If Benjamin Franklin were alive today, his famous quote "Nothing is certain, except death and taxes." might include a third item - paying medical expenses. Medical expenses, in one form or another, are unavoidable. Fortunately a health savings account (HSA) is a great way to cut your spending on medical expenses.
A major tax break
If you have a high deductible health insurance plan (deductible of at least $1,350 for an individual or $2,700 for a family), you can add an HSA to pay for medical expenses with pre-tax income. Contributions to an HSA can be made via payroll deduction or directly to the account and deducted as an adjustment on your tax return. This approach effectively reduces your medical bills by as much as 37 percent!
Tips to maximize your HSA
Once your HSA is established, here are three simple ideas you can use to take full advantage of this great tax-savings vehicle:
Knowing you will always have medical expenses, prioritize your HSA contributions to take advantage of its additional tax benefits.
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