(WICHITA) – Do health savings accounts make financial sense? Recent guidelines issued by the Internal Revenue Service put HSAs on equal footing with Individual Retirement Accounts from a tax perspective. But HSAs offer benefits IRAs simply cannot.
“Put simply, no other account has the tax advantages that HSAs do,” says Roy Ramthun, co-author of a new report from the Flint Hills Center for Public Policy and a Visiting Fellow at the Council for Affordable Health Insurance. “Throughout the life of an HSA its owners can withdraw funds for medical care tax-free. Because of this, taxpayers should consider fully funding their HSAs first, before other types of retirement accounts.”
HSAs were introduced in 2004 and allow individuals to pay for medical services upfront through funds they deposit tax-free into a personal account. A required insurance policy then kicks in for catastrophic expenses. Any unused funds build up from year-to-year and collect interest in the process.
The new report “
What Can A Health Savings Account Do For You?: The tax, savings, and health spending advantages of HSAs,” provides important information on HSAs and their financial advantages. The report also includes an overview of recent IRS guidance, including rules regarding the ability to rollover funds from an IRA into an HSA. You can read the full report at
www.flinthills.org.
“Over 6 million Americans have insurance plans tied to health savings accounts,” says Flint Hills Center for Public Policy Senior Fellow and co-author Matthew Hisrich. “Those Kansans without an HSA should consider whether one is right for them. Those who already have an HSA should consider whether they are taking full advantage of this powerful tool.”
