Michael Milazzo photo

Michael A. Milazzo, CLU, ChFC

Registered Principal

 

The Meridian Financial Company

3350 Club Villas Dr SE, Unit #1303

Southport, NC 28461

 

Phone:  631-979-4223

Fax:      910-854-0002

 

Email: meridian@ae.cadaretgrant.com

Website: www.merfinco.com

May/June 2025

Choosing a Health Savings Account

Happy couple, paperwork and technology for savings, paying bills or estate planning. Married people, conversation and budget for insurance policy, investing or tax returns in apartment or family home

Health Savings Accounts (HSAs) are unique in that besides helping you manage healthcare costs effectively, they also offer triple tax advantages: Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified expenses are tax-free.


An HSA is a tax-advantaged savings account that helps individuals save for qualified medical expenses. To be eligible for an HSA, you must be enrolled in a High Deductible Health Plan (HDHP), which has specific minimum deductible and maximum out-of-pocket expense limits defined annually by the IRS. (See the table below.) Additionally, you can't be enrolled in Medicare or claimed as a dependent on someone else's tax return.


Advantages
Along with minimizing your current taxable income, HSAs offer numerous other advantages. Unlike employer-offered Flexible Spending Accounts (FSAs), which may have a "use it or lose it" stipulation, HSAs allow funds to roll over year after year. This feature is especially beneficial for long-term savings.


Many HSAs offer investment options that can potentially yield higher returns than traditional savings accounts. This means you can grow your HSA funds over time, maximizing their utility. Once you reach age 65, HSAs can be used for non-medical expenses without penalties (though income taxes will apply). This makes HSAs an excellent supplement to retirement savings.


Considerations
HSAs may charge various fees, including account maintenance fees and transaction fees. It's crucial to compare different HSA providers to understand their fee structures, as these can impact your savings.


Interest rates on HSA accounts vary significantly; some providers offer competitive rates akin to traditional savings accounts, while others provide the opportunity to invest in stocks, bonds, or mutual funds. Navigating the intricacies of HSAs can be overwhelming. Working with a trusted financial professional can provide tailored insights and strategies to help you integrate an HSA into your broader planning efforts.


HSA and HDHP Limits for 2025


HSA Contribution
Individual - $4,300
Family - $8,550


HDHP Deductible
Individual - $2,850 - $4,300
Family - $5,700 - $8,550


HDHP Maximum Out of Pocket (excluding premiums)
Individual - Not more than $5,700
Family - Not more than $10,500


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Securities and Advisory Services offered through Cadaret, Grant & Co, Inc, a Registered Investment Advisor and Member FINRA/SIPC. The Meridian Financial Company and Cadaret, Grant & Co., Inc. are separate entities. I am registered to sell Securities in the following States: NY, NJ, PA, NC, FL, ID.
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