Americans with high-deductible health insurance plans can allocate money in HSAs to cover certain medical expenses. Their contributions are not subject to federal income taxes and can be invested as is the case with an IRA. The advantage of HSAs is that any unused funds roll over each year and any remaining money can be used for retirement after the age of 65.
People who buy coverage on the public health insurance exchanges are especially good candidates for this, since most of the purchased plans, including silver and bronze plans under Obamacare, are high-deductible plans. A high deductible is defined as at least $1,300 for an individual and at least $2,600 for a family in 2015, according to the IRS.
While only 8% of Americans have an HSA account, some 50% said they would be somewhat or very likely to use an HSA to lower their taxes, according to a 2014 insuranceQuotes.com report.
Popular expenses that HSAs can be used for include prescription medications, doctor and dentist visits and eyeglasses. HSAs can also pay for continuing coverage through the Consolidated Omnibus Budget Reconciliation Act and long-term care insurance.
“With the advent of Obamacare, more Americans are eligible for a Health Savings Account than ever before,” said Laura Adams, insuranceQuotes.com’s senior analyst, said. “You fund it ahead of time, which means you will get a discount for any medical procedures you need in the future." Those savings, Adams added, can become substantial over time.