More FSA/HSA Benefits

As many METARs know, I am a big proponent of the Health Savings Accounts. Like most of the tax code, it was designed to primarily benefit wealthy people, but with a bit of planning and a dash of LBYM people with ordinary incomes can benefit as well, as long as you have a a high-deductible health insurance plan (HDHP).

In a nutshell, HSAs offer tax-free contributions (including payroll taxes in most cases), tax-free growth, and tax-free withdrawals for qualified medical expenses. The sweetener is the withdrawals can be made in any year following the medical expense. Which means you can let those tax-free gains compound for years. At age 65, it becomes functionally the same as a traditional IRA.

The list of qualified medical expenses is pretty broad but it gets even broader if you have a letter of medical necessity (LMN). At that point, things like gym memberships and meal kits become eligible. I just got an LMN for a home sauna.


I can’t recommend a HSA account enough (if you qualify) for all the thinks syke6 said above!!