When it comes to navigating the world of employee benefits, there’s a lot to take in, especially if you’re a first timer. Among the suite of benefits you’re likely to be offered, voluntary benefits are often misunderstood. What are Some Examples of Voluntary Benefits? Voluntary benefits include a variety of options, all designed to...
How do Employees Save With an HSA?
There are a several types of savings accounts people can choose from. A Health Savings Account (HSA) from Advantage Administrators, though, should be at the top of the list for employees. Its ability to be used for retirement savings and emergency medical expenses makes it an invaluable tool in one’s financial personnel, and its triple tax advantage only adds to the appeal. So, take a seat and read on to find out why an HSA could be the right fit for you.
You Save With Tax-free Contributions
All funds that you or your employer contribute to your HSA are tax-free. As a bonus, all contributions belong to you, not your employer. That means even if you switch companies, you keep your HSA. This is because all funds put into your HSA are being withdrawn from your salary without being taxed on the federal or state levels.
You Save With Tax-free Earnings
Once placed in an HSA, the funds can grow in two ways. First, money placed in your Advantage Administrators HSA cash account will collect interest. Another way to make more money using your HSA is to invest the money into an HSA investment account. All earnings made from an HSA are tax-free, so savvy investor or not, you will be making money for the future.
You Save With Tax-free Withdrawals for a Qualified Medical Expense
While most withdrawals are taxed, some medical purchases or expenses may be taken care of with HSA funds. Examples include allergy medicine and testing, chiropractor treatments, over-the-counter medicine, and transplants.
If you use HSA funds to purchase an unqualified expense, the purchase will be taxed, and you will have to pay a 20% tax penalty. The penalty goes away when you are 65, but you will still be taxed on ineligible purchases.