Guidelines to Prepare for Record Healthcare Costs.

People who have high-deductible health insurance plans can use a health savings account (HSA) to reduce their out-of-pocket expenses.

HSA contributions are not subject to federal income tax, and profits grow tax-free in the account.

At the end of the year, unused funds in an HSA roll over, making them accessible for upcoming medical costs.

Contrary to flexible spending accounts (FSAs), which are "use it or lose it," this is not the case.

An HSA has some drawbacks if you take money out of your HSA before you turn 65 to pay for non-qualified expenses.

You will be responsible for income taxes as well as a 20% penalty. You will owe taxes once you turn 65, but not the penalty.

HSAs must have high-deductible health plans (HDHPs), but they aren't always the best option.

The funds you deposit into your HSA have no time limit and will remain indefinitely.

In general, you can't use your HSA to pay your health insurance premiums, but you can for Medicare premiums.

When your HSA is a brokerage account, you can not only save money tax-free but also make money.