Liz Weston: How to harness your HSA’s superpowers

If you have a high-deductible health insurance plan, a health savings account can help you pay your medical bills. But HSAs have hidden superpowers that make them a great way for some people to create a tax-free pot of money for retirement or other long-term goals. In the right circumstances, you can even use an HSA to help your young adult children start saving for their futures.

Not everyone is a good candidate for a high-deductible health insurance policy, however. The minimum deductible that qualifies you to use an HSA is $1,400 for individual coverage or $2,800 for family coverage. Many plans ask you to contribute even more before coverage kicks in. If meeting the high deductible would be a hardship, or cause you to scrimp on health care, you’re probably better off choosing a lower-deductible policy and skipping an HSA.

If a high deductible policy is a good fit, you’ll need even more cash to take full advantage of an HSA: enough to pay the deductible and other health care expenses out of your own pocket, without tapping the account. That’s a pretty tall order, but you can still benefit from an HSA even if you have to spend some of the money along the way.

Here are the four biggest advantages to an HSA.

SUPERPOWER 1: YOU CAN GET TRIPLE TAX BENEFITS

HSAs offer a rare triple tax break : your contributions are deductible, the money grows tax-deferred and withdrawals aren’t taxed if you have qualified medical expenses.

By contrast, withdrawals from other tax-advantaged accounts, such as 401(k)s, are typically taxed as income. If withdrawals are tax-free — as they can be from Roth IRAs — you didn’t get a tax break when you put the money in.

SUPERPOWER 2: YOU DON’T HAVE TO SPEND THE MONEY

Any unspent balances in your HSA can be rolled over from year to year. That’s in...