Healthcare can be one of the priciest yet essential parts of life’s journey. And yet, many struggle to utilize the financial tools that may help. Take Health Saving Accounts (HSAs), for example. A Health Saving Account (HSA) is one powerful planning tool that lets you save and invest money on a pre-tax basis to pay for qualified medical expenses. You can significantly reduce the cost by using untaxed dollars to cover deductibles, copayments, coinsurance, and other qualified expenses.
If you are looking to help manage the financial impact of healthcare, a Health Savings Account (HSA) may be just the ticket. Here are a few benefits:
Tax Advantages*:
- Contributions through an employer are always pretax
- You can invest the funds after your account balance reaches a certain level
- Distributions for qualified health expenses are not taxable
Additionally, unlike a Flexible Spending Account (FSA), which is funded with pretax dollars but must be used by a specific deadline, HSA contributions can remain in your account to be used for future medical bills at any time. In short, this means there is no “use it or lose it” penalty.[1]
Flexibility and Choice:
- If you move, change employers, or change health plans, your HSA stays with you.
- Unused balances are rolled over each year, and the balance is eligible for an array of investment options.
- There is no minimum amount required to open an HSA.
Qualifications: You can open and contribute to an HSA if you are
- Enrolled in an HSA-eligible plan
- Not covered by Medicare or an ineligible health plan
- Not claimed as a dependent on someone else’s tax return
HSA Contribution Limits for 2022:
HSA contribution limits are adjusted annually for inflation. For 2022, the individual contribution limit is $3,650 or $7,300 for families. This is a $50 increase for individuals and a $100 increase for families from 2021.
Getting started could not be easier. It is as simple as funding an account and using it to offset expenses. I encourage you to start planning for the future today. Opening an HSA is just one tax-smart way to offset the cost of health care for you and your family. Call us today for collaboration, coaching, and customized advice.
[1] Marketwatch.com, March 17, 2021
* With respect to federal taxation only. Contributions, investment earnings, and distributions may or may not be subject to state taxation.