How to Get All the Tax Benefits From Your Health-Savings Account

By Laura Saunders | Originally posted on WSJ

An HSA can cushion the blow of medical expenses, but it’s also a tax-favored investment vehicle

Health savings accounts continue to gain ground with Americans. And with good reason, because they offer triple tax benefits.

No wonder there were nearly 43 million HSAs as of June 30 compared with about 32 million at the end of 2021, according to new data from HSA consulting firm Devenir.

And while the accounts aren’t new, this is a good time of year to delve into HSA rules and wrinkles. That’s because healthcare plan open enrollment is coming soon for many employees, and favorable changes have taken effect for many self-employed workers and early retirees. Plus, some HSA benefits become more relevant as Boomers age.

“These accounts are the most tax-efficient way to save for healthcare expenses during retirement, especially Medicare premiums,” says Roy Ramthun, an HSA specialist.

To begin with, HSAs are tax-favored savings accounts that are paired with high-deductible health insurance. They’re available both to employees through workplace plans and to many individual buyers using ACA (Obamacare) coverage.