Are You HSA eligible? If so, here’s how to take advantage of it during this time of year. While open enrollment season is still here, now is a great time to review and analyze all the options available to you, including an HSA (health savings plan). Many individuals have questions about what benefits they are eligible for, and what those benefits truly mean. Retirement savings and medical coverage are typically a large part of your workplace benefits, which is why it’s so important to take advantage of what’s available to you, such as an HSA.
So, what are HSA’s? An HSA is a tax-advantaged health savings account that allows you to save money specifically to pay medical and health care expenses. If you get your insurance coverage through high-deductible health plans, you can qualify for an HSA. Your contributions within the account will grow on a tax-free basis, and any untouched dollars can be rolled over year to year. One of the key benefits of an HSA is the triple tax advantage it offers: contributions are tax-deductible, earnings are tax-free, and withdrawals for qualified medical expenses are also tax-free. By using untaxed dollars in a Health Savings Account to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. This flexibility and tax advantage make HSAs a valuable tool for individuals seeking to manage healthcare costs and build long-term financial security
Due to inflation, the IRS increased the contribution limits for HSAs in 2024. So, next year individuals with a HDHP will have a HSA contribution limit of $4,150, up from $3,850 this year. The HSA contribution limit for family coverage will be $8,300 up from $7,750 this year. This is a 7% increase over what you can contribute this year for 2023. These adjustments are quite large, so be sure to take advantage if you are eligible to do so!
Be sure to contribute by the end-of-the-year December 31st deadline, so that you can make the most of your yearly contribution. Keep in mind that HSAs are just one of the many benefits that you can take advantage of. Check out our open-enrollment blog to see what else you may have been eligible for and our retirement contribution limits blog to see the increases in retirement contribution limits ! For other end of the year tips, check out our financial checklist blog here. If you have any questions about funding your various accounts, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.
