What Is a Health Savings Account and How Does It Work if You Open One

by | Mar 1, 2022 | Financial Services

A health savings account can be a great way to put aside money for healthcare expenses. Since you can save pre-tax income, it doesn’t hit your wallet as hard. Plus, you can find some of them with an insurance policy attached. So, you can use it as your insurance policy while saving at the same time.

What Is a Health Savings Account

For many, healthcare expenses are a huge part of what’s stressing them out. To minimize the burden of healthcare expenses, a Health Savings Account may be helpful. Since you can put money in them before taking out taxes, they’re able to stretch purchasing power. So, even if you have tons of medical costs, they won’t be as hard to manage.

There are several rules regarding how much you can contribute to an HSA. One of the main factors affecting your annual contributions is the size of your family, too. If you’re opening one as a single person, you’re limited to $3,650 annually. Your deductible can’t be higher than $7,050, either. But, it has to be at least $1,400 at the smallest.

Once you’re over 50 years old, your annual contribution limits go up to $4,650. The maximum out-of-pocket stays at $7,050, though.

When you’re filing for a family, the limits are also higher. Over the age of 50, they go up to $8,300. The minimum size of a deductible is $2,800 at that level, too.

If you have a high-deductible health plan, you may qualify for an HSA account.

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