What Is a Health Savings Account (HSA) & Do I Need One?
If you’re like most Americans, the healthcare system can be a confusing topic to navigate. A recent survey by Bend Financial revealed that 56% of Americans feel “completely lost when it comes to understanding health insurance.” One topic identified in the survey as particularly confounding was Health Savings Accounts (HSAs). Unfortunately, this type of confusion can be costly, and consumers would be wise to understand and utilize the many financial advantages HSAs can provide.
In this article we’ll help you understand what a Health Savings Account (HSA) is, what the benefits are, who is eligible, and how you can open one with Honor.
What Is An HSA?
An HSA is a personal savings account established to pay certain healthcare costs. Any money deposited into this account can be withdrawn tax-free as long as it is used for qualified, out-of-pocket medical expenses such as deductibles, copayments, coinsurance, doctor visits, prescription drugs, and more.
What Are The Benefits?
HSAs offer a distinct financial benefit, as you aren’t taxed on money you contribute to the account or any interest earned. And, as long as the funds are used for qualified, out-of-pocket medical costs, you also don’t pay tax on the withdrawals.
Another benefit is that your HSA funds don’t expire; the money stays in your account until you use it and can be rolled over annually. And, because the HSA belongs to the person and not the employer, it doesn’t disappear if you change jobs or retire.
While navigating the healthcare landscape can be overwhelming, managing your money doesn’t have to be. Turn your confusion into confidence by taking advantage of the many benefits a Health Savings Account provides.
How Much Can You Contribute?
In 2022, the maximum annual amount you can contribute to your HSA is $3,650 for self-only coverage and $7,300 for family coverage. In 2023, those amounts increase to $3,850 and $7,500, respectively. The federal government allows an additional $1,000 as a “catch-up” contribution to be deposited to your HSA each year if you are 55 or older. Any money that is in your account at the end of the year remains in your account to pay for future qualified medical expenses, and balances can be carried over indefinitely.
Who Is Eligible For An HSA?
To be eligible to contribute to an HSA, you must already be covered by a high-deductible health plan (HDHP). In an HDHP, the monthly premium is lower than in a traditional healthcare plan, but members pay more for any out-of-pocket expenses.
Who Is Not Eligible?
You can’t contribute to an HSA if you are enrolled in Medicare or a traditional healthcare plan that doesn’t qualify as an HDHP. Regardless of your eligibility status, you are still entitled to use funds previously contributed to pay for any qualified medical expenses.
Where Can You Get An HSA?
Contrary to popular belief, you aren’t required to open an HSA through your employer. An HSA belongs to the individual, not the employer, and any eligible individual may open one regardless if the business they work for offers an account.
Similarly, the funds are yours to keep, even if you change jobs or switch health plans. Many financial institutions and insurance companies provide financially beneficial HSA options for their members.
Honor members are eligible to open an HSA. To learn more about Honor’s HSA program, click the button below.
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