FSAs have lower contribution limits and are riskier because typically you have to spend the money down in one year or you forfeit it, although some FSAs have a $550 carryover provision. If you’re stuck in a dud HSA with high fees or if you’ve left a job that offered an HSA, note that you can move your old HSA to a new provider.ĭon’t confuse HSAs with healthcare FSAs (sometimes confusingly called health spending accounts). If you’re self-employed, you can set up an account at Fidelity or Lively, which both offer fee-free HSAs for individuals. Some employers even pitch in and contribute to your account (the average employer contribution was $870 for those making contributions, Devenir found, worth mentioning to your HR department). ![]() So when workplace open enrollment comes around, that time you’re picking your health care benefits for 2022, pay special attention to your HSA choices. Most HSAs are offered as an employee benefit. Also, check that your 2021 contributions are on track. In the meantime, you can still top off health savings account contributions for tax year 2020 through the Covid-19-related extended tax day deadline of May 17, 2021. Plus, once you turn 65, you can withdraw money for non-medical uses, paying the same tax as you would on withdrawals from a pretax 401(k). An HSA can even serve as a backup rainy-day fund if you suddenly need cash, you can take money out tax-free to reimburse yourself for any prior years’ medical expenses paid from outside the account. You can invest and let your money grow for decades tax-free, so long as you, or a surviving spouse, eventually use it for medical expenses. (The higher your tax bracket, the bigger your savings.) Thanks to a Covid-19-tax relief provision, you can use money you stash in an HSA for over-the-counter medications like Tylenol or Flonase as well as menstrual products like tampons and pads.Īre you investing your HSA dollars? The real juice to an HSA is use it as a retirement savings kitty. ![]() Got an unexpected doctor’s bill? You can put money into your HSA, take it right out, and the government just paid 25% of the bill. How much should you contribute? At a minimum, you should contribute enough to cover your deductible. Out-of-pocket maximums are $7,050 for individual coverage and $14,100 for family coverage for 2022. ![]() For 2022, that means a plan with a minimum annual deductible of $1,400 for individual coverage or $2,800 for family coverage. You can contribute to an HSA if you’re in a qualifying high-deductible health plan.
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