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The funds are taxed, but you will have gained the benefit of years of tax-deferred growth. However, if you don’t use up all of the funds in your HSA by the time you turn 65, you can make withdrawals from the HSA account and you are not penalized for withdrawing those funds to spend on something other than qualified medical expenses. Contributions are deductible on your tax return, even if you don’t itemize, and withdrawals for qualified medical expenses are tax free. HSAs are meant to be used to pay for qualified medical expenses in conjunction with a high deductible healthcare plan.
![out of pocket cash out of pocket cash](https://thumbs.dreamstime.com/b/close-up-businessman-person-holding-wallet-close-up-businessman-person-holding-wallet-hands-man-take-money-out-146029668.jpg)
If you’re fortunate enough to be in a situation where you have maxed out your tax-free (Roth) and tax-deferred (traditional IRA/401(k)) retirement savings options, you do have the option of using a health savings account as another tax-deferred retirement option. In order to be eligible to use a HSA, you need to be enrolled in a health insurance program that qualifies as a high deductible healthcare plan (HDHP). “Health nuts are going to feel stupid someday, lying in hospitals dying of nothing.”Ī health savings account (HSA) is a tax-sheltered account designed to allow you to use tax-advantaged money to pay for healthcare expenses, and if you do not need to use it to pay for healthcare expenses, then you can invest that money in the market, and the money will grow tax-deferred.