There are numerous advantages of HSA-qualified plans for employees, but perhaps what’s least understood by employees is the power of HSAs as a financial resource for retirement. Dollars that accumulate in an HSA do so with some of the best tax protection available from the IRS. Contributions to the account under a limit are tax deductible, they grow in the account with no tax applied to the earnings, and as long as a participant uses the funds towards a qualifying health care expense, they receive a full tax deduction on the withdrawal as well. As a result, a well-funded HSA can help a plan participant more feasibly retire before they are eligible for Medicare, since they can purchase lower-cost plans and use their HSA to cover out-of-pocket expenses.
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