The Benefits of a Health Savings Account
The real benefit of being in a HDHP is the access you are given to a health savings account (HSA). The health savings account is where you elect to save some pre-tax dollars to cover any future medical expenses before you meet your deductible. This account also has an investment option, so when you have your maximum out-of-pocket dollar amount saved in cash you can start to invest these extra dollars. Now, these extra dollars are for health care expenses only, but they can be banked throughout your lifetime so when retirement rolls around you will have a very nice nest egg for your medical expenses. The most powerful and impactful use for this savings will be for long-term care. Health care costs for seniors are expected to grow at approximately 5.8% over the next 10 years, and these future costs are quickly becoming retirees' most pressing concern regarding their retirement. (For related reading, see: Rules for Having a Health Savings Account (HSA).)
Not only can you bank these savings and invest them for future medical expenses, but once you turn age 65 you can pull your HSA funds out for everyday livings expenses and only have to pay income tax. The 20% penalty falls off once the account owner turns age 65. This means the HSA you have been putting money into for the last 20+ years has effectively become another retirement funding vehicle if health care costs are not a concern.
Read more: The Real Benefit of a High Deductible Health Plan | Investopedia https://www.investopedia.com/advisor-network/articles/real-benefit-high-deductible-health-plan/#ixzz4zNCkw5x4
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