A triple tax benefit loophole

Even as Congress struggles to do something to alter the Affordable Care Act there has been no suggestion that a beneficial loophole will be closed. In fact, Republicans in Congress want to expand this benefit. What is it? Health Savings Accounts or HSAs.

I've mentioned this before but few people I know bother to see this as not only a great way to pay for healthcare expenses but to invest for retirement. How?

Well, let's take a step back. Many high-deductible health care plans (HDHP) allow participants to contribute on a pre-tax basis to an account that can be used for qualified medical expenses. This is actually quite a broad category since it includes dental, vision, hearing aids and prescriptions as well as traditional core medical expenses. So if your minimum individual deductible is $1,300 ($2,600 for families) and your maximum out of pocket costs are $6,550 ($13,100 for families) you may be eligible.

Such plans work best if you're healthy and won't need frequent doctor visits.

Oh, that triple tax benefit loophole? I've already mentioned the first one (pre-tax dollars reduce your current tax obligation). Second, you can invest these funds much like an IRA and they grow tax-free. Third, when you eventually use these funds you won't be taxed for their appreciation or in any other way. Oh, and you can carry the balance forward without penalties. Just make sure to use the money for qualified medical expenses. What are they? Look here: HSA