If your health plan has a high deductible, paying for occasional doctor visits and prescription medications can sometimes feel challenging. After all, those medical costs come out of pocket — your pocket — until the deductible is met. Can a Health Savings Account (HSA) help you save?
This type of savings account lets you set aside money to pay for qualified medical expenses. Consider four benefits of having an HSA account that you may not be aware of.
The dollars you contribute to an HSA account are pre-tax, meaning taxes are not withheld from those amounts. As long as you use the funds to pay for a qualified medical expense, the distributions are also tax-free.1 This offers a significant tax advantage!
You can also contribute to your HSA from your own bank account (up to the annual maximum allowed) and qualify for a deduction on your tax return. For example, if you make $55,000 and contribute $2,000, your taxable income is reduced to $53,000.
You can use HSA funds to pay for eligible medical expenses for your spouse and qualified dependents, even if they aren’t on your health plan.2 This can offer savings for the whole family!
You can even use these funds to pay for some products and services not typically covered by your health plan, including glasses, dental cleanings and fillings, over-the-counter medications, hearing aids and more.3
An HSA account may earn interest or other earnings, as you may be able to invest the funds in your account. Banks typically offer savings deposits only, while some HSA investment platforms and brokerages offer more investment opportunities.4 Interest and other earnings are tax-free.1
HSA accounts are not a use-it-or-lose-it option. Thankfully, the funds can roll over year after year. Even if you switch jobs, your account goes with you because it’s tied to you as an individual — not your employer.
You can contribute to an HSA if you’re enrolled in an HSA-qualified High-Deductible Health Plan (HDHP) and don’t have another disqualifying health plan, such as FSAs and other full-coverage health plans.5 You also can’t be enrolled in Medicare or be claimed as a dependent on someone else’s tax return.1
Consider consulting with a tax professional to fully understand the potential tax advantages and eligibility requirements.
At GuideStone®, our HDHPs are HSA-eligible and offer wellness tools and international coverage without sacrificing biblical values. We’re here to help you understand your options when it comes to health plans and other coverages. For more information, contact us at Insurance@GuideStone.org or 1-844-INS-GUIDE (1-844-467-4843), Monday through Friday, from 7 a.m. to 6 p.m. CT.
GuideStone welcomes the opportunity to share this general information. However, this article is not intended to be relied upon as legal or tax advice or medical advice, diagnosis or treatment.
1IRS.gov/publications/p969
2Apps.IRS.gov/app/vita/content/17s/37_09_005.jsp
3IRS.gov/forms-pubs/about-publication-502
4Investopedia.com/articles/personal-finance/082914/rules-having-health-savings-account-hsa.asp
5HSAStore.com/articles/learn-hsa-tax-deduction.html
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