Contribute to your health savings account
In addition to being a great way to cover current medical expenses, a health savings account, or HSA can be an excellent long-term investment account. The short version is that HSA funds can be invested and carried over year after year, so they can be a great way to set aside money on a tax-advantaged basis in addition to your retirement savings.
HSAs enjoy a unique triple tax benefit. Qualified participants can contribute money to their HSA and take a tax deduction. Then, HSA funds can be invested and are allowed to grow on a tax-deferred basis. And if used for qualified medical expenses, HSA withdrawals are 100% tax-free, no matter how much profit your investments have made.
If you qualified for and were enrolled in an HSA in 2018 by having a high-deductible health plan, it could be a savvy tax move to contribute more before the tax deadline. If you had single health coverage in 2018, your contribution limit is $3,450, and if you had a family health plan, your limit is $6,900. This can not only be a smart way to cut your tax bill, but also helps plan for future medical costs.
