Recently, children around the world have become obsessed, as only toddlers can, with a song. They sing it in the morning, they sing it at night, they sing it in the tub, and even during a fight. If you have been living under an internet rock or don’t have young ones, you have missed the fun of “Baby Shark.”
What would your family do if you couldn’t “run away, do do do do do do,” and be “safe at last, do do do do do do do”? What would you do if one of you faced a medical emergency? Where would the money come from to pay for those unexpected medical bills?
Ways to Use Your HSA and Benefits
A Health Savings Account (HSA) is a way to save for health care costs at a tax-deductible rate. Every dollar you put into an HSA is taken out before taxes are, thereby saving you hundreds, if not thousands, of dollars. In addition, every dollar you save rolls over to the next year. Basically, an HSA is just like a 401(k) for your medical bills.
To be able to invest in an HSA, your employer must offer and you must be enrolled in a High Deductible Health Plan (HDHP). The HDHP must have a yearly deductible of $1,300 for an individual or $2,600 for a family.
A combination of a lower premium amount for the HDHP and the tax savings realized by the HSA is often a better and more cost-effective means of paying for medical costs than a traditional PPO.
Remember, any money you don’t use out of your HSA rolls over to the next year. This roll over amount can continue to accumulate until you reach retirement. The maximum amount a family can contribute to an HSA per year for 2019 is $$7,000. A single person can contribute up to $3,500 in 2019. However, anyone (parents, spouse, family, or friends) can contribute to this account.
Where Can I Spend My HSA Dollars?
The federal government has a list of qualified medical expenses where you can spend your HSA dollars. Obvious costs, such as payments to doctors, dentists, or prescriptions, but also items you may not have considered such as home care medical services, medical equipment, and supplies.
In addition, any medical expenses that insurance doesn’t cover and are considered qualified medical expenses that you paid out of pocket can be reimbursed with HSA dollars. Some other examples include:
- Hearing aids
- Chiropractic services
- Physical therapy
- Psychological counseling
- And even smoking cessation programs
Some items not included on the HSA eligible medical expense list include:
- Nonprescription drugs or medicines
- Nutritional supplements
- Weight-loss programs
- Funeral expenses
- Cosmetic surgery
- Personal use items
Is It Worth It to Invest in an HSA?
Even if you are young and healthy, it is still wise to invest in an HSA if offered by your employer. Since those dollars can be rolled over year after year, they can quickly add up to a tidy sum that can be used during retirement for expected medical expenses. Just think of your HSA as another way to save you money.