Next Level HSA Detailed Video Transcript
Health Savings Account or HSA. You’ve probably heard of it but what do you do with it? Good question.
Think of an HSA like a really smart savings account with some tax benefits that help you save and pay for health care expenses now or in the future.
To qualify for an HSA, you must enroll or be enrolled in a qualified high-deductible health plan.
The two are designed to work together to help you better manage your health care dollars.
When you do have a medical expense – like a doctor’s visit or lab test – you’ll pay out-of-pocket until you reach your deductible.
After that, your health plan starts to share the costs with you – that’s called coinsurance.
You’ll pay your coinsurance amount until you reach your out-of-pocket maximum. The out-of-pocket maximum is the most you’ll pay for covered health services in a year – no surprises.
Remember, the cost of network preventive care is covered 100%.
Funding your HSA
Finding the extra cash to fund your HSA may be a challenge and you might be wondering how much you should you set aside.
Start with the money you think you’ll spend on anticipated expenses throughout the year – maybe you’re planning to expand your family, schedule a surgery or fill prescriptions for a condition.
This is money you would likely spend anyway. So, why not get the tax advantages of using your HSA as a way of saving money for these expenses?
Another option… since you may pay less in contributions, also known as premiums, for your high-deductible health plan, consider contributing those savings to your HSA.
HSA & Taxes
The tax benefits of an HSA can help stretch your health care dollars.
The money you contribute is tax-free or tax deductible. Think of it this way, if you pay a tax rate of 20%, you have to earn $120 to pay for a $100 service. But if you’re paying with tax-free HSA funds, you only have to earn $100 to pay for that same $100 service.
You also won’t pay taxes on the dollars you take out of your HSA to pay for qualified medical expenses.
And any interest you earn on the account grows tax-free.
You can even choose to invest an eligible portion* of your HSA dollars in mutual funds to help build your savings for the future.
[*on amounts above $2000]
There’s no use it or lose it rule with an HSA. The money rolls over from year-to-year and every dollar is yours to keep even if you change jobs or switch health plans.
Contributing to your HSA
Contributing to your HSA is easy.
You can set-up payroll deductions through your employer. These tax-free contributions are taken right from your paycheck, a little at a time. Be sure to check your benefit documents for how to request or change payroll deductions.
You can also make a one-time deposit or recurring deposits online. These contributions are tax-deductible.
You can stop, start or change your contribution amount at any time.
Your employer also contributes to your HSA – that’s additional money just for having an HSA!
Anyone else who wants to contribute to your HSA can. Just remember that all contributions count towards the annual IRS contribution limit.
Using your HSA
Once your HSA is funded, you can use it to pay for qualified medical expenses you have now or save it and use it for expenses in the future.
What counts as a qualified medical expense?
Your deductible…
Coinsurance…
Prescriptions…
Eyeglasses…
Braces...
Check out the complete list at IRS.gov.
Paying those medical expenses is simple.
You’ll receive a debit card linked to your HSA. As long as you have funds available, you can use your debit card to pay a medical bill or when you’re at the pharmacy.
Another option – go online to pay a bill directly using your HSA or a personal bank account. You can also reimburse yourself for an expense you already paid for out-of-pocket.
So, don’t wait.
If you haven’t already, elect to open your HSA through your employer or online. If you’ve already opened your HSA, start contributing or consider increasing your contribution to make the most of your health care dollars today.
[UnitedHealthcare logo]
[myuhc.com]
