Understanding the Differences Between RHSAs and HSAs

Health Savings Accounts (HSAs) and Retirement Health Savings Accounts (RHSAs) are both tax-advantaged accounts that offer individuals a way to save for healthcare expenses. While they share similarities, there are key differences between the two that individuals should be aware of.

One of the main differences between RHSAs and HSAs is the purpose for which they are intended. HSAs are designed for current healthcare expenses, while RHSAs are specifically earmarked for healthcare expenses in retirement.

Another important distinction is the eligibility criteria. To open an HSA, individuals must be enrolled in a high-deductible health insurance plan (HDHP). On the other hand, RHSAs are available to individuals who have a high-deductible plan with a health savings arrangement, mainly those who are nearing retirement age.

When it comes to contributions, both accounts have annual limits set by the IRS. However, the contribution limits for RHSAs are typically higher than those for HSAs, allowing individuals to save more for their healthcare needs later in life.

Understanding Health Savings Accounts (HSAs) and Retirement Health Savings Accounts (RHSAs) can help you make informed decisions about your healthcare savings. HSAs are primarily for immediate medical expenses, while RHSAs cater to future healthcare costs during retirement.