To what extent HSA can be a money saver?
Contribution to this plan save you from taxation. You dont have to pay income till the money stays in the account. Your withdrawal for medical purposes is tax free. According to the reports of US Treasury Department, by contributing $2500 to HSA, a person having one dependent child can go for federal income tax savings up to $756. And contributing $5450, a married couple can save up to $1417. (Source: www.treasury.gov/offices/publicaffairs/hsa/pdf/hsa-example.pdf) interest on the amount saved in the account grows tax free basis. And the mutual fund it carries is benefited with tax free capital gains. When you withdraw money from HSA for medical expenses, you do not need to pay penalties or taxes. If your age is sixty five, you can withdraw money from the HSA without penalties or taxes. In this case, you have to pay regular income tax on the withdrawls.
