HEALTH SAVINGS ACCOUNTS GO BEYOND PAYING FOR IMMEDIATE MEDICAL BILLS
BUILD SMART SAVINGS
Considering a high deductible health plan (HDHP)? If so, it’s important to also consider the advantages of a Health Savings Account (HSA).
SouthStar Bank HSA Details:
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Qualifying for an HSA
HSAs are available to individuals who currently have a high-deductible insurance plan and no other health insurance. Individuals must not yet be enrolled in Medicare, or be claimed as a dependent on someone else’s tax return.
Individuals can contribute to HSA until enrolled in Medicare, even if unemployed or self-employed.
Pre-Tax Contributions and Earnings
Contributions to an HSA are typically made with pre-tax dollars through payroll deductions. Funds are not included in gross income, so they are not subject to federal income. In most states, including Texas, funds are not subject to state income taxes. Funds can also be added ad-hoc as a tax-deductible contribution. If you make contributions with after-tax dollars, it can be deducted from the gross income on your tax return and reduce your tax bill for the year.
As of 2021, there is a limit of $3,600 per individual or $7,200 per family per year contribution. Individuals can contribute to HSA until enrolled in Medicare, even if unemployed or self-employed. Any interest earned on the account is tax free.
With a SouthStar Bank HSA Account, there are a variety of options to pay for qualified expenses, including:
- HSA debit card
- Online bill pay
- Self re-imbursement
Qualified expenses are tax free and include most medical expenses such as:¹
- Doctor visits, including copays
- Hospital charges
- Vision (including glasses and contacts)
- Hearing aids
- Physical therapy
- In-home nursing or assisted living facilities
No Time Limit
In an HSA, funds do not have a fixed timeline, and will remain with the account owner if you change employers, change insurance, or retire. This differentiates the account drastically from a flex spending account which must be used under a specific timeline.
Plus, unlike a 401k or IRA, an HSA does not require the owner to begin utilizing funds at a certain age. Once you’re over age 65 and enrolled in Medicare, you can no-longer contribute to an HSA, but you can still use the funds for out-of-pocket medical expenses.
It is not required to take distributions in the same year that you pay for a particular medical expense. If you keep required documentation and the HSA account was established prior, you can reimburse yourself from the HSA account. As long as you use the money for qualifying health expenses, it remains tax free.
Frequently Asked Questions
In 2022, the individual contribution limit for an HSA account is $3,650. The family contribution is $7,300.
In 2023, the individual contribution limit for an HSA account is $3,850. The family contribution is $7,750.
If you are 55 years or over, an additional contribution for $1,000 per year can be made. Spouses wishing to both make additional contributions must have separate HSA accounts.