HSA Rollover: Getting the Most Out of Your Funds
What is an HSA?
A Heath Savings Account (HSA) is a type of savings account available to those with a qualifying High Deductible Health Plan (HDHP). It allows you to set aside money each year for eligible medical expenses.
Your HSA funds can be spent tax-free on you, your spouse, your children, or any other dependent listed on your tax return to pay for healthcare costs your medical plan doesn’t cover. This includes items like over-the-counter medications, sunscreen or even mental health counseling. Refer to the HSA Eligibility List.
HSAs also offer a triple-tax advantage. This means your contributions go into your account tax-free, savings may grow tax-free, and when used for eligible items, withdrawals are tax-free.
What happens if I don’t use all my HSA funds by the end of the year?
Unlike Flexible Spending Accounts (FSAs), HSAs do not follow a “use it or lose it” rule. Any funds you don’t use during your plan year will roll over to the next year.
Knowing your HSA rollover funds are available when you need them, it's always a wise decision to think about your HSA contribution for the upcoming year. Not only can you change your contribution amount at any time, anyone—you, your spouse, your employer—can contribute to your HSA.
What happens if I switch HSA providers?
Similar to a personal savings account, you own your HSA. No matter where life takes you, you will not lose any of your HSA funds, even those you’ve accumulated with another provider.
How else can I use my HSA?
In addition to helping you pay for eligible medical expenses, HSAs also provide many financial benefits.
Before retirement, an HSA can be invested in stocks, bonds, or other assets, depending on the options available from your HSA provider. This allows accountholders to take advantage of market gains without experiencing any capital gains taxes. In other words, you keep more money in your pocket.
Upon retirement, you can use your HSA funds to pay for healthcare expenses. Once you reach the age of 65, you can withdraw funds to cover your regular living expenses. Accountholders who spend HSA funds on non-medical expenses after 65 will owe taxes, but decades of tax-free growth are tough to match.
Because of its flexibility and versatility, an HSA is a valuable addition to anyone’s health and retirement plan. Visit americanfidelity.com/hsa to learn more about this tax savings tool.
This blog is up to date as of October 2023 and has not been updated for changes in the law, administration or current events.
HSA Store
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.
