HSA

Health savings accounts (HSAs) are a type of tax-advantaged account that can be used to save and invest for medical expenses. Here are some ways to use an HSA to build wealth, as well as tips on how to use it for spending and saving:

1. Contribute the maximum amount: The annual contribution limit for an HSA in 2022 is $3,650 for individuals and $7,300 for families. If you can afford it, maximizing your contributions can help you build wealth over time.

2. Invest the funds: Most HSA providers offer investment options, which can allow you to grow your funds over time. Consider investing in low-cost index funds or ETFs to keep fees and expenses low.

3. Use the funds for qualified medical expenses: HSAs can be used to pay for qualified medical expenses such as doctor visits, prescriptions, and medical procedures. Be sure to keep receipts and documentation in case of an audit.

4. Save for future medical expenses: Since HSAs do not have a use-it-or-lose-it provision, you can carry over funds from year to year and build a significant balance over time. This can be especially valuable if you anticipate higher medical expenses in the future.

5. Consider using the HSA as a retirement savings vehicle: Once you turn 65, you can use your HSA funds for non-medical expenses penalty-free, although you will have to pay income taxes on the withdrawals. This can make the HSA a powerful tool for retirement savings, especially if you have maxed out your other tax-advantaged accounts such as 401(k)s and IRAs.

6. Pay medical expenses out-of-pocket and let the HSA grow: If you can afford it, consider paying for medical expenses out-of-pocket and leaving the funds in your HSA to grow tax-free over time. This can help you build a significant balance in your HSA that can be used for future medical expenses or as a retirement savings vehicle.

In summary, HSAs can be a powerful tool for building wealth and saving for medical expenses. By contributing the maximum amount, investing the funds, using them for qualified medical expenses, saving for future medical expenses, considering the HSA as a retirement savings vehicle, and paying medical expenses out-of-pocket, you can make the most of your HSA and achieve your financial goals.