Making the Most of Your HSA
It’s no secret that HSAs are an excellent retirement vehicle. They allow tax-free contributions, growth, and withdrawals. They are completely owned by you and can be transferred from one employer to the next. HSA funds also roll over from year to year. So, how can you take complete advantage of these benefits?
It’s simple: Grow your health savings by contributing! Even if your employer makes contributions towards your HSA, you should be contributing monthly if you want to maximize your savings. A smart way to contribute is to think about how much you’re saving on premiums, and then put those savings in your HSA. Remember, HSA dollars are your dollars. They don’t expire, and they will roll over year after year.
Understand Price Variance
Many people don’t know this, but there is a great lack of price transparency when it comes to costs of medical procedures. For example, you could pay $600 for a blood test at Facility A, or drive down the road to Facility B and get the same test for $200. The same is true for baby delivery, office visits, mammograms, and many services; even within the same metro area. Being aware of price variance, and knowing how to find more affordable options, can be the difference of up to thousands of dollars in reduced medical costs (which means more savings in your HSA).
Be Aware of Prescription Costs
Not only is there cost variance for medical procedures, there is also cost variance in prescribed medications. Instead of going for name-brand medications, opt for the generic brand when possible. Just call one of our PHAs to see what options are available to you.
Utilize Tax Advantages
Don’t forget to report your HSA contributions on your tax return. Say you make $65,000 per year. That means your federal income tax will be 22% (if you’re the head of a household, not single). Say you put away $5,000 in your HSA. You don’t have to pay taxes on that $5,000. That’s a savings of $1,100 (22% of $5,000)! HSA contribution limits for 2020 are $3,550 for self-only coverage and $7,100 for families, and those tax savings can add up over the years.
Invest Your HSA Dollars
Many with HSAs aren’t aware that they can invest their HSA dollars. As your HSA grows, investing a portion of those savings can be a smart way to grow them even faster. Call our PHAs to see how you can invest your HSA funds.