![]() ![]() You can set aside money this year in an HSA and use it 40 years from now. With an FSA, if you do not spend the funds in your account by the end of the year, you forfeit the remaining balance to the plan administrator. However, HSAs have a key advantage over FSAs. You can set aside pre-tax income in an HSA for use specifically on health spending, just like with a Flexible Spending Account (FSA). Tax Advantages of Health Savings Accounts Only choose an HDHP if you have some money set aside in an emergency fund or cash savings. However, you must save enough to pay the entire deductible, if necessary. The HSA option incentivize policyholders to become smarter with their healthcare spending by planning ahead for it with a pre-tax HSA. Higher deductibles can save policyholders money if they don’t go to the doctor often. In 2024, HDHP out-of-pocket expenses cannot exceed:Įmployers may offer high deductible plans for enrollees who prefer to pay a lower monthly premium. For 2023, these limits are $7,500 for self-coverage only and up to $15,000 for family coverage. IRS rules for HDHP also limit out-of-pocket expenses. These deductibles are higher than average, hence the name, High-Deductible Health Plan. In 2024, A plan qualifies as an HDHP if its deductibles are at least: In 2023, a plan may qualify as an HDHP if the deductibles are $1,500 per year or higher for individuals, or $3,000 per year or higher for a family plan. You must participate in a qualifying High-Deductible Health Plan (HDHP) to be eligible for an HSA. In essence, a Health Savings Account is very similar to a combination of a Traditional IRA (tax deductible when you contribute) and a Roth IRA (no taxes on qualified withdrawals for medical expenses). Withdrawals are also tax-free when you use the money for qualified medical expenses. Yearly HSA contributions are tax-deductible and grow tax-free. Health Savings Accounts are tax-advantaged savings accounts explicitly for health care spending. ![]()
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