The Health Savings Account: A Powerful but Oft-Overlooked Asset for Retirement

Some 15 years after the U.S. government established health savings accounts to give people a tax-favored vehicle to pay for medical and healthcare expenses, the HSA remains “the best deal in the tax code,” according to CERTIFIED FINANCIAL PLANNER™ professional and FPA member William M. Harris, cofounder of WH Cornerstone Investments in Duxbury, Mass.

That deal comes in the form of “a compelling mix of tax breaks and other savings that can keep [HSA account owners’] health insurance costs down,” explains FPA member Peter Lazaroff, CFP®, co-chief investment officer at Plancorp in St. Louis, Mo. “But under the right circumstances, these accounts offer an even more powerful — and largely underappreciated — chance to boost your long-term savings and provide a nest egg to offset the rising cost of health care later in life.”

Established as part of a federal tax law that took hold in 2004, HSAs are available to people who participate in a high-deductible health plan. The compelling mix to which Lazaroff refers begins with a triple tax advantage:
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