What Are The Limits?
HSA accounts have limits to how much you can contribute. Individuals are able to contribute up to $3,400 per year, while families can deposit $6,750 tax-free up until April 15th of the following year. The balance of your HSA rolls over from year to year, and it stays with you even if you switch jobs. Some employers also offer matching contributions to help fund your HSA. Keep in mind that a flexible spending account cannot stack with a health savings account.
How Do I Use It?
When you start using funds from your HSA to pay for qualified medical expenses you should keep accurate records of your expenses. Receipts and statements show that the expenses qualify for HSA use and aren’t reimbursed by another source, such as the insurance company. You can be required to prove where the funds went for them to be tax-deductible. Another benefit of having an HSA is that the money you contribute can also build up in a similar way that an IRA does, allowing you to save for higher medical costs you might incur in the future. Once you reach age 65, you can withdraw the money without facing tax penalties, but it will still count as income.
Look into getting a health savings account if you have or anticipate having high medical costs. It can ease the financial burden of being enrolled in an HDHP for medical insurance for you and your family.