What’s the benefit of having an HSA?

Saving money on health insurance and healthcare can be tough. On top of a hefty monthly premium, you might also need to meet a high deductible in order for your health plan to help pay your bills.

That’s where Health Savings Accounts (HSAs) come in!

HSAs are a lot like personal savings accounts except the money you put into them is used to pay for qualified medical expenses. For 2019, you can open and contribute to a HSA if your health insurance plan is considered a “high deductible health plan.” Your plan is a high deductible health plan if:

• Your self-only plan has a deductible of $1,350 or more
• Your family plan has a deductible of $2,700 or more
• Your self-only plan has a maximum out-of-pocket of $6,750
• Your family plan has a maximum out-of-pocket of $13,500

Here are 5 reasons why you should consider an HSA:

1. You get a triple tax advantage that you can’t get from anything else.

First, contributions to a HSA are reported as adjustments to your income on your tax return (or pre-tax if you’re contributing through your employer’s payroll). This means you do not pay taxes on the amount of money you contribute to your HSA. Second, the money in your HSA may gain interest tax-free. Third, when you use the money on qualified medical expenses, your withdrawals are also tax free! There is no other savings method that has as many tax advantages as a health savings account.

2. If you have an individual plan you can contribute up to $3,500 and if you have a family plan you can contribute up to $7,000.*

The maximum amount you can contribute to a HSA is determined each year, based on inflation. The amounts above are how much you can contribute in 2019. Deducting these amounts from your taxes by contributing to your HSA can have a real impact on your taxes for 2019, and can help you put money aside for healthcare costs (either expected or unexpected).

*If you’re 55 or older, you can contribute an additional $1,000 to your HSA.

3. Unlike Flexible Spending Accounts (FSAs), money in your HSA rolls over from year-to-year.

All money you contribute to your HSA is yours to keep. The money rolls over from year-to-year which allows people to use HSAs as a long-term strategy for saving money for expected healthcare costs (like pregnancies) or for retirement, when healthcare costs are usually higher.

4. The money can be used for any qualified medical expense.

You can use the money from your HSA on things called “qualified medical expenses,” which may include more services than you realize. Qualified medical expenses include things like dental cleanings and treatments, vision exams and glasses, prescriptions, vaccines, and more.

5. High deductible health plans (HDHP) usually have lower monthly premiums.

When you choose a HDHP, you’re usually picking a health insurance plan that has a lower monthly premium than a copay plan. By choosing a HDHP, you can typically save money monthly, and also take advantage of the benefits of a HSA for when you do need to pay for healthcare expenses.

Do you have other questions about HSAs and HDHPs for you or your company? The Independent Benefit Advisors serving Raleigh and The Triangle, Charlotte and ALL of North Carolina can help you determine the plan that is best plan for YOUR company.