Who benefits from an HSA? Health Savings Accounts are a good match for:
- Individuals looking to reduce the amount they pay in income taxes for the year.
- Individuals who are wanting to reduce their taxable income in order to qualify for tax credits and/or increase the amount of their premium tax credits.
- Individuals who would like to pay for dental, vision, and homeopathic medical needs with untaxed money.
- Individuals who want an incentive to save money for future medical expenses
Funds never expire – Your Health Savings Account is between you, your bank, and the IRS – it is not monitored by a health insurance company and is always yours – even if you are no longer insured with the original carrier and even if you are no longer insured on a qualified HSA plan. Unlike older-style employer Flexible Spending Account (FSA) plans, you are not required to spend the money in the account by a particular date.
What happens after you turn 65 and go on Medicare? When you turn 65 you are no longer eligible to fund your health savings account with the bank however you can continue to withdraw money from the account. If the money is used as a payment to you or a provider for IRS approved medical, dental, and vision expenses for you or any of your tax dependents, the withdrawals are not treated as income and are not subject to income taxes; if the funds are used for non-IRS approved expenses, the money is simply treated as income for that year.
HSA contribution limits
- For 2017 the maximum contributions are:
- Individual Coverage = $3,550 for 2020 – $3,600 for 2021
- Family Coverage (2+ individuals covered on HSA plan) = $7,100 for 2020 – $7,200 for 2021
- Individuals who are age 55+ may make an additional $1,000 Catch-Up contribution each calendar year
Are all high deductible plans HSA qualified? No – not all plans that have high deductibles are HSA qualified. In order for a plan to be HSA qualified it MUST be labeled as either HSA or HDHP. If you are unsure – ask!