The Benefits (and the Catch) of Health Savings Accounts

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The Benefits (and the Catch) of Health Savings Accounts You can set aside as much as $3,400 for an individual, or $6,750 for a family, in an H. S.A. You can leave the money in a basic, interest-bearing savings account or, in some cases, invest the money — just as you would with a 401(k) retirement account — for the long term. Fidelity, which offers H. S.A.s, said money invested in a health savings account could help provide cash to cover needed health and medical costs in retirement. Ryan McCostlin, an expert in individual and family health care at the advisory firm Bernard Health, said the tax-free growth available with H. S.A.s made them powerful savings tools. The Employee Benefit Research Institute, which tracks a database of 5.5 million health savings accounts totaling $11.3 billion as of the end of 2016, found that H. S.A.-eligible health insurance plans covered nearly three in 10 employees last year. But there’s a catch: The savings accounts are available only with certain health insurance plans meeting specific criteria, like high deductibles — at least $1,300 for an individual and $2,600 for a family. H. S.A.s, or health savings accounts, are not yet as familiar as their better-known cousin, the F. S.A., flexible spending account. Contributions can be deducted pretax from your paycheck, lowering your taxable income; any interest or investment gains on the money is tax free; and withdrawals from the account are tax free, as long you spend the money on eligible items.