Esta página de Internet está disponible sólo en inglés. Sin embargo, tenemos otros materiales de educación financiera en español.
Saving for current and future health care expenses has gotten a little easier thanks to Health Savings Accounts (HSAs). The benefits of an HSA include tax savings and the chance to invest your contributions in hopes of growing your assets. To open an HSA, you must meet a few qualifications.
In general, you can open an HSA only if you are under 65 and have an HSA-qualified health care plan. This plan can be held independently or through an employer. For 2013, the deductible (the amount you pay out of pocket before the insurance company covers costs) must be at least $1,250 for an individual or $2,500 for a family. HSA-qualified health care plans typically have lower premiums than other health care plans.
In conjunction with your HSA-qualified health care plan, an HSA allows you to set aside money on a tax-free basis. You can use the funds to pay the out-of-pocket health care costs your insurance doesn’t cover before or after you meet your deductible. Often, you can choose to contribute to your HSA with automatic payroll deductions each month or pay period.
Assuming you don’t spend all your contributions, HSA funds remain in your account from year to year, making the account a valuable long-term savings tool. You always own and control the money in your HSA, even if you change jobs or transition to a nonqualified health care plan. In 2014, the maximum amount that an individual can contribute annually to an HSA is $3,300. For families, the maximum is $6,550. If you’re 55 or older, you can make up to $1,000 in additional catch-up contributions annually.
Having a special savings account for health care expenses is particularly useful as you age. You can use HSA funds to cover long-term care premiums, Medicare premiums, and out-of-pocket expenses for a range of medical services — including the dentist and other specialists.
The funds you put into an HSA aren’t subject to federal income taxes or payroll taxes (Federal Insurance Contributions Act or Federal Unemployment Tax Act taxes, when contributions are made through your employer), and there are no taxes on withdrawals if you spend the money on qualifying health care expenses. Qualifying expenses can include anything from acupuncture to x-rays. These expenses may be incurred before or during your retirement, provided you have documentation of the expense.
Prior to age 65, you pay a 20% tax if you use HSA funds for nonmedical purposes or medical expenses that the IRS considers ineligible. After age 65, you can use the funds for any purpose, and that 20% excise tax doesn’t apply — only income taxes apply if the funds are used for ineligible expenses.
If you think an HSA might be right for you, find out if you can open one through your employer. You can also open an HSA through your bank or other financial institution.
We’re committed to your financial success. Here you’ll find a wide range of helpful information, interactive tools, practical strategies, and more — all designed to help you increase your financial literacy and reach your financial goals.
These articles have been prepared for informational purposes only and are not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each investor’s situation is unique you need to review your specific investment objectives, risk tolerance and liquidity needs with your financial professional(s) before a suitable investment strategy can be selected. Also, since Wells Fargo Advisors does not provide tax or legal advice, investors need to consult with their own tax and legal advisors before taking any action that may have tax or legal consequences.
Retirement Professionals are registered representatives of Wells Fargo Advisors, LLC. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company. Discussions with Retirement Professionals may lead to a referral to Wells Fargo Advisors’ affiliates including Wells Fargo Bank, N.A. Wells Fargo Advisors and its associates may receive a financial or other benefit for this referral.