Health Savings Accounts

Health Savings Accounts are a great way to save pre-tax money for medical expenses now and in retirement.

A Health Savings Account (HSA) is a tax-advantaged personal savings account that helps those with HDHPs (high-deductible health plans) save money on many out-of-pocket medical expenses like doctor visits, vision and dental care, prescriptions, and much more. HSAs allow you to contribute pre-tax dollars, and the funds in an HSA are never taxed when used for qualified medical expenses. You can contribute to an HSA up to $3,850 in 2024 for individual coverage and $7,750 for family coverage. Members age 55 and older may make additional catch-up contributions up to $1,000.

Unlike FSAs, your HSA belongs to you, and the balance is portable, meaning you can keep it if you change jobs or leave a qualifying high-deductible health plan. Unused funds in an HSA roll over from year to year, and you can invest your funds tax-free with investment options available through CYC.

How to Qualify For Health Saving Accounts
Health Savings Accounts 1

How to Qualify For Health Saving Accounts?

In order to qualify for an HSA:

  • You need to be enrolled in a qualified high-deductible health plan. This type of plan typically has lower monthly premiums but higher deductibles, which you must meet before your insurance company begins to cover any costs.
  • You must be 18 or older to open an HSA and contribute to it. You must also have a US-based Social Security Number/TIN to open an HSA.
  • Once qualified for an HSA, the next step is to set up an account with a bank or other financial institution. You can ask your insurance provider or employer to recommend a place to open one.

You can then make contributions to your HSA as long as they don’t exceed the annual contribution limits. These limits are updated annually by the IRS in Publication 969. HSAs are not limited to medical care expenses; they can also be used for dental, vision, and other eligible out-of-pocket expenses. You can also use funds to pay for COBRA, certain Medicare premiums, and qualified long-term care premiums. Another great benefit of an HSA is that it’s portable. Funds in an HSA can roll over from year to year, and you can take them with you if you leave the state or change jobs.

In addition, you can also invest your HSA funds if you’d like to do so. You can choose to put your money in a variety of investments, including mutual funds and stocks. The best time to start saving for your HSA is during the annual open enrollment period. However, you can also start saving and investing in your HSA any time. In fact, you can even consolidate multiple HSAs into a single account to accelerate your savings.

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