401(k)
Why employees should max out their HSA contributions
Most people don’t think about an HSA as a savings account. Instead, they think of it as an account used to set aside money, tax-free, to pay for healthcare expenses. While this is true, the reality is an HSA is much more than a bank account. It’s a long-term savings vehicle.
The short answer is that they are both defined contribution plans.
The Individual Coverage Health Reimbursement Arrangement (ICHRA) is an employer-sponsored defined contribution health plan whereas a 401(k) is a defined contribution retirement plan.
Over the years, HSAs have been touted as a way to pay for out-of-pocket medical expenses with tax-free dollars. However, recently HSAs have been making headlines as an alternative to 401(k) plans and other retirement plans.