Skip to main content

The Trust Company of Tennessee - Live Confidently

Login
  • Home
  • About Us
    • Our Team
    • Community Support
  • Services
    • Wealth Management
    • Corporate Retirement
    • Personal Trust
    • Business Advisory Services
  • Careers
  • Contact Us
  • Events
  • News

Are health savings accounts just what the doctor ordered?

November 5, 2019 by The Trust Company of Tennessee

AdobeStock 87056044

Health savings accounts (HSAs) are the best savings and tax strategy in many years.

Why? They are triple tax-free!

How can that be, you ask?

  1. You do not pay income tax on the contribution to the HSA.
  2. If you invest the contributions and earn dividends and interest, you do not pay any tax on that income or any capital gains.
  3. When you withdraw the funds for medical expenses, you do not pay income tax so the contribution, earnings and any appreciation are tax-free.

Who can have an HSA?

Only those who have a qualified high-deductible health plan (HDHP).

Who should have an HSA?

High income earners (who have HDHP insurance) and can afford to pay the high deductible out of pocket and invest the contributions for growth. Since HDHPs have high deductibles that must be met before the insurance will pay, it is important to have cash available to pay for any medical expenses up to that limit. Of course, it is available if you really needed it.

When should you spend your HSA?

Ideally, you can wait and use it in retirement after it has had time to grow. The growth will be tax free if used for qualified medical expenses (incurred from the time you had HDHP so save those receipts for large tickets items such as braces or long-term care premiums).

If you need your HSA before retirement, is it available?

Yes, it is. You can spend your HSA any time for qualified medical expenses. If spent on non-qualified expenses, then you would pay ordinary income tax plus a 20% penalty.

Are HSAs for everyone?

No. If you do not have cash available to pay the deductible, this may not be the best option for you.

 

To learn more about HSAs, please reach out to your Relationship Manager.

SIGN UP FOR UPDATES

Contact Us

(865) 971-1902
info@thetrust.com

Find a Location

Connect with us

Copyright © 2023 The Trust Company

By using this site, you are agreeing to the use of cookies to enhance your experience.AcceptReject
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT