Make the Most of a Health Savings Account

One of the biggest challenges in store for people as they start to use their health plans in 2015 will be dealing with high deductibles. Nearly one-third of employers are offering only high-deductible plans with no alternative, according to the National Business Group on Health, and people who buy insurance on their own are choosing high-deductible policies as a way to lower their ever-rising premiums. The average bronze plan on the state health insurance exchanges had a deductible of more than $4,300 in 2014, according to a study by Avalere Health.

It can be tough to adjust your family budget to cover a large deductible, but there is one benefit: A high deductible may make you eligible to contribute to a health savings account. An HSA gives you an attractive triple tax break. Your contributions are tax-deductible (or pretax through an employer’s plan), the money grows tax-deferred, and you can use it tax-free for medical expenses in any year. Many employers are pitching in, too.

You’ll benefit the most if you keep the money growing in the account for future medical expenses -- building up a tax-free stash of savings you can use anytime, even after retirement. To help you make the most of this valuable opportunity, we've updated our helpful FAQ about health savings accounts. Learn more.

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FAQs About Health Savings Accounts

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.