Did you know you can still fund your 2021 health savings account until Tax Day on April 15th, 2022? A health savings account or HSA is a tax-advantaged bank account that is basically a medical IRA. You can invest your funds into stocks, bonds, and other investments but the withdrawals must be used only for qualified medical expenses. If you use the funds for non-qualified medical expenses, you will have to pay income taxes plus a 20% tax penalty.
To fund an HSA, you must have enrolled in a High Deductible Health Plan or HDHP. The plans will have HDHP in their plan names. An individual can contribute $3,600 into an HSA for the 2021 tax year while a family can contribute up to $7,200. For the 2022 tax year, an individual can contribute $3,650 while a family can contribute $7,300. Your HSA funds can be rolled over year to year and should be invested to hopefully grow in value.
Examples of qualifying medical expenses:
- Physical Therapy
- Infertility Treatment
- Dependent Care (babysitting, pre-K, summer day camp, before & after school programs)
- Long-term care premiums
- Medicare Part B & D premiums
Some common companies that offer health savings accounts are Fidelity, Lively, TD Ameritrade, HSA Bank, Health Equity & Bank of America. If you already have an investment account (IRA, 401k, brokerage accounts), you may want to see if you can have an HSA on the same platform as your other investments. Keep in mind that some HSA providers charge fees while many are available free of charge.
If you have any questions about setting up an HSA with a High Deductible Health Plan, please do not hesitate to contact us. At Solid Health Insurance Services, we strive to help our clients find the right health, dental, vision, life, and long-term care insurance which best fits their budget and medical needs.