TEXAS, USA — Chances are your employer offers ways for you to invest in yourself, or at least help your tax situation when it comes to health care costs. And most of those reduce your taxable yearly income.
There are really two types of health care investing.
Flexible spending accounts for money that you'll be spending before December 31st in a calendar year, and H-S-A's which allow long-term investing and payments for health care.
Certified Financial Planner Neil Vannoy told 6 News, "Flexible spending accounts let you contribute pre-tax dollars to cover expenses like glasses, visits to the dentist, and other health-related costs during the year. But don't put any money into the account that you're not sure you'll use because any money left will be lost."
The best part about setting money aside into an H-S-A is that the investment that you make lowers your yearly taxable income amount.
Quite simply, it will reduce the amount of taxes that you owe in a calendar year.
Neil explains. "If you have a high-deductible health insurance plan you might be eligible for a Health Savings Account, or H-S-A. These accounts let you save pre-tax money for qualified medical expenses. But, unlike flexible spending accounts, you can roll the unused money over to future years."
So, we asked Neil, should you treat your H-S-A as part of your retirement planning?
He told us, “I frequently recommend that clients invest their H-S-A balances for long-term growth instead of spending the money on current medical expenses. Investing the funds will let them grow and compound giving you more money to pay medical expenses in retirement when you're not receiving a paycheck."
For most of you these options that we just discussed, occur during the open enrollment, so check with your employer to find out when you are eligible to sign up.