Health Savings Accounts, or HSA's, are a great way to save tax-free money to use for qualified health expenses such as prescriptions, meeting your deductible or even glasses and contacts. Not only is it a great way for you to save money, it is also the vehicle by which the Conference contributes first dollar support to help offset the high deductible. That's right, each January and July an amount of $500 for single plans and $1,000 for family plans will be deposited in your HSA account for an annual amount of $1,000 or $2,000, respectively. HSA qualified expenses are determined by the IRS so care should be taken to use those funds accordingly. Below is a link to IRS publication 969 which outlines, in detail, how much you can contribute, how to use your HSA and what services and products can be purchased through an HSA.
5 Reasons to Use an HSA
1. Save triple on taxes : As long as you spend the balance for qualified medical expenses, using an HSA offers a triple tax benefit, allowing you to save on:
Contributions—Money you contribute is tax free.
Withdrawals—Money can be withdrawn without paying taxes.
Earnings—Any interest and earnings are tax free.
2. Keep it indefinitely—even through retirement
Once you contribute to an HSA, the money is yours—even if you change to a different health plan or leave your job. It can also be rolled over indefinitely, unlike flexible spending accounts, which have a "use-it-or-lose-it" provision. If you keep money in your HSA into retirement, it is not subject to required minimum distribution (RMD) rules, so you aren't forced to take money out until you are ready to spend it.
3. Use it for your whole family
Your HSA can be used to pay medical premiums or medical expenses for anyone you claim on your taxes—even if they aren’t covered on your medical plan. If you retain the account until retirement, you can use the funds for any expense as long as you pay income taxes like you would with a retirement savings account (e.g., 403b or 401k).
4. Be prepared for the expected—or the unexpected
When you fund your HSA to cover expected medical expenses, the tax benefit is like getting a discount equal to what your tax rate would be. Who wouldn't want to save $100 on a $400 procedure? Plus, you can change the amount you contribute to an HSA at any time during the plan year without a qualifying reason. So after an unexpected trip to the emergency room, instead of dipping into savings or incurring debt, you could put your payments on a plan and fund your HSA to pay the bills at a discount.
5. Supersize what you set aside
You can fund your HSA with up to $3,600 a year ($7,200 family limit) for 2021. You can add up to $1,000 more if you are age 55 or older.