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I recently “tweaked” my knee while on a warm run at the Y. The event causing the injury was pretty darned benign, but this time the recovery has been frustrating and is taking longer than what I’m used to when I typically abuse myself.

Eventually after attempting to ignore it, denying it and then Google and YouTube diagnosing it, I was strongly encouraged to get the knee looked at by a professional. I got an MRI, there’s some issues in there, I’m probably going to need some dreaded medical attention. This might cost me some money.

I said, “Hey Honey, do we have any money left in that HSA account we’ve been throwing into for years?” We did. I was happy as I reacquainted myself with this special account. Bottom line, this often-neglected little planning tool is the best deal out there for saving money.

An HSA, or Health Savings Account, is a specially designated savings account designed to fill the gap on high deductible health plans of HDHPs on a tax preferred basis. It’s the only tax preferred savings plan that has triple tax benefits.  

Contributions to an HSA are tax deductible when they go in, the growth or interest on the HSA account occurs tax deferred while it’s in the plan, and if the money is distributed for qualified medical expenses both contributions and growth come out tax free when withdrawn. And to make this sweet deal even sweeter, these tax preferred funds can be withdrawn at any age, even in the same year they were put into the account.  

To be eligible to open and fund an HSA, you must have a qualifying high deductible health insurance plan. Of course, the government has made the rules regarding what type of health plan qualifies more complicated than they need to be, best to make sure the plan is HSA eligible when its selected, but if your plan is eligible the maximum contributions this year for an individual is $3,400 for an individual and $6,750 for a family. HSA participants age 55 or older can also contribute a $1,000 catch-up contribution. Unfortunately, my current Medi-Share health plan is not yet eligible, but Medi-Share says they are working on it.

Even though I can’t contribute to the account this year, I can still use the money in the account for qualified medical expenses that the IRS considers as expenses incurred to diagnose, cure, treat, mitigate or prevent a disease, or for the purpose of affecting any structure or function of the body. It’s a pretty broad and flexible list. And if there is any money left in an HSA after age 65 it can then be used to pay Medicare premiums, which is an expense all of us are just about sure to have

We have our family HSA at a local bank. My wife likes the debit card function on the account, but a number of investment custody firms also offer HSA accounts that could provide access to more growth oriented investments as HSA balances build over time.

So, when planning on how to allocate savings on a year-to-year basis, HSA accounts provide some attractive benefits. Unfortunately, I have to take some money out of our account this year, but that’s what it’s there for and ski season is coming.

Opinions are solely the writer's. Marc Ruiz is a wealth adviser with Oak Partners and a registered representative of Sll Investments, member FINRA/SIPC. Oak Partners and Sll are separate companies. SII Investments does not provide tax or legal advice. Contact Marc at marc.ruiz@oakpartners.com.

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