If you have a high deductible health insurance plan, one way to help improve your financial situation is by using an HSA. An HSA, or Health Savings Account, is a special type of savings account that allows you to set money aside to be used in the future for your medical expenses, and receive a tax benefit when you do. If you do get one of these accounts, make sure you are using it to its fullest!
First, make sure you use it for all approved costs. It can be used for more than just medical bills. You can also buy your prescriptions and over-the-counter medications with it. Natural healthcare needs and even your contact lens supplies can all be purchased using funds in your HSA. When you set up the account, talk to your banker about the types of costs that can be applied. You may be surprised at just how many there are.
If you have some extra funds in your monthly budget, you can add them to the HSA to build up your “chest” to use in times of high medical expenses. The money grows tax-free, and as long as you only withdraw it to use for qualified medical expenses, you will not be penalized.
If you have enough wiggle room in your budget, aim to carry enough money in your account to cover your deductible. This may take some time to save up, but once you do, you will not have nay worries should you face a medical crisis. The money to cover your deductible will be in place.
If you are using an HSA and find that you need that money for a nonqualified expense, you can use it. But do this only in emergencies. Taking money out for anything other than qualified expenses makes the money taxable, and you will also pay a penalty. So, make sure you understand exactly how the program works, but do not be afraid to make it work for you! Your tax return just might thank you!
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