QualifiedHigh-Deductible Health Plans (QHDHPs) and Health Savings Accounts (HSAs) are designed to be used together. Since QHDHPs generally have lower monthly premiums and more out-of-pocket costs, HSAs help you pay for qualified health care expenses like prescriptions, coinsurance, vision, dental, and more until you reach your deductible.
A Versatile Way To Save On Health Care
An HSA is like a bank account. You can use it now to help pay for current qualified medical expenses, or you can save for future expenses — even into retirement.
Your HSA can do some things that other spending accounts can’t.
It's Portable Income
Unlike other spending accounts, you own your HSA. The money you put into an HSA is yours, even if you change jobs, health plans, or retire.
Money in your HSA rolls over from year to year, earning interest. You can even invest your HSA money.
It Gets Triple Tax Savings
Income Tax: Money is typically taken out of your paycheck before income tax.
Interest: You are not taxed on interest or earnings on your account.
Qualified Expenses: You don’t pay tax when you use your money on qualified medical expenses.
How HSAs Work
You can contribute to your HSA either through payroll deductions or from your own bank account. The amount of money you put into your HSA is up to you, and your employer may also contribute—but the IRS does set a maximum contribution limit every year.
You cannot continue to contribute once you’re eligible for Medicare. That’s why it’s often used as away to pay for medical expenses after retirement.
There are lots of ways to make your HSA grow. That’s why it’s such a great way to save for retirement.
At the end of each year, the money you don’t spend gets carried over year after year. That means if you don’t use all of the money you contribute during the year, you will see growth.
If you’re 55 or older, you can put in an extra $1,000 per year.
Combine with a Limited Purpose FSA
Use a Limited Purpose Flexible Spending Account (FSA) to pay for your dental and vision expenses throughout the year and keep more money in your HSA.
Invest Your Money
Once your HSA hits a certain balance, you can invest in mutual funds — a great way to prepare for retirement.
Making Your HSA grow
See how the savings can stack up with this HSA example.
A contribution of $50 a month over 25 years
Increase the contribution to $200 a month over 25 years
Maximum family contribution of $6,750 a year over 25 years
For illustrative purposes only. Savings calculations assume (i) pre-tax contributions are used to fund the HSA, (ii) tax rates are 15%- federal, 5% - state, and 7.65% FICA, and (iii) average annual interest rate earnings of 3%. Actual results may vary.
** In some cases, your employer may contribute. The IRS sets different limits on contributions to HSAs and FSAs.
HSAs give you more value for your health care dollars and allow you to take control of expenses both now and into the future.
Planning for the future is easier, too. Maximize your savings with triple tax benefits and investment opportunities. And, HSAs roll over every year and give you extra benefits after you turn 65 – giving you one powerful tool for retirement!
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