In the U.S.A., it doesn’t matter how healthy you are, healthcare is always more expensive than it needs to be. This is why millions of people are using Health Savings Accounts, or HSAs, to save big money on the rising costs of healthcare. In this HSA Strategy guide, you’ll find great tips on how to get the most out of your Health Savings Account.
These tax-privileged accounts make most health expenses 100% tax-free, and can earn money every year to help protect your retirement savings from medical bills.But in order to maximize the value of your HSA investment, some careful planning is in order. In this guide, we’ll look at some simple ways to get more from your HSA contributions, year after year.
In This HSA Strategy Guide [Key Takeaways]
- HSAs are tax-advantaged savings accounts where you can deposit pre-tax money to save for future health expenses
- Making your maximum annual HSA contribution is key to boosting your earnings
- Limiting HSA withdrawals to qualified health expenses will ensure that your money remains 100% tax-free
Compare Pricing on the Best HSA Plans Available
What is a Health Savings Account (HSA)?
HSAs are tax-advantaged investment vehicles that can be used to put away pre-tax payroll money to pay for future health expenses. All HSA contributions grow year-after-year, and as long as the funds are only spent on qualified expenses, they remain tax-free upon withdrawal.
HSAs can be used to pay for everyday health expenses, including:
- Ambulance service
- Birth control treatment
- Flu shots
- Physical therapy
- Prescription Drugs
- Lab fees
- Medical Alert bracelets
- Psychiatric care
- Over the counter (OTC) medicines
- And much, much more!
HSA Strategy: How do I Maximize My HSA Benefits?
The best way to increase your HSA returns and maximize savings is to:
- Make the maximum contribution every year, and,
- To limit your withdrawals to HSA-qualified expenses.
Step One: Make Your Maximum HSA Contributions
The more money in your HSA, the more it will earn over time. By the time you retire, you could have a significant amount of tax-free money saved up in your HSA to pay for medical needs. Seeing as how the average couple retiring in 2023 is on track to spend as much as $350,000 on healthcare in retirement, the tax-advantaged power of an HSA is a truly unmatched investment.
Step Two: Avoid Non-Qualified Expenses
The money in your HSA is yours, which means that you can spend it however you like. However, using your HSA funds for non-qualified expenses will eliminate the tax benefits. Try to keep your HSA dedicated to health expenses, and if at all possible, limit your withdrawals so your money can grow faster.
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Maximize Your HSA FAQ – Frequently Asked Questions
Q: Who Can Use a Health Savings Account?
A: Health Savings Accounts (HSAs) are only available to individuals who are enrolled in an HSA-qualified health plan. This can be a High Deductible Health Insurance Plan (HDHP), or a Health Sharing Plan that’s paired with minimum essential coverage.
Q: What is the 2023 HSA Contribution Limit?
A: The 2023 HSA contribution limit is $3,650 for an individual and $7,300 for families. The annual catch-up contribution for individuals between 55 and 65 is an additional $1,000.
Q: Can I Use my HSA to Pay for Someone Else?
A: The only time that you can use your HSA to pay for someone else’s medical costs is if they are a spouse or are listed on your most recent tax return as a dependent.
Q: What are the HSA Withdrawal Rules?
A: In order for HSA withdrawals to remain tax-free, the funds must be spent on qualified medical expenses.
Q: Can I delay taking money out of my HSA, so the account has more time to grow tax-free?
A: Yes! Leaving the money in your HSA will enable you to take full advantage of the tax-free growth. Just make sure you save your receipts, and you can reimburse yourself years later if you like.
Q: What Expenses Are Not Covered by HSA?
A: Some examples of non-qualified expenses include vacations, vitamins (some supplements can be HSA-eligible), maternity clothes, child care, and elective cosmetic procedures.
Need an HSA-Qualified Health Plan? We’re Here to Help
If you don’t have an HSA, the first step is enrolling yourself in an HSA-qualified health plan. For most, this means a high deductible health insurance plan (HDHP). For others, it could be a more affordable health sharing plan, specially configured to work with an HSA.
Whatever type of health plan you need, we’re here to make it easy, and get it done fast.
Click here to schedule your consultation, or call the office at 800-913-0172.
Here are some additional articles on Health Savings Accounts: 2023 HSA Contribution Deadline – What You Need to Know | Which Nutritional Supplements You Can’t Pay for From Your HSA
Here are some additional pages related to this article: HSA plans, also known as High Deductible Health Plans, can help you take control of your health and your money. | HSA FAQS Health Savings Account Answers