First and foremost, your health savings account is an important financial tool that helps you cover expenses that your health insurance account does not pay for. However, your HSA is also an investment vehicle that offers exciting opportunities to build wealth and to prepare for retirement. In fact, these are three reasons to optimize your HSA contributions each year.

Three Unique Tax Benefits

An HSA is a tax-advantaged account. This means that your contributions use pre-tax dollars, and this offsets your annual tax liability. You can also withdraw funds tax-free to pay for copays, a deductible and other qualified expenses. In addition to these exciting benefits, your funds can grow tax-free over the years.

Invest Your Funds for Optimized Growth

Many people use their HSA as a savings account. They essentially park their funds in the account until they need to pay for qualified medical expenses. However, did you know that you can invest funds in a wide range of mutual funds and other managed investment vehicles? The growth is tax-free, and you can withdraw your funds without a penalty for non-medical purposes after the age of 65. In this way, you can invest in your health savings account in a similar fashion as you would invest in a traditional IRA. If you would like to know about how to invest in your health savings account, visit this website.

Cover Future Medical Expenses

Your retirement accounts are used to supplement income in the future, but what if you could start paying for specific expenses in retirement today? Your HSA contributions can be used to pay for your medical expenses at any time in the future. Whether those expenses hit before or after retirement, contributions and growth over the years can keep your budget on track.

Did you know that you can invest up to $3,000 per year in your HSA as an individual or up to $7,000 for families? By maximizing your contributions now, you can be better prepared for the future.

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