Icon

Savings and Investing

Life Changes

What is a health savings account?

Health insurance costs continue to increase. Making sure that you have enough financial resources to cover your health care costs is an important pillar of financial security. Having a Health Savings Account might be a good idea for you.

What is a Health Savings Account?

Simply put, a Health Savings Account (HSA) allows you to put pre-tax money into a dedicated HSA to pay for qualified medical expenses. Using earnings that have not had taxes taken out to pay for deductibles, copayments, and other qualified expenses, lowers your health care costs. HSAs must be spent on qualified medical expenses if you are under 65. Once you reach 65, you can withdraw HSA funds for any reason.

Eligibility requirements

If you are in a health plan with a deductible of at least $1,400 for an individual and $2,800 for a family, you can use an HSA. You may want to check to see if your health plan is “HSA eligible.” For 2020, the out-of-pocket maximum for an HSA-qualified health plan cannot be more than $6,900 for self-only coverage or $13,800 for family coverage.

How much can I contribute to an HSA?

In 2020, you can contribute up to $3,550 for an individual and up to $7,100 for a family. In addition to these limits, HSA participants who are 55 or older can contribute an additional $1,000 as a catch-up contribution. The limits include contributions to your HSA from your employer. HSA funds roll over year to year if you don’t spend them, and HSAs earn interest.

Invest your HSA Funds

Individuals are allowed to invest the money in their HSA accounts in mutual funds, etfs, and stocks. The gains aren’t taxable if they are used to pay for qualified medical expenses, which is another amazing benefit.

An HSA is not the same as an FSA

An FSA (Flexible Spending Account) and an HSA are similar, but they have some notable differences. Primarily, self-employed individuals aren’t eligible for funding an FSA. HSA funds can be rolled over year after year, but FSA funds must be used in that tax year or they expire.

 

NEXT UP The impact of high fees on savings How much can I contribute to my plan? What’s an ETF? Why Asset Allocation Matters Everything you Need to Know about Icon’s Fees What investments are available through Icon? Why do I need to answer a suitability questionnaire My employer is offering Icon. How does it work? Employer matching contributions–Don’t leave anything behind! Auto-escalation–A great idea The impact of high fees on savings How much can I contribute to my plan? Find out why it’s important to review your statement Save early and often What’s an ETF? High fees can erode your savings Annuities–What you need to know The basics of stocks and bonds Why Asset Allocation Matters The Savers Tax Credit – Are you taking advantage of it? What is a health savings account? A close look at Social Security Student loans feel like a weight When can I use my savings in retirement ? Emergency Savings Plan – What’s your plan? Do you receive a Form 1099? What you need to know Paying taxes as an independent contractor What if I want to take money out before I retire? What happens if I get fired or laid off? Naming a beneficiary What do I do with my 401(k) when I change jobs? Thinking of consolidating old 401(k) plans? Reserve mortgages, how do they work? Disability insurance, a great safety net Why it’s a good idea to have a will Using your home equity–Things to consider A close look at Social Security Student loans feel like a weight Emergency Savings Plan – What’s your plan? What if I want to take money out before I retire? What if I want to take money out before I retire? What if I want to take money out before I retire? What if I want to take money out before I retire? What if I want to take money out before I retire?