The many benefits of health savings accounts

Health savings accounts are special accounts that are opened by customers to better manage their health care expenses in the future. There are quite a few benefits one can get out of health care savings accounts including tax savings.

Getting started with health savings account

In this case, customers are allowed to deposit tax free in their health savings cash accounts where it earns interest. Customers can later open an investment account too, in order to invest their cash account deposits in mutual funds. The good part is that when the money is withdrawn from the cash account for medical expenses, they are not taxed. This means that one can literally save, earn interest and also invest to make it multiple so that customers have enough money to pay for their medical expenses at a later stage.

Features that banks usually offer

The cash account is usually FDIC insured and customers also get a VISA debit card which will provide some liquidity in emergency situations as well. Not only can one set recurring or one-time online transfer, customers can also invest in an entire spectrum of mutual funds without worrying about the trading fee which is generally levied on online trades. Customers are also provided with a supply of checks to use as handy cash along with a line of credit for some applicants.

Earnings on the health savings accounts

One of the biggest earning out of health savings accounts is what you save on medical expenses. Usually you can easily save 25% of your out of pocket expenditure for your health care expenses. More importantly, you do not have to pay tax on these savings. Since you are savings for health care expenses this way, you need to pay less every month in the form of health insurance premium. Not only will this save you from unforeseen health expenditure, it can be carried over and accumulated year after year. You also earn interest in a safe environment where you don’t need to worry that your health savings are washed because of stock market collapse or any other misfortune.

There are usually no hidden charges or fees on such accounts which distinguished them from mutual funds and various other investments. The most important thing about these accounts is the relative convenience with which money can be withdrawn at any time which is not the case generally with mutual funds or certificates of deposit.