3 Mind-Blowing Reasons Why Millennials Should Consider an HSA

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Overwhelmed by the health insurance options! Not sure which one to pick. Never heard of a HSA. Not sure what a HSA is ? Or why you would want a HSA in the first place? 

In this article, I share the reasons why I personally fell in love with a health plan that has a HSA. I’ll give you a few hints: more freedom, more control and more money.

What is an HSA Account and How Does it Work?

A HSA stands for health savings account and it’s awesome! It’s like a IRA but for your health and medical related expenses. Once I discovered that it’s yours to keep for a lifetime and it’s under your control, no matter if you are self-employed or you stay with a particular employer for the long-term, I knew it was the right choice me! 

A HSA is a great option for a healthy young person or family who doesn’t need a lot of doctors appointments or specialists, but still wants to be covered with Health insurance that has a lower premiums.

Why Should I Consider a HSA?

Drum roll… a HSA offers not one, not two, but three tax perks! Seriously!  TRIPLE tax benefits.

  1. Your contributions to your HSA are a tax deductible. (Wahoo, lowering your taxable income) 
  2.  The money you put into your HSA account excludes income tax and FICA payroll taxes. (More for you and your needs!) 
  3. Money in your HSA account earns tax-free interest and growth
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HSAs are one of the only tax-advantaged accounts that exclude contributions not only from income tax but also from FICA payroll taxes, noted Voya Financial, which manages HSAs and retirement plan accounts.

On top of all that you’ve got an account ready to pay for medical expenses that arise now or in the future. It’s a nice security blanket for the present and older you! 

Some people use it as apart of their retirement plan, knowing that they may have more medical needs the closer they get to 65. Once you hit 65, you can use your HSA funds for any purpose without being penalized.

What is the downside to a HSA?

You will likely pay more out-of-pocket medical expenses, hence the HSA account, since your co-insurance pays less than other higher premium insurance plans. 

There is also a higher deductible. 

And you have to qualify and be covered under a High Deductible Health plan in order to have a HSA.

Can Anyone get a HSA?

Unfortunately, no! You must be covered under a high deductible health plan (HDHP) to be eligible to make contributions to a Health Savings Account. Learn more on the IRS website

If you live in New Jersey and California, then no HSA for you. These two U.S. states don’t recognize HSAs. Bummer!

What is the Maximum HSA contribution for 2022 and 2023?

HSA Contribution limits for 2022: $3650 Self only / $7300 Family

HSA Contribution limits for 2023: $3850 Self only / $7750 Family

More info here and here

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When is the HSA contribution deadline?

You can contribute to HSA for 2022 up to April 18, 2023. 

You can contribute to HSA for 2023 up to April 15, 2024.

Double check the IRS website to be certain, things change! 

How much should I contribute to my HSA?

Do what you can afford. Use your discretion. If you can max out your HSA account annually,  do it baby ! Your future self will thank you later!

What can I use my HSA funds for in 2023?

If you open a HSA you can use your contribution funds to pay for medical and dental expenses and so much more! 

There is an impressively long list on the IRS website of HSA eligible expenses. You should check it out before making purchases with your HSA account. 

You’ll find anything from vaccines, masks, chiropractor, acupuncture and therapist appointments! Doctors visits, co-pays, you can even pay your Cobra premiums.

The list will blow your mind!

Examples of HSA qualified expenses may include:

12 Common Medicines

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Writer Whitney Ellis

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