Next year, more Americans will have access to a powerful financial tool.
Embedded in President Donald Trump’s sweeping budget bill are three provisions that expand access to health savings accounts — the tax-advantaged accounts available to those enrolled in a high-deductible health plan.
Like a flexible spending account, an HSA is funded through pre-tax dollars and can be used to cover medical costs throughout the year. Unlike an FSA, though, the money doesn’t have a “use it or lose it” provision. Rather, the funds sit in an account you own and can take with you should you switch jobs.
Another feature that sets HSAs apart: you can invest the money in the likes of stocks, bonds or exchange-traded funds. And if you invest the money in these accounts rather than spending it on pressing health-care needs, that’s where some serious advantages kick in, experts say.
“An HSA is indeed one of the most powerful, yet underutilized, financial tools available, especially considering its unique triple tax advantage — contributions are tax-deductible, growth is tax-free and withdrawals for qualified medical expenses are also tax-free,” Sean Lovison, a certified financial planner and founder of Purpose Built Financial Services, previously told CNBC Make It.
