Let’s start with what exactly an HSA is. A Health Savings Account consists of two things: a high deductible health plan purchased from a private carrier, such as Florida Blue, in which you pay a monthly premium for… as well as a qualifying savings account at a bank where pre-tax contributions can be made. That account would then be where funds come from to pay for things like copays at the doctor, certain medicines, etc.
Some examples of qualified expenses that can be purchased with an HSA account are:
· Prescription or over the counter medications
· Eye glasses, contacts, solution, etc
· Acupuncture and chiropractic care
· Vaccinations or immunizations
· Dentures or dental treatment
· Hearing aids
· Insulin and diabetic supplies
· Allergy testing
· Wheelchairs, walkers, crutches, etc
· Sunscreen and first aid
There are limitations and guidelines to abide by with an HSA account. These can vary each year so it’s important to pay attention to them at every renewal if that’s the plan you choose. For 2021, an individual can contribute up to $3,600 of pre-tax money per year and for a family, the maximum contribution is $7,200. The out of pocket maximum is $7,000 for an individual and $14,000 per family.
Meaning, one can put $3,600 into that bank account and then use however much of it they need for health expenses. Then after $7,000 out of pocket is spent, their plan’s coverage kicks in and they pay nothing more for that calendar year.
For 2022, those limits have increased to a $3,650 contribution limit for an individual and of maximum of $7,300 for a family. The out of pocket maximum was also increased to $7,050 per individual and $14,100 for a family.
The tax-deductible contributions, tax-free interest and tax-free withdrawals for qualified medical expenses are all huge perks to an HSA plan for health care. But another big advantage is that it is 100% yours. If you get it through an employer and leave that job, you keep it. If you don’t use it, it remains there as a savings account and the contribution allowance starts back over the next year.
Again, Health Savings Accounts are not the right fit for everyone but are definitely worth exploring. And if you’re ever uncertain about a qualified expense, you can contact your carrier for clarification. It is also recommended that you always keep all receipts in the event of an audit.