If your employer offers a high-deductible health insurance plan, but not the option to enroll in a Health Savings Account (HAS), you can open a separate HSA to take advantage of its many benefits. A certified financial advisor can help you work your HSA.
Benefits of Opening an HSA
Opening an HSA delivers several benefits. First, you decide how much you can afford to set aside for health care expenses. Second, you control how you plan to spend your health care dollars. You shop for health care based on balancing the cost and quality of care. Third, if your employer contributes to financing your HSA, you own the account and all the money put into it. Fourth, you do not have to spend everything invested in an HSA, as your annual balance rolls over to the next year. This means you do not waste money on unnecessary medical procedures.
Finally, you do not have to pay taxes on the money that you invest in a Health Savings Account.
How to Get the Most Out of a Health Savings Account
The principle of enrolling in a Health Savings Account is to save money for medical expenses, without facing any tax obligations. You should follow a few tips to get the most out of your HSA.
Maximize Contributions
For the 2022 tax year, you can contribute a maximum of $3,650 for yourself or $7,200 for your family. The more money you contribute, the more health care benefits you receive. For example, if you require a costly surgery, contributing more money to an HSA provides you with more money to pay medical bills. If your employer contributes to your HSA, that counts against your maximum contributions.
Match Employer Contributions
Many employers contribute to employee Health Savings Accounts as a type of benefit. You have the option to match the contribution made by your employer and you should act on that option. Matching an employer contribution typically does not involve as much money as a solo contribution, which means this might be a good place to start spending money on health care.
Contribute Enough Money to Cover Your Health Insurance Deductible
An effective HSA strategy involves covering out-of-pocket expenses, which typically is the amount you have chosen for the annual deductible. Instead of paying out-of-pocket for health care through your annual deductible, you dip into your Health Savings Account to pay for the medical expenses that are not covered by your health insurance plan.
The Bottom Line
You should not wait until you need a medical procedure to start an HSA. By enrolling in a Health Savings Account today, you can increase its value at a rate that matches your budget, as well as invest the funds placed in an HSA to grow the funds over time. Since Health Savings Account holders represent a segment of who we serve, one of our financial advisors can help you get started.