Skip to main content
Menu File a Claim Login
American-Fidelity-logo
Menu
Menu File a Claim Login
American-Fidelity-logo
American Fidelity Logo American Fidelity Logo
  1. Strategy
      •  
      • Employee Benefits
      • Communication and Education
      • Enrollment and Admin
      • HR Assistance
      • Tax Savings
      • Compliance Updates
      •  
  2. Products
      •  
      • Benefits
      • Dependent Verification
      • HR Technology
      • Reimbursement Accounts
      • Retirement Savings
      • Section 125
      •  
  3. Why Us
      •  
      • For Education
      • For the Public Sector
      • For Automotive
      • Account Managers
      • Customer Testimonials
      •  
  4. Blog
      •  
      • Benefits Strategy
      • Reimbursement Accounts
      • Supplemental Benefits
      • Customer Stories
      • Compliance Updates
      •  
  5. Support
      •  
      • COVID-19
      • Employer Assistance
      • Videos
      • Contact Us
      •  
  6. Claims
      •  
      •  
Login
 
 
American Fidelity Logo

How much should you contribute to your HSA?

 

January 14, 2021

4 minute read

Category: Reimbursement Accounts

Learn more about this blog article

Are you contributing enough to your Health Savings Account (HSA) each year? While figuring this out may seem complicated, there are several strategies to consider when deciding how much to contribute to your account. Keep reading to learn more about benefits of each option.

Every year the International Revenue Support (IRS) sets limits on HSA contributions, which are adjusted for inflation each year. The 2021 limits for employee-only coverage is a $3,600 annual contribution, and for family coverage the annual HSA contribution limit is $7,200. For those age 55 or older, an extra $1,000 “catch-up” contribution amount is permitted.

Here are some options to consider when choosing how much to contribute to your HSA:

How much to contribute

Details

Benefits

Match your employer’s contribution

Employer contributions are often spread throughout the year, for example on a quarterly basis, or in the form of a lump sum.

Contributing even a small amount could be beneficial.

Annual contribution limit

For 2021, the maximum individuals can contribute is $3,600 and $7,200 for families.

Contributing the maximum amount will help lower your taxable income and gives you the most tax-free interest on your account.

Your medical insurance deductible

This amount is how much you pay toward your health care bills before health insurance begins to cover it. Your HSA can help cover these costs.

Covering your deductible will help create an adequate budget to cover your initial out of pocket health care costs.

Out-of-pocket maximum up to the annual contribution limit

This is the most you can spend on health care expenses from your own pocket before your health plan covers everything. This includes your deductible and copay or coinsurance.

This will help you be prepared for the “worst-case-scenario.” If you don’t use all the money in your HSA, the money will roll over to the next year.

To figure out which option is best for you, consider how financially prepared you are for unexpected non-medical costs. If you aren’t financially stable enough for these unexpected costs, contributing the maximum amount may not be the best option for you. Instead, consider splitting your savings between your HSA and a liquid (easily accessible) savings account.

Second, account for all your medical expenses for the year. For example, if you spend $100 each month on a prescription, you could contribute at least $1,200 to your HSA. This will allow you to enjoy the tax advantages on money you will already be spending on health care costs. Another option is contributing the amount of your annual deductible so your initial out-of-pocket costs will be covered in the event you have a large bill or medical emergency.

Lastly if you feel financially stable enough, consider contributing the max amount to your HSA. If you don’t use all the funds within a year, the amount will roll over year-over year without a maximum account balance limit. You may also have the option to invest your HSA funds. Investing your HSA can help increase your tax-free growth, retirement savings and asset growth. If you are considering investing your HSA, it's important to note you will have to maintain both the required minimum investment balance and the amount of money you anticipate using on your health expenses for the year.

Understanding how much to contribute to your HSA is key to getting the most of your account. 

 

This blog is up to date as of December 2020 and has not been updated for changes in the law, administration or current event.

 
  • Tags:
  • HSA

Share:

 

Shop for Eligible Items on the HSA Store

You may purchase HSA-eligible items online at the HSA Store. Browse medical supplies, over-the-counter medication, prescriptions, and more.

Visit HSAStore.com

 

Related HSA Articles

 

End of year tips for reimbursement accounts

December 20, 2022

4 minute read

The end of a calendar year can be a busy season. As you prepare for the new year, check out these tips for managing your reimbursement account.

  • Tags:
  • HCFSA
  • FSA
  • HRA
  • HSA

HSA Mistakes to Avoid: Dependent Rules

November 08, 2022

5 minute read

There are some eligibility rules to consider if your employees plan to use their HSA funds for their tax dependents' medical expenses.

  • Tags:
  • HSA

2023 reimbursement limits and Social Security wage caps announced

November 07, 2022

3 minute read

The IRS has just announced 2023 reimbursement account limits and Social Security wage caps.

  • Tags:
  • FSA
  • LPFSA
  • DCA
  • HSA
  • HCFSA
  • Compliance

ESB-8619-1220

American Fidelity Assurance Company
americanfidelity.com

https://americanfidelity.com/blog/reimburse/how-much-should-you-contribute-to-your-hsa/

Site Map

About Us

News Center

Careers

Contact Us

© 2022 American Fidelity Assurance Company

  • Privacy Notices |
  • Report Fraud |
  • Terms of Service |
  • Licensing |
  • Special Notices |
  • Cameron Enterprises

ESB-8619-1220

  • File a Claim
    Login
  • Home
  • Benefits Strategy
    • Employee Benefits
    • Communication and Education
    • Enrollment and Admin
    • HR Assistance
    • Tax Savings
    • Compliance Updates
  • Products
    • Benefits
    • Dependent Verification
    • HR Technology
    • Reimbursement Accounts
    • Retirement Savings
    • Section 125
  • Why Us
    • For Education
    • For the Public Sector
    • For Automotive
    • Account Managers
    • Customer Testimonials
  • Blog
    • Benefits Strategy
    • Reimbursement Accounts
    • Supplemental Benefits
    • Customer Stories
    • Compliance Updates
  • Support
    • COVID-19
    • Employer Assistance
    • Videos
    • Contact Us
  • Claims
  • Careers
    • Corporate Careers
    • Sales Careers
  • About Us
  • Site Map

Popular Topics:
  • Register for an Account
  • Forms
  • Unused FSA Funds
  • HCFSA Eligible Expenses
  • Carryovers, grace periods and runoff periods
  • HSA Eligible Expenses
  • HSA Tax Forms
  • Disability Tax Forms