Anytime I try to do my benefits the description isn’t helpful in explaining why it’s such a good investment move, aside from stating the obvious that it saves money incase you need it. Do I have to invest it? Or do you just let it sit? I’m confused
In: Economics
It’s Yet Another Complication to the income tax code meant to encourage savings, in this case particularly saving for healthcare related expenses. You put money into the account through your employer, you can invest that money in the market like a brokerage account, and as long as you use the money for healthcare related expenses it is not taxed at any point.
The generally suggested “trick” is to avoid taking money out of it while you’re young, even if you do have medical expenses, and let the money grow, untaxed. Then when you’re old you’ll have a big pile of tax-free money to cover all of your medical expenses. After 65, you can also withdraw it for non-medical expenses and only pay regular income tax on it (before 65 if you withdraw it like that you’ll get smacked with a fee).
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