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Every year, the IRS announces maximum contribution limits for HSAs. In 2019, you can contribute up to $3,500 for single coverage and $7,000 for family coverage. In order to qualify for an HSA, you must have a deductible of at least $1,350 for single insurance or $2,700 for family insurance. If you are over the age of 55, your limits are $1,000 higher for ‘catch up contributions.’ Once you sign up for Medicare, though, at age 65, you can no longer contribute to your HSA.
The maximum contributions discussed above include any employer contributions. If your employer adds to your HSA, it comes right off the amount you can contribute. For example, if you have family coverage and your employer contributed $1,000, you could only contribute $6,000 for a total of $7,000.
What are the Criteria for HSA Eligible Policies?
Aside from the deductible requirements, HSA-eligible properties must meet other requirements as well:
- The deductible or the policy must apply to all services and prescription coverage. The only exception is wellness coverage.
- The insurance plan must have a pre-determined maximum out-of-pocket expense that is no more than $6,750 for single coverage and $13,000 for family coverage.
Who is Eligible for an HSA Insurance Plan?
In order to get an HSA policy, you must meet the following:
- You must have a high deductible insurance plan, as we discussed above
- You cannot have any other insurance policies
- You are not a dependent on any other policy
- You don’t have an FSA
How Can you Use Your HSA?
You can use your HSA money on any medical expenses you would have to pay out of your own pocket. A few examples include:
- Bills that insurance doesn’t cover
You can use all of your HSA funds in your account or let them roll over into the next year. The money grows tax-deferred and is there for you when you need it. If you use the funds for anything non-medical related, though, you will pay taxes on the money plus a 20 percent penalty.
You’ll receive a debit card to use your HSA funds. This makes it easy to pay co-pays or for prescriptions right away. If you receive a medical bill in the mail, you can use the debit card to pay the bill over the phone or online.
Setting up an HSA
In order to set up an HSA, you must first enroll in a high deductible insurance plan. If you get insurance through your employer, you may be able to sign up for the HSA right through your employer. If not, talk to your insurance company. Most insurance companies have banks that they recommended for the HSA. If not, you are free to find your own bank or credit union, just make sure you know the terms of the account before opening one.
An HSA can help you afford medical bills throughout the years. You are free to contribute up to the maximum amount each year, allowing the money to grow in a tax-deferred account. If your employer contributes to your HSA, it can make your medical costs even less expensive through the years.Get the right insurance coverage.