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Why launch a health savings account (HSA)?
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UP, UP AND AWAY!
Before you "launch" your HSA, you'll need to take a look at your health insurance coverage. To contribute to an HSA, you must be covered under an HSA-eligible high deductible health plan (HDHP). An HDHP is HSA-eligible if it satisfies the annual deductible and out-of-pocket expense limits. In addition to having HSA-eligible HDHP coverage, you:
Before you "launch" your HSA, you'll need to take a look at your health insurance coverage. To contribute to an HSA, you must be covered under an HSA-eligible high deductible health plan (HDHP). An HDHP is HSA-eligible if it satisfies the annual deductible and out-of-pocket expense limits. In addition to having HSA-eligible HDHP coverage, you:
- Cannot be covered by another health plan (with limited exceptions),
- Cannot be enrolled in Medicare, and
- Cannot be eligible to be claimed as a dependent on another person's tax return.
HIGH DEDUCTIBLE HEALTH PLAN LIMITS*
PLAN EXPENSES |
YEAR |
SELF-ONLY COVERAGE |
FAMILY COVERAGE |
Minimum annual deductible |
2022 |
$1,400 |
$2,800 |
Maximum out-of-pocket expenses |
2022 |
$7,050 |
$14,100 |
NOTE: An HDHP with self-only coverage is a plan that covers only an individual. An HDHP with family coverage is a plan that covers an individual plus one or more dependents.
HEALTH SAVINGS ACCOUNT CONTRIBUTION LIMITS*
YEAR |
SELF-ONLY COVERAGE |
IF AGE 55 OR OLDER |
FAMILY COVERAGE |
IF AGE 55 OR OLDER |
2022 |
$3,650 |
$4,650 |
$7,300 |
$8,300 |
The sky's the limit ... well, almost!
As long as you don't go over the limits that apply to your type of insurance coverage, you can contribute as much as you want, as often as you want throughout the year until your tax return due date (generally April 15 of the following year). In fact, anyone can contribute for you, even your employer.
As long as you don't go over the limits that apply to your type of insurance coverage, you can contribute as much as you want, as often as you want throughout the year until your tax return due date (generally April 15 of the following year). In fact, anyone can contribute for you, even your employer.
A tax-deductible take-off
As your HSA contributions "take off," don't forget about that tax deduction. As long as you cannot be claimed as a dependent on another person's tax return, you can deduct your HSA contributions (except those made by your employer).
A tax-free landing
When it's time to take money out of your HSA, prepare for a smooth "landing" without tax or penalty. Simply use the money for qualified medical expenses. This generally includes most medical, dental and vision care expenses that are incurred by either you, your spouse or any covered dependents.
HSA distributions not used for qualified medical expenses are subject to ordinary income tax and, if taken before age 65, a 20 percent IRS penalty tax (unless the distribution is because of death or disability).
For more information
Talk to us — we'll be glad to provide you with more information on HSAs.
As your HSA contributions "take off," don't forget about that tax deduction. As long as you cannot be claimed as a dependent on another person's tax return, you can deduct your HSA contributions (except those made by your employer).
A tax-free landing
When it's time to take money out of your HSA, prepare for a smooth "landing" without tax or penalty. Simply use the money for qualified medical expenses. This generally includes most medical, dental and vision care expenses that are incurred by either you, your spouse or any covered dependents.
HSA distributions not used for qualified medical expenses are subject to ordinary income tax and, if taken before age 65, a 20 percent IRS penalty tax (unless the distribution is because of death or disability).
For more information
Talk to us — we'll be glad to provide you with more information on HSAs.
*These limits are subject to annual cost-of-living adjustments.
