2. Qualifying for an HSA
High-Deductible Health Plan (HDHP): To be eligible for an HSA, you must be enrolled in a high-deductible health plan, which typically features higher deductibles and lower premiums.
No Other Health Coverage: Individuals with other health coverage, such as Medicare or another health insurance plan, may not qualify for an HSA.
3. Contributions to HSAs
Individual and Family Limits: HSA contributions are subject to annual limits. For 2023, the contribution limit is $3,650 for individuals and $7,300 for families.
Catch-Up Contributions: Individuals aged 55 and older can make additional catch-up contributions of $1,000 per year.
Employer Contributions: Employers may contribute to their employees’ HSAs, enhancing the overall contribution amount.
4. Maximizing Tax Advantages
Tax-Deductible Contributions: Contributions to an HSA are tax-deductible, reducing your taxable income for the year.
Tax-Free Growth: The funds in your HSA can grow tax-free through investment options, allowing for potential long-term growth.
Tax-Free Withdrawals: Qualified withdrawals for medical expenses, including doctor visits, prescriptions, and certain preventive care, are tax-free.
5. Strategic Use of HSA Funds
Medical Expenses: Utilize HSA funds for qualified medical expenses, including deductibles, co-payments, and certain over-the-counter medications.