Signing Up for an H.S.A.? First Figure Out How You’ll Use the Money

Signing Up for an H.S.A.? First Figure Out How You’ll Use the Money

H.S.A.s can be used for a variety of health and medical expenses, including dental care. The HSA Bank offers a summary of eligible and ineligible expenses on its website.

A complete list is available in I.R.S. Publication 502.

Here are some questions and answers about health savings accounts:

How much can I contribute to an H.S.A.?

For 2020, individuals can contribute up to $3,550 and families up to $7,100. People 55 and older can contribute an extra $1,000. To qualify for an H.S.A. next year, you must have a health plan with a deductible of at least $1,400 for an individual and $2,800 for a family. If you’re not sure if your plan qualifies, ask your insurer.

For this year, the limits are $3,500 for individuals and $7,000 for families. Contributions for 2019 can be made up until the April tax filing deadline.

What if I want to save for a while, then invest the money later?

A reasonable approach, for those who can afford it, is to save enough in your H.S.A. to cover your deductible before you begin investing, said Justin McCarthy, a director and senior wealth adviser at Mariner Wealth Advisors in New York. That can help strike a balance between covering short-term medical needs and saving for future health costs.

Do I have to reimburse myself from my H.S.A. right away?

No. You can let the money in your H.S.A. grow, pay for health costs out of another account, then reimburse yourself for the expenses from the H.S.A. at any time in the future, Mr. Ramthun said. Just be sure to save receipts — whether in an actual shoe box or in a digital version, which many H.S.A. providers now offer. That way, should the I.R.S. request proof that the money was spent on eligible expenses, you’ll have documentation, Mr. Ramthun said. If you do save paper receipts, he said, be aware that ink can fade. It’s also wise to have an online backup.

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