Published by: Presley General Insurance Agency, Inc.
For those enrolled in high-deductible healthcare plans, the low premiums often keep monthly expenses manageable. But what happens when a large medical expense occurs? The result is often a heavy burden on family budgets. A health savings account (HSA) provides an answer, along with additional tax benefits.
What is a health savings account? Pair a health savings account with a high-deductible healthcare plan, and you can save for out-of-pocket medical expenses like a deductible, prescription medications, and more. If the money isn’t used in any particular calendar year, it rolls over to the next year. In fact, an HSA can be rolled over all the way into retirement, making the account a bit of a backdoor savings vehicle. At that point, the funds can be used for qualified medical expenses like Medicare premiums, medicines, special equipment, and so on.
What are the tax advantages of an HSA? Contributions to a health savings account are made on a pre-tax basis. That means the funds contributed to the account are not taxable, and your overall income tax liability for the year will be lowered by the number of your contributions. This can provide a significant tax break for workers while allowing them to hedge against large, unexpected bills.
How much can you contribute to an HSA each year? Contribution limits are sometimes increased due to inflation. For 2022, the contribution limit for HSAs is $3,650 for those enrolled in individual healthcare plans and $7,300 for those on family plans. Again, taxable income can be lowered by that amount, if the full contribution is made.
What if an employer does not offer an HSA? Those enrolled in qualifying high-deductible healthcare plans can enroll in an HSA through a bank that offers such plans.
Call us to discuss health savings accounts, to decide if offering one would be right for your employee benefits package. We will answer any questions you have, and help you investigate all of your health insurance and other benefits needs.