How do HSA accounts actually work and are they worth it?

Health & Fitness

My new job offers a high deductible health plan with an HSA option. HR tried to explain it but I still dont really get it. Like the money rolls over forever? And I can invest it? Seems too good to be true. Anyone actually using one of these and can explain if its worth switching from a traditional PPO?

David Jones

3 Answers

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HSAs are honestly amazing once you understand them. Heres the deal:

Money goes in pre-tax (lowers your taxable income)

It grows tax-free if you invest it

Withdrawals for medical expenses are tax-free

Triple tax advantage - literally the best tax shelter available to regular people. The catch is you need a high deductible plan which means more out of pocket before insurance kicks in. I max mine out every year (,850 for 2024) and invest it all in index funds. Been doing this for 6 years and have almost k saved up for future medical expenses. Highly recommend if you can afford to pay for routine care out of pocket.

Andrew Jackson

HSAs are insane good. Ive been maxing mine for 8 years and have over k invested. Its my "stealth retirement account" - tax free in, tax free growth, tax free out for medical. No other account has triple tax advantage.

Joshua Anderson

One caveat - high deductible plans can be scary if you have a major health event. Keep enough cash to cover the deductible outside the HSA. Dont put yourself in a position where you cant afford to get sick.