Maximize Your Benefits: The Power of HSA

Health Savings Accounts (HSAs) have become a powerful tool for managing healthcare expenses, but their potential extends far beyond covering out-of-pocket costs. Let’s explore the unique advantages of HSAs, including tax benefits, the opportunity to reinvest in the market, lower out-of-pocket maximums, and the benefits for families and older employees.

1. The Power of Reinvestment

• HSAs offer a unique opportunity to make your money work harder for you.

• Once you've covered your deductible in your HSA account, any additional funds can be reinvested into the marketplace.

• This allows you to potentially grow your savings and further secure your financial health.

2. Tax Benefits

• One of the most significant advantages of HSAs is their tax benefits. The contributions you make to your HSA, including premiums for the health plan, are made pre-tax. Additionally, any earnings from reinvesting these premiums are tax-free.

• Withdrawals for eligible health-related expenses are also tax-free. This means that every dollar in your HSA can be used entirely for your healthcare needs.

• These pre-tax contributions also lower the FICA taxes that both individuals and sponsoring companies would otherwise pay, making HSAs a financially smart choice.

3. Lower Out-of-Pocket Maximums:

• HSAs typically have lower out-of-pocket maximums.

• This means you'll spend less before your insurance starts to pay for your healthcare expenses, easing the financial burden.

4. Family Coverage Benefits

• HSAs offer particular benefits for family coverage.

• With embedded deductibles or out-of-pocket maximums, individual family members only need to satisfy their own expense maximum. Typically found in HSA benefit plan designs.

• This is a significant advantage over aggregated plans requiring family amounts to be satisfied, typically found in traditional plans with copays.

5. Maximum Contribution Amounts

• For 2023, the maximum contribution for:

  • Self-Only Coverage: $3,850

  • Family: $7,750

• For 2024, the maximum contribution for:

  • Self-Only Coverage: $4,150

  • Family: $8,300

6. Catch-Up Contributions

• For older employees, HSAs offer additional benefits. Individuals aged 55 and older can make 'catch-up' contributions, allowing them to add an extra $1,000 to their HSA annually.

• This helps older employees to better prepare for healthcare costs in retirement.

7. Eligible Expenses

HSA dollars can be spent on a wide range of eligible expenses, including but not limited to:

• Medical deductibles and co-payments

• Dental care

• Vision care

• Prescription medications

• Mental health services

• Chiropractic services

• Physical therapy

Conclusion

The power of HSAs extends far beyond just covering healthcare costs. With tax benefits, the ability to reinvest, lower out-of-pocket maximums, benefits for families and older employees, and generous contribution limits, HSAs offer a powerful tool for managing your healthcare finances.

At Radwick & Lightle, we're here to help you maximize these benefits and secure your financial health.