The benefits of HSAsWith HSAs:
- Pretax contributions, gains from investment, and withdrawals used for qualified medical expenses are exempt from federal and most state taxes.
- Any unused balance is carried over to the next year.
- Funds never expire.
- Unused funds can be passed on to a beneficiary after death.
- After turning 65, account holders can withdraw money for any purpose. However, if those funds are not use for a bona fide medical expense, they are taxed as income.