Rising health insurance costs make HSAs a powerful savings tool—learn how to maximize your benefits while planning for the future.
Health insurance premiums continue to rise, leaving many individuals and business owners looking for ways to save on costs while still securing their financial future. One strategy is opting for a high-deductible health plan (HDHP) and redirecting the savings from lower premiums into a Health Savings Account (HSA). Not only does this provide an immediate tax advantage, but it also builds a long-term financial cushion for medical expenses in retirement.
HSA or Roth IRA: Which One Should You Choose?
Both HSAs and Roth IRAs offer tax advantages, but they serve different purposes:
- HSA Benefits: Contributions are tax-deductible, grow tax-free, and can be withdrawn tax-free for qualified medical expenses. After age 65, HSA funds can be used for non-medical expenses, though they will be taxed similarly to a traditional IRA.
- Roth IRA Benefits: Contributions are made with after-tax dollars, but withdrawals in retirement (including earnings) are tax-free. Roth IRAs are a great option for those looking to maximize tax-free retirement income.
For those with an HDHP, an HSA can be a more flexible savings tool, offering the ability to cover healthcare expenses now while growing tax-free for retirement.
Maximizing Your Savings with an HSA
If you choose a high-deductible plan, consider contributing the difference in your monthly premiums to an HSA. This approach allows you to:
- Build a dedicated healthcare emergency fund
- Reduce taxable income
- Grow your savings tax-free for future medical expenses
- Use the funds in retirement for any purpose after age 65, although distributions used for something other than qualified medical expenses are taxed as ordinary income
At RMC Group, we help businesses navigate both retirement planning and employee health benefits. Whether you’re looking for tax-efficient retirement solutions, ways to offer better benefits to employees, or guidance on HSAs and high-deductible plans, our professionals can provide customized strategies that align with your financial goals.
Want to learn more about how to maximize your savings and benefits? Contact RMC Group today to explore your options at 239-298-8210 or rmc@rmcgp.com.
