Answer These 5 Questions When You’re Enrolling in an HSA
September 26, 2019
Health Savings Account (HSA) participation continues to soar, with a recent report finding that HSA assets nationwide just eclipsed $60 billion. And HSA investments are more than triple what they were just four years ago, which shows that more Americans are using these accounts as part of their savings and retirement-planning strategy.
With open enrollment season near for many employees, are you thinking of participating in a Health Savings Account for the first time? Or are you simply re-evaluating your contributions to the account? We’ve compiled five questions for you to think about to help you fully experience the triple-tax advantage of an HSA. And sign up for a live National HSA Awareness Day broadcast to learn more about how these accounts are a great solution for your healthcare and retirement needs.
What type of health plan do I need to qualify?
For you to qualify for a Health Savings Account, you must be enrolled in a High-Deductible Health Plan. The IRS sets annual deductible limits for HDHPs.
How much should I contribute to my HSA?
All HSA funds carry over from one year to the next, which makes them smart vehicles for savings and investment. That means it makes sense to contribute as much as you’re able to (as long as you stay within the IRS contribution limits). Also consider:
- Catch-up contributions. You can contribute an additional $1,000 per year (on top of the IRS limits) once you’ve reached age 55.
- Employer contributions. Your employer may offer to either contribute to their employees’ HSAs or to match a certain amount of your contributions.
Can I enroll in an HSA and an FSA?
Yes. You can save even more money on eligible expenses by participating in a Health Savings Account and certain types of Flexible Spending Accounts (FSAs). HSA participants are eligible to contribute to:
- A Limited FSA, which lets you save on qualifying dental, vision and preventive care expenses.
- A Dependent Care FSA, which lets you set aside pre-tax dollars for eligible day care expenses or for care of a disabled spouse or dependent.
Note: You are not eligible to participate in both an HSA and a Medical FSA (which covers eligible medical, dental, vision and preventive care expenses).
What is the investment threshold?
Health Savings Account funds can be invested, which lets you build up your balance at a much higher rate than the standard interest rate of an HSA’s cash account. That’s one of the reasons these accounts rival a 401(k) or an IRA for retirement planning. Before you can invest, your balance must reach an investment threshold. You’ll want to find out what that threshold is so you’ll know how soon you can invest.
How do I know what expenses are eligible?
The IRS determines what expenses are eligible. Our interactive eligible expense list makes it easy for you to find out if an item is eligible. Our participants also can use the Benefits Mobile App by Discovery Benefits, which has an eligible expense scanner that lets them scan the bar codes of purchases to determine instantly if that purchase is eligible for HSA funds.
Would you like to learn more about the benefits of an HSA? Visit www.HSAday.com and experience HSA Day on October 15!
Please note: Discovery Benefits cannot provide legal, investment or financial advice related to the plans we administer and nothing shared in this blog post should be interpreted as such. We encourage you to seek appropriate professional advice regarding your plan.