Five HSA Facts You May Not Know
A Heath Savings Account (HSA) account is a savings account that allows you to set aside money each year for eligible medical expenses when you have a qualified High Deductible Health Plan (HDHP) and meet other legal requirements. Even routine doctor visits can add up, which is why an HSA is a valuable resource to pull from when it is time to pay eligible medical expenses.
How else can HSAs help you? Here are five HSA facts you may not know.
1) There are several tax-free advantages.
Not only are your contributions tax-free, but they also accrue tax-free interest as well. Money withdrawn from the account to pay for eligible medical expenses is also not taxed. This is known as the triple tax benefit.
2) Unused funds roll over to the next year.
Unlike Flexible Spending Accounts, there’s no reason to fear losing unused HSA funds. Any funds not used during your plan year will move over to the next year, so the money’s there whenever you need it.
3) An HSA can cover the previous year’s medical expenses.
If the HSA was established before the eligible medical expense occurred, the account will cover it. This is another example of the protection and flexibility that an HSA may offer. It is very important to keep all receipts, especially when working with previous years. Keeping receipts helps you stay organized and avoids confusion. These receipts will also be needed in case of an Internal Revenue Service (IRS) audit.
4) You cannot establish your own HSA if you are claimed as a dependent on someone’s tax return.
Being a dependent on someone’s tax return disqualifies you having your own HSA. You may still be able to use your parent or guardian’s HSA funds if applicable, but you cannot have a separate account. Read more: HSA Mistakes to Avoid: Dependent Rules
5) Anyone can contribute to your HSA.
You are not the only one who can put funds into the HSA. Keep in mind that anyone including your spouse and employer can also contribute to your HSA.
The flexibility of an HSA makes it a great resource. Are you wanting to lessen stress over medical expenses? Consider establishing a Health Savings Account.
This blog is up to date as of April 2021 and has not been updated for changes in the law, administration or current events.
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.