The Tax Professionals Blog — Heath Savings Accounts

Health Savings Accounts (HSAs) are an oft-overlooked stratagem in retirement planning.  Individuals with high-deductible health insurance plans can establish an HAS and make tax-deductible contributions to it. Congress created these plans to help individuals pay for medical expenses not covered by insurance.  HSAs allow tax-free distributions to pay for unreimbursed medical expenses.  Distributions taken that are not used to pay for unreimbursed medical expenses are taxable and subject to a 20% non-qualified distribution penalty.  However, the 20% penalty no longer applies after reaching age 65.