Health Savings Account
What is a health savings account?
Otherwise known as an HSA, a health savings account can be funded with your tax-exempt dollars by your employer, by a family member, or by anyone else on your behalf. Dollars from the account can help pay for eligible medical expenses not covered by an insurance plan, including the deductible, coinsurance, dental, vision and other expenses. This money can even be used on your dependent’s expenses regardless of their enrollment in your health plan!
Who is eligible for an HSA?
Anyone who is:
- Covered by a high-deductible health plan (HDHP);
- Not entitled to (eligible for AND enrolled in) Medicare benefits; or
- Not eligible to be claimed on another person’s tax return (Adult Child)
How much can I contribute to an HSA?
The annual HSA contribution limits for 2018 are:
- $3,450 for individual coverage
- $6,900 for family coverage
- Individuals age 55 or older may be eligible to make a catchup contribution of an additional $1,000
Why should I elect an HSA?
Cost Savings / Triple Tax Benefit
- HSA contributions are excluded from federal income tax
- Interest earnings are tax-deferred
- Withdrawals for eligible expenses are exempt from federal income tax
- Reduction in medical plan contribution
- Unused money is held in an interest bearing savings or investment account
The money in your HSA account belongs to you and rolls over from year to year. It is NOT a “use it or lose it” account.
If you have money left over (from your defined contribution) you can allocate how much you want to put into the HSA and you can also make your own contributions on a pre-tax basis (up to the maximum allowable per year).