By Brenda Guerrero

A kidney transplant, spinal cord surgery or cranial surgery will cost $48,000 without insurance.  Often times these medical expenses are financed by liquidating retirement funds, however this is not the long-term path to building financial security nor is it the most effective tax strategy.

A Health Savings Account (HSA) is a powerful tool to save for medical expenses while creating wealth.  HSA accounts are available for individuals enrolled in high-deductible health plans through their employers.  In 2021 you can contribute up to $3,600 if you have an individual plan and up to $7,200 if you have family coverage. These limits are increased by $1,000 after age 54.

HSA benefits:
  1. Contributions are tax deductible and account earnings are tax deferred
  2. Withdrawals spent on qualified medical expenses are tax-free
  3. Balances can grow securely in a FDIC-insured savings account
  4. HSA balances carry over from year to year with no use-it-or-lose-it limits, even if you are self-employed, change employers, or retire
  5. One little known benefit is that HSA expenses can be paid from after-tax funds each year and then reimbursed in one payment at retirement by your HSA plan.  This allows maximum tax-free growth of the account.
Are you prepared for a medical emergency?  Call us to discuss how to get started on funding your HSA account as well as building an emergency fund to cover at least twelve months of expenses.