What is an HSA?
* An HSA is a Health Savings Account.
Thanks for reading!
Nah, I’m joshin’ with ya.
An HSA is indeed a Health Savings Account, but it’s so much more than that! Here's some information about HSAs:
1. Think of it as a tax-deferred “Sinking Fund”.
When you contribute to an HSA, you are doing so TAX FREE! That means that when the money is deposited, it is not subject to federal income tax. Think of it like this: If your gross pay is $5000 and $100 is deposited into your HSA, your income is only taxed at $4900.
2. You can use it for a variety of medical expenses.
The most common expenses that are covered:
Co-payments
Lab work
Vision expenses (like new prescription glasses or sunglasses)
Doctor visits
Dentures
Prescription costs
The above expenses are often not covered by insurance, or are only partially covered.
The expenses that are NOT covered:
Cosmetic procedures or surgery
Day care costs
Marriage Counseling
Diapers
Hair removal
Late payment fees charged by health care provider
(To find a complete list of eligible expenses, visit your HSA website.)
3. You can pay with an HSA debit card or submit your receipt for reimbursement.
Depending on your plan, you will either receive a debit card to use for your expenses or you will have to submit a claim through your HSA to get reimbursed. For example, my HSA has an app and I can take pictures of receipts and upload them to get reimbursed either by check or direct deposit. For ease of use I decided on direct deposit.
4. Your company may offer to deposit money into your HSA if you complete a biometric screening.
FREE MONEY!!!! That’s basically what it is. The lab work for a screening is free and you’re able to know what’s going on with your body. Some companies may not offer this, so be sure to check! My company offers $450 for individual and $900 individual + spouse if both participate. Another company may offer $700 for individual without even needing a screening.
5. Contributions have a MAX LIMIT!
“2019 HSA Contribution Limits Released By The IRS. In 2019, the HSA contribution limit will increase to $3,500 for single (an increase of $50) and $7,000 for family (an increase of $100)” (source: https://www.discoverybenefits.com/blog/posts/2018/05/10/2019-hsa-contribution-limits-released-by-the-irs)
Just because it's not taxed, doesn’t mean there are no downfalls. Ha!
6. Your funds will roll over if not used.
Unlike a FSA (flex spending account) your contributions will roll over next year and will remain eligible for use. This is great for young single adults who may not have recurring medical exams like children or older adults may have.
Hopefully this post was helpful. I know I sure learned a lot reading about it!
Thanks for visiting!
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