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Health Savings Accounts, also known as HSAs, can help you take greater control over your healthcare costs. They allow you to save money that can be used to help cover qualified out-of-pocket health costs while also gaining tax benefits. |
How Does An HSA Work?
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HSA Contribution GuidelinesFor the 2024 tax year, singles can contribute up to $4,150 and those with family coverage can contribute up to $8,300. Those over 55 can contribute and additional $1,000. You can have multiple HSAs, but the total contributed must not be greater than the limits above. Multiple HSAs can be rolled into one, in which case the contribution limits no longer apply. Contributions can come from the insureds or their employers. Once-in-a-lifetime rollovers from a Traditional or Roth IRA are also allowed, but within the standard contribution limits. There is no minimum contribution, and you do not have to contribute every year.
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HSA Tax ImplicationsYou do not pay taxes on earnings in an HSA as long as they are spent on qualified medical expenses.* An HSA is the only account available that offers a tax deduction today along with a tax-free withdrawal tomorrow. Be sure to consult with your tax advisor for details. If your employer makes contributions, they will be excluded from your income and therefore may not be deducted. You may withdraw money at any time for non-medical purposes. Before the age of 65, a 20% penalty will be assessed to the distribution. After 65, you will pay income taxes on the amount withdrawn. |
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