9 Unexpected Ways a Health Savings Account Can Help You Save

The rising cost of health care is top of mind now more than ever. We’re in the middle of a global pandemic, premiums are skyrocketing, and the cost of medication has been steadily rising over the past decade.

More consumers are looking for ways to combat these costs to make health care more affordable; And if you’re eligible, a health savings account is a great option.

So let’s break down some of the key benefits of having a high deductible health plan (HDHP) with a health savings account (HSA) and how you can use one to save.

First, let’s give the breakdown on those acronyms.

What is an HDHP?

An HDHP is a type of health care plan that often has a lower monthly premium but a high deductible. Meaning, you have to spend more out-of-pocket before insurance steps in to take on costs. HSAs were introduced as a triple-tax advantaged savings vehicle to help offset the larger out-of-pocket costs. So how exactly can they save you money? Let’s show you some of the ways.

An HSA Reduces Your Taxable Income

If you’ve set up HSA contributions through your employer, and they come straight out of your paycheck, those go into your HSA pre-tax, reducing your taxable income as you save. Another way this works is if you personally contribute from your paycheck post-tax, you’ll get the tax credit back with your tax return.

Gains Are Tax-Free

This applies to both interest gains and any gains you might get from investing. Any interest you earn on your HSA while you save is totally tax-free, adding more dollars you can put toward your health. Even if that interest rate is modest, it will add up. Additionally, if you’re the investing type, any gains made on the investments made with your HSA dollars can be returned totally tax-free, really allowing your HSA to grow and flourish.

You Can Invest Tax-Free

More tax-free things! One of the most under-utilized facts of an HSA is the ability to invest your savings pre-tax and watch your investments grow tax-free. Meaning taxes don’t apply to the money going in or out, therefore reducing your taxable income yet again. The only other account that is remotely similar is a Roth IRA, and even then, the Roth IRA doesn’t allow you to take out the funds whenever you need to like an HSA does. Plus, there are no penalties for withdrawals with an HSA when you’re spending the money on qualified medical expenses.

Save On The Cost of Prescriptions at The Pharmacy

Most people assume that the copay you get for your prescription is cheaper than the prescription without insurance, but that’s not always the case. If you pay for the prescription with your HSA, you don’t pay tax and you can use your RxSaver coupon to make sure you’re paying the best price, which could be up to 85% off the cash price of the medication.

You Can Cover Insurance Premiums

If your job has been affected this year, and therefore your health insurance, you might be using (or considering using) COBRA to extend the coverage you were receiving. Your HSA can pay for COBRA premiums, which tend to be more expensive because you’re footing the entire bill without an employer’s help.

Take advantage of your hard work and those savings you’ve set aside to take care of your health. Additionally, your HSA can also cover insurance premiums outside of COBRA while you’re receiving state or federal unemployment benefits.

You Can Pay For Telehealth Services

Under the CARES Act passed in March of this year, HDHPs can cover telehealth and other remote care services before participants have met their deductible. Typically, HDHPs can't offer first-dollar coverage beyond preventative health, so this is a great win! Additionally, your insurer may cover more of the cost than normal for telehealth services not related to COVID-19, so your copay is lower and you can still use your HSA to take care of these costs. This includes mental health services like seeing a psychiatrist or psychologist for medication or therapy.

Save Even More on Your Drugstore Runs

Another benefit of the CARES Act passed earlier this year is that your HSA can now cover over-the-counter medications that you can find at any drugstore near you. From OTC painkillers to your vitamins, you can spend your HSA dollars pre-tax to be stocked up on everything you need to stay healthy at home. Most of the time, at larger chains like Walgreens and CVS, an item’s HSA eligibility will be highlighted when you’re checking out, so be sure to look for the savings.

HSAs Can Help Cover Some Fertility Treatments

Another big way an HSA can help you out is with expensive fertility treatments. Whether that’s medications to treat infertility, in-vitro fertilization, artificial insemination, or other assisted reproductive technologies, your HSA can help out where your insurance can’t. While most insurance plans these days cover infertility treatment, some may not cover a good portion of it, therefore leaving large out-of-pocket expenses.

Save on Dental and Vision Health Care Costs

While HSAs are heavily discussed alongside health insurance, you can also use them to cover dental and vision costs. So when you go in for your dental cleanings, x-rays, fillings, etc. keep your HSA in mind! You can even use an HSA for braces if your kiddos need them. The same goes for vision costs. Be it a routine ophthalmologist visit or the need for new prescription glasses, these are all HSA-eligible expenses that don’t need to make a dent in your bank account.

Your Health is Worth Every Penny

An HSA is a multi-faceted tool that can help you get through a lot, especially right now. If money is a roadblock or insurance can’t take on large sums of healthcare costs, step back and see if an HSA can help.

Even if your HSA doesn’t have enough in it right now, you can save receipts and be reimbursed later! Yes, it’s true, keep those receipts! Money should not be a hindrance to getting the care you need, so let’s keep working together to get the best price for the best care. We’ve got this!