Awwwwwwww, here it goes!
Healthcare, healthcare, healthcare. Can be a humongous headache, but also can save you (and make you, thanks to the HSA option) lots of money.
What is an HSA?
HSA (Health Savings Account) is the new shiny option in . Congress established the HSA in 2003, so ~*millennials*~ are the first to take full advantage of the wealth-growing account *insert muscles emoji*.
Quick HSA rundown:
- Most employers offer an HSA or you can open one on your own
- You make deposits monthly to your HSA (and your employer might make deposits too!)
- In 2019 the maximum contribution limits are $3,500 for single plans and $7,000 for family plans – so max it out like a 401k if you can!
- Unlike an FSA (flexible savings account), you do not have to spend the money before the end of the year
- Contributions are tax-deductible
- Withdrawals are tax free (when used for qualified medical expenses)
What’s a deductible?
HSA is a high deductible healthcare plan. Your deductible is the amount you pay out of pocket per year before your health plan kicks in. I currently have a $1,500 deductible in my HSA, so if I go to the doctor a few times here and there, I’ll pay for it out of my health savings account. (Although most yearly check ups are covered, you always want to double check on that!) But if I had to have my appendix out and got a bill for $20,000, I’d only be liable to pay $1,500 of that.
Why should I consider an HSA?
- If you are looking to pay less each month for health insurance (but this may mean you will pay more out of pocket when you go to the doctor)
- If you do not go to the doctor often
- Most employers will match your contributions
- Other people can contribute to your HSA – #adulting by opening the account and #millennial-ing by having the option for you parents to contribute if needed LOL
- If and when you switch jobs, your HSA account stays with you
- You can use the money in this account later in life to pay for what ever you please – golf clubs, hot tub, sailboat…dreaming of retirement…getting off topic….. piña colada at 2:00 PM….
- Even if you switch employers, you can most likely still contribute to the same HSA
What are the downsides to an HSA?
- If you plan on taking the money out of this account for something other than qualified medical expenses before the age of 65, you’ll be charged – A LOT
- If you plan to see the doctor a few times per year – your appointments will add up real quick!
Help!!!! What do I do with this new information?!!
Not yet convinced? Check out HSA vs FSA. Explore all the options your employer offers before you make the best decision for your situation.
To open an HSA, talk to your HR department to see if it is an optional health plan through your employer. An HSA can also be opened in less than 10 minutes online at the HSA Open an Account page!
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