Best Health Savings Account

If your employer offers a health savings account, that’s usually your best bet. Your contributions will escape federal as well as Social Security taxes when made through payroll deduction. If you have health insurance on your own or your employer doesn’t offer an HSA, consider HealthEquity, which lets you choose among 17 low-cost Vanguard mutual funds and six Vanguard target-date funds for long-term investing. HealthEquity also offers an FDIC-insured savings account for short-term savings.

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It’s like a supercharged flexible spending account that never expires, and it can even serve as an extra retirement-savings fund. Most employers also add a few hundred dollars to the accounts each year as a bonus.

Unlike flexible-spending accounts, you don’t have to spend the money in an HSA by the end of the year. You can use the money tax-free for medical expenses anytime, even after retirement. In fact, you’ll get a bigger benefit from an HSA if you can use other cash to pay for current out-of-pocket medical bills and leave the money growing in the account for the long term.