

Health Savings Accounts Boost Retirement Savings
13 snips Oct 29, 2021
Michael Cannon, Director of health policy studies at the Cato Institute, dives into the powerful potential of Health Savings Accounts (HSAs), not just for health care but also for retirement savings. He highlights the significant tax benefits HSAs offer and how they can be leveraged for long-term financial growth. Cannon discusses the importance of policy reforms to make HSAs more accessible and flexible, empowering individuals while also advocating for higher contribution limits. Finally, he emphasizes HSAs as a dual-purpose tool, combining health expenditure funding with investment opportunities.
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HSA Tax Advantages
- HSAs offer triple tax advantages: tax-free contributions, tax-free growth, and tax-free withdrawals for medical expenses.
- After age 65, withdrawals are only taxed as income, even for non-medical expenses.
Maximizing HSA Benefits
- Save aggressively by maximizing HSA contributions, especially if young and healthy. Pay medical expenses out-of-pocket, keeping receipts, to let HSA funds grow tax-free.
- Withdraw HSA funds tax-free for any expense by offsetting it with past medical expense receipts.
HSA Restrictions
- HSAs are currently restricted to high-deductible health plans, limiting their potential. This excludes people who prefer other insurance types or are uninsured.
- Expanding HSA eligibility could increase healthcare affordability and encourage insurance adoption by protecting HSA savings.