6 reasons you should be maxing your HSA contributions

6 reasons you should be maxing your HSA contributions
1. Triple Tax Advantage: contributions to your HAS are tax-deductible which means they reduce your taxable income. The money in your HAS grows tax-free. Withdrawals for qualified medical expenses are tax-free.
2. Retirement Fund: HSAs can function as retirement savings tools. Money that you do not spend on medical expenses can be invested into the stock market and grow significantly over time. Your HSA funds can take advantage of the magic of compound growth in the market which can lead to substantial savings and investment growth. After you reach the age of 65, you can withdraw the funds for non-medical expenses without penalty, but you will have to pay income tax like how a traditional IRA works.
3. Emergency Fund: Your HSA can act like an emergency fund for unexpected medical expenses. By maximizing your contributions, you can have a substantial financial cushion of medical expenses. Health care costs can be substantial and will most likely only increase in price and frequency as you age. It is prudent to start contributing money towards your HSA now, so the money can grow in the stock market, and provide for future medical expenses in the future.
4. Employer Contributions: If your employer is contributing to your HSA, you should max your contributions to take full advantage of employer contributions. Employer contributions are part of your overall benefits and compensation package. It is effectively free money if you fulfill your end of the bargain: contributing to your HSA.
5. Flexibility: HSAs have a great degree of flexibility in how you can use the funds including deductibles, co-pays, prescriptions, dental care, and even certain things at the store if they are medical related.
6. Portability: Your HSA is portable which means it is not tied to your job or insurance plan. You can keep your HSA funds when you switched jobs or insurance providers.
You should note that HSAs have contribution limits set by the IRS. For 2023, the annual contribution limit for individuals with self-only coverage is $3,750, and for those with family coverage, it's $7,500.
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