A Health Savings Accounts (HSA) provides a tax advantage to offset health care expenses. This tax-exempt custodial account is established exclusively for the purpose of paying or reimbursing qualified medical expenses. It is available to taxpayers in the United States who are enrolled in a high deductible health plan (HDHP).
The money in your HSA remains available for future qualified medical expenses even if you change health insurance plans, go to work for a different employer, or retire.
Contributions can come from you, your employer, a relative or anyone else who wants to add to your HSA. The Internal Revenue Service does, however, set limits. For 2024, for example, the limit is $4,150 for individuals and $8,300 for families, plus an additional $1,000 “catch-up” contribution for anyone age 55 or older by the end of the tax year.
Contributions are typically made with pre-tax dollars, through payroll deductions at your employer. As a result, they are not included in your gross income and are not subject to federal income taxes. In most states, contributions are not subject to state income taxes.
*consult with your tax advisory or accountant to learn more.
The maximum HSA contribution limit is $4,150 per year for an individual, while families can contribute $8,300. There is also a catch-up contribution limit of $1,000 for those who are age 55 or older (note: catchup contributions for retirement accounts start at age 50). These limits change annually. Visit irs.gov for more information.
If you make contributions with after-tax dollars, you can deduct them from your gross income on your tax return, reducing your tax bill for the year.
*consult with your tax advisory or accountant to learn more.
