Health Saving Accounts
A Powerful Way to Save
Qualified High Deductible Health Plans (QHDHPs) and Health Savings Accounts (HSAs) are designed to be used together to help you save. Because QHDHPs generally have lower monthly premiums and more out-of-pocket costs, HSAs help you pay for medical expenses before you meet your deductible. You have choice and the control for when and how you use your money.
An HSA is a personal savings account that can be used to pay for medical, dental, vision, prescriptions, and other qualified medical expenses now or into the future.
HSAs have benefits today and into the future
An HSA is like a bank account. You can use it:
As a spending account to help pay for current qualified medical expenses
As a Savings account to pay for future medical expenses, even into retirement
An HSA gives you several perks and features that aren’t offered by any other spending account.
Unlike other types of spending accounts, you OWN your HSA account. You keep all the money - even if you change jobs or health plans.
Money in your HSA rolls over from year to year. It earns interest. You can even invest your HSA money. There are many ways to grow your account.
It Gets Triple Tax Savings!
Income Tax: Money is typically taken out of your paycheck before income tax
Interest: You are not taxed on interest or earnings on your account
Qualified Expenses: You don’t pay tax when you use your money on qualified health care expenses.
How HSAs Work
You can contribute to your HSA either through payroll deduction or from your own bank account. The amount of money you put into your HSA is up to you, and your employer may also contribute. However, you cannot continue to contribute once you’re eligible for Medicare. The IRS also sets a maximum on how much can be contributed in total for the year.
Qualified Health Care Expenses
The money in your HSA can pay for:
- Medical deductibles or coinsurance
- Dental expenses and orthodontia
- Vision expenses like eyeglasses and laser eye surgery
- Over-the-counter products like contact solution and band-aids
Extra Benefits for Retirement
Your HSA is a great partner for your IRA or 401(k). Once you turn 65, your HSA can be used for even MORE expenses, like health insurance premiums and other non-eligible expenses without a tax penalty.*
*Distributions for these non-qualified expenses will be subject to income taxes.
Watch Your Savings Stack Up
HSAs are powerful investment vehicles and can be a great addition to your retirement strategy. And, there are a number of ways to help your money grow outside of your payroll contributions.
At the end of each year, the money you don’t spend gets carried over year after year That means if you don’t use all of the money you contribute during the year, you’ll see growth.
If you’re age 55 or older, your contribution maximum is raised by $1,000 per year.
Combine with a Limited Purpose FSA
Use a Limited Purpose Flexible Spending Account (FSA) to pay for your dental and vision expenses throughout the year and keep more money in your HSA.
Invest Your Money
Take advantage of integrated investment options, much like a 401(k).
Here’s how your investments can grow over time:
|A contribution of $50 a month over 25 years|
|Increase the contribution to $200 a month over 25 years|
|Maximum family contribution of $6,750 a year over 25 years|
For illustrative purposes only. Savings calculations assume (i) pre-tax contributions are used to fund the HSA, (ii) tax rates are 15%- federal, 5% - state, and 7.65% FICA, and (iii) average annual interest rate earnings of 3%. Actual results may vary.
Ask your employer about opening an HSA today.
HSAs give you more value for your health care dollars and allow you to take control of expenses both now and into the future.
Planning for the future is easier, too. Maximize your savings with triple tax benefits and investment opportunities. And, HSAs roll over every year and give you extra benefits after you turn 65 – giving you one powerful tool for retirement!
To take advantage of an HSA, you must be enrolled in a qualified high deductible health plan. Additional eligibility requirements may apply. The IRS sets maximum amounts on how much you can contribute each year. These amounts are subject to change by the IRS based on inflation.
Disclaimer: Not all states follow federal tax rules with respect to contributions made to HSAs. Please consult your tax advisor to determine the extent to which these contributions may be subject to state income tax and wage withholding rules.