Save money on taxes and be better prepared for medical expenses with an HSA.
Simple, to save money on taxes and be better prepared for medical expenses. The 2019 HSA contribution limit is $3,500 for individuals and $7,000 for families. That jumps up to $3,550 and $7,100 respectively for 2020. HSA contributions are taken out before taxes. The more you contribute (up to the IRS limits) the more you reduce your taxes.
HSA Tax advantages:
- You contribute tax free through a payroll deduction to reduce your taxable income.
- Tax free growth- your plan may offer investment options and the account can grows tax free.
- Spend tax free- If withdrawals are used to pay for qualified eligible expenses you won’t pay tax when you take money out.
Putting enough money into your HSA protects you from financial hardship from medical expenses.
- 25% of people have difficulty paying medical bills each year
- $1,500 Average deductible for individuals
- 40% of Americans say they could not pay an unexpected $1,000 medical expense
- A 65-year-old couple who retires in 2019 are estimated to need $250,000 to pay for healthcare in retirement
Who can contribute?
- Health Savings Accounts (HSA’s) allow both you and your employer the ability to contribute to the account.
- The maximum contributions combine you and your employers’ contributions.
- Any funds put into your HSA are YOURS, even if you leave the employer through termination or retirement.
- You can use the money on qualified medical expenses for yourself, your spouse, and your dependents.
How to contribute?
- HSA contributions are determined during your open enrollment period, but you can elect to contribute anytime during the year as well. See your HR team for details.
- Once your elections have been made, the HSA contributions will be done through a payroll deduction.
- Like a checking account, you will only have access to the amount you have already contributed.