Should You Invest Your Health Savings Account in 2023?
Health savings accounts (HSAs) are often touted as excellent retirement savings tools. This is due to a combination of their "triple tax benefit" and the way money in those accounts gets treated once an account owner reaches age 65.
The triple tax benefit is the fact that money can be contributed pre-tax, grow tax-deferred, and be withdrawn tax-free for qualified medical purposes. The age 65 benefit is that once an owner reaches age 65, that person can withdraw money for any purpose and only pay ordinary income taxes on their gains. That makes the HSA act similar to a traditional IRA and tempting to use as a retirement plan. That's especially true since healthcare costs tend to rise as you age, adding to the account's impact.
Yet as awesome as those accounts can be, there is one massive string attached to them. To be able to contribute to a health savings account, you must only be covered by a high deductible health insurance plan. That means if you get sick or injured or otherwise need substantial medical care, you've got to cover the first part of the costs of that care out of your own pocket. That raises a key question: Should you really invest your health savings account in 2023?
Source Fool.com
