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What are the advantages of an HSA?
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- What are the advantages of an HSA?
- There are many financial advantages to owning an HSA, including:
- Employer contributions and employee pretax contributions via a cafeteria plan are not taxable income
- Post-tax contributions are tax deductible even if you do not itemize deductions on Form 1040
- You may make tax-free withdrawals from your HSA for eligible medical expenses not covered by your plan
- The interest or other earnings on the HSA funds accumulate tax free
- If, in the future, you are not covered by an HDHP you may still make tax-free withdrawals from your account for eligible medical expenses but you can no longer contribute to the HSA
- If you become disabled or reach age 65, withdrawals can be made for non-medical reasons without penalty, but amounts must be reported as taxable income