hand, if you need a lot of medical attention every year and have high premiums through a regular PPO insurance plan, you might also financially benefit from this option.

1. They Offer A Triple-Tax Benefit

If there’s one thing everyone gets excited about, it’s saving money on taxes, am I right? One of the best aspects of an HSA is that you receive a triple-tax benefit. Here are the three benefits broken down:

  • All your contributions can be done using pre-tax dollars, and if you happen to use after-tax dollars, you can still deduct your contributions when you file your taxes. (2)
  • As long as you use the money for qualified medical expenses, no withdrawals are taxed.
  • Money in the account can be invested and all interest gains grow tax-free.

2. Amounts Roll Over From Year To Year

Unlike a flexible spending account where you have to use all the money in the account each year or you lose it, any unused money in an HSA can be rolled into the next year and continue to grow tax-free until you need it. This is especially useful for years when you don’t have any major medical expenses and the money serves as an additional investment account.

3. Others Can Contribute To The Account

In addition to making your own contributions to your HSA, employers have the option of making contributions, as well as qualified family members! (3) The maximum contributions allowed for individual coverage plans in 2020 is $3,550; for family plans that amount is doubled to $7,100. 

4. It Goes With You

It doesn’t matter if you leave your current work or decide that switching to a different health plan from an HDHP is a better option for your situation, the money in your HSA goes with you. This includes any contributions your employer makes; since that money is vested immediately, you keep that money as well. 

5. There Are No Required Minimum Distributions (RMDs)

Many retirement accounts have required minimum distributions starting at age 72, where you must withdraw a certain amount of money that will be added to your taxable income. (4) With an HSA, nobody can make you take anything out. That money could sit there as long as you want it to! This account could also be a great nest egg to pay for long-term care if it’s needed at some point. 

Is A Health Savings Account A Good Option For You?

Although there are many benefits to starting an HSA, is it the best option for you? That’s a question we can help you answer once we understand what your priorities are and assess your financial situation. Contact us at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com with any questions you have or to schedule a consultation.

About Haydel, Biel & Associates

Haydel, Biel & Associates is an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they have built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with creative financial technologies that make it easier than ever to accomplish your goals. They strive to keep things simple and fun to give their clients peace of mind and alleviate financial stress. HBA Wealth takes care of their clients’ needs first and foremost and goes the extra mile to make their clients’ finances grow. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at ricky@hbawealth.com.

The commentary on this blog/website reflects the personal opinions, viewpoints and analyses of the Haydel Biel & Associates employees providing such comments, and should not be regarded as a description of advisory services provided by  Haydel Biel & Associates or performance returns of any Haydel Biel & Associates Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Haydel Biel & Associates manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.


(1) https://www.healthinsurance.org/glossary/health-savings-account/ 

(2) https://www.investopedia.com/articles/personal-finance/090814/pros-and-cons-health-savings-account-hsa.asp

(3) https://hsastore.com/learn/basics/hsa-family-friends

(4) https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions