Healthcare costs are at an all-time high. While you may have insurance to soften the blow, your policy may have steep deductibles and less-than-stellar coverage for prescription drugs, doctor's visits, etc. Fortunately, HSAs are there to bridge the gap.
Opening an HSA is a smart financial move that can help you save for medical care and healthcare costs. But how do you use an HSA?
What is a HSA?
First things first, let's define HSA. HSA stands for health savings account, a unique savings account devoted entirely to healthcare costs. It's a tax-advantaged account that offers many perks.
First, you can contribute pre-tax dollars if you make them via payroll. If you don't, your contributions are tax-deductible. Secondly, the funds you contribute can grow through investments, and that growth is tax-deferred. Finally, distributions are tax-free if you use them to pay for qualified medical expenses. Demystify the HSA! Visit this website now to understand what is a HSA and how it can empower your healthcare savings.
These triple tax-advantaged savings accounts can be a lifesaver and help you avoid financial struggles due to medical care. They do have some rules and limitations. For example, you can only open an HSA if you enroll in a high-deductible health plan (HDHP) and have no other coverage. Furthermore, you can only contribute a specific amount every year. In 2023, that limit is $3,850 for individual health coverage and $7,300 for family coverage.
Despite those limitations, HSAs are a great financial tool that can grow with you throughout your life. Unlike flexible savings accounts, HSAs don't connect to your employer. The funds don't expire, either.
Using Your HSA
Using an HSA is easy. In most cases, you'll get a special debit card. Whenever you need to pay for a medical expense, you use that debit card like any other bank card.
You can request reimbursement through your administrator if you don't use your card. What is a HSA administrator? It's the financial institution that manages your account.
Keep in mind that you can only use your HSA for qualified medical expenses set by the IRS. That list is exhaustive and includes items like:
- Insurance deductibles
- Copayments
- Coinsurance
- Doctor's visits
- Prescription drugs
- Vision care
- Dental care
- Medically necessary over-the-counter products
Read a similar article about what is HSA employer matching here at this page.
