Health Savings Accounts
Save on both Taxes and Medical Costs
What is an HSA?
A Health Savings Account (HSA) is a personal savings account that works with your High Deductible Health Plan (HDHP) and gives you tax deductions. By depositing any amount up to the annual maximum each year, you can grow your account tax-free, and make qualified tax-free withdrawals to pay for medical expenses.
QHDHP (Qualified High Deductible Health Plan)
A Qualified High Deductible Health Plan is a health insurance plan with a minimum deductible of $1,350 for an individual and a combined deductible of $2,700 for a family. The plan also must have an out of pocket maximum of not more than $6,650 for a single person and $13,300 for a family. If you have any questions about whether or not your health care plan qualifies, you can contact your healthcare provider.
Contribution Limits
Individuals may contribute up to the IRS limit of $3,450 per year and families may contribute up to the IRS limit of $6,900 per year. Contributions for any year may be made up until April 15th of the following year.
For persons age 55 or over, each year you may make an additional catch-up contribution amount of up to $1,000. You may get more information here: https://healthequity.com/learn/hsa.
Qualified Expenses
Qualified Expenses are expenses recognized by the IRS as being medical in nature, and are not subject to taxes or penalties. Typically, all medical, dental, and vision expenses are qualified expenses. Including chiropractic care and acupuncture. In times of unemployment where federal or state unemployment benefits are being collected, account funds may be useable to pay Health Insurance premiums. Funds may also be used to pay for nursing homes, retirement facilities, and elder care – and may be used to pay for Long-Term Care Insurance premiums before that.
What happens upon the death of the account owner?
If the named beneficiary is the spouse, then the spouse continues using the account as an HSA. Otherwise,e the account will cease being an HSA and the beneficiary (or beneficiaries) will be required to pay taxes on the free-market value of the HAS as of the time of death, less any qualified expenses incurred by the decedent that are paid by the beneficiaries within 1 year of the death.
The power of an HSA
Once you put money in your HSA, you can use it to pay for qualified medical expenses now or save and grow your balance to use later in life or in retirement: all tax-free.
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