I spend most of December coming up with ways to save on taxes in the existing year, and new plans to save on taxes in the next year. My poor CPA receives countless emails with new ideas for tax write-offs. One of 2017’s biggest disappointments was realizing that the thousands of dollars spent on healthcare costs were not tax deductible.
An HSA (Health Savings Account), is an account that allows you to put away money for healthcare costs. All of the money put into the HSA is tax deductible, and can be invested for the future. You can qualify for an HSA by getting a high deductible health plan. Be sure to ask your health insurance company which plans have the option of an HSA. There is no income minimum or maximum in order to qualify for an HSA, it is strictly about which plan you pick.
Auerbach went on to provide the following advice;
“Don’t be afraid of a high deductible health plan. A high deductible plan can give you two things; a lower premium, and the option to put cash away into an HSA.”
The second piece of advice he provided is not to be afraid to contribute to your HSA.
“The value of an HSA can benefit you even more than a 401K. You can put the difference of premium from a low deductible plan to a high deductible plan into an HSA, and the growth from investing should help you get out ahead”.
There are a few weeks still left in open enrollment for healthcare plans, and it is an important time to consider all of your options. Don’t be afraid to explore something that you don’t know very much about, because the benefits can be pleasantly surprising.
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