Health Savings Accounts (HSAs)

Apr 7, 2020
Health Savings Accounts

Introduction

Welcome to Chicago Mortgage Funding, your go-to resource for comprehensive information about Health Savings Accounts (HSAs). In this article, we will dive into the world of HSAs, their benefits, eligibility requirements, contribution limits, and tax advantages. If you are looking for ways to save for your healthcare expenses while enjoying certain tax benefits, you've come to the right place.

What are Health Savings Accounts (HSAs)?

Health Savings Accounts (HSAs) are tax-advantaged savings accounts specifically designed to help individuals and families save for qualified medical expenses. These accounts are typically paired with high-deductible health insurance plans, providing individuals with greater control over their healthcare costs while benefiting from tax advantages.

Benefits of Health Savings Accounts

There are several benefits associated with Health Savings Accounts:

  • Tax Savings: Contributions made to your HSA are tax-deductible, meaning you can reduce your taxable income.
  • Triple Tax Advantages: HSA funds grow tax-free, can be withdrawn tax-free for qualified medical expenses, and any unused funds roll over to the next year.
  • Control over Healthcare Costs: HSAs allow individuals to take control of their healthcare expenses, enabling them to save for future medical needs and unexpected healthcare costs.
  • Portability: HSAs are owned by individuals, which means you can take your HSA with you even if you change jobs or retire.
  • Flexibility: Unlike flexible spending accounts, HSAs have no "use it or lose it" policy. Any funds you contribute will remain in your account until you need them.

Eligibility for Health Savings Accounts

To be eligible for an HSA, you must meet the following criteria:

  • You must be covered by a high-deductible health insurance plan, as defined by the IRS.
  • You cannot be enrolled in Medicare.
  • You cannot be claimed as a dependent on someone else's tax return.

Contribution Limits

Each year, the IRS sets contribution limits for HSAs. For the year 2021:

  • For individuals, the maximum annual contribution is $3,600.
  • For families, the maximum annual contribution is $7,200.
  • Individuals aged 55 and older can make an additional catch-up contribution of $1,000.

Using Health Savings Accounts

Once you have an HSA, you can use the funds to pay for qualified medical expenses. Qualified medical expenses include but are not limited to:

  • Doctor visits and consultations
  • Hospital expenses
  • Prescription medications
  • Medical equipment
  • Preventive care
  • Dental and vision expenses

It's essential to keep track of your expenses and retain documentation to ensure you are using your HSA funds appropriately.

Conclusion

Health Savings Accounts (HSAs) offer individuals and families a smart way to save for healthcare expenses while enjoying tax advantages. At Chicago Mortgage Funding, we strive to provide you with all the necessary information to make informed decisions about your financial health. Start saving for your healthcare expenses today and take control of your healthcare costs with an HSA.

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