When you enroll in an FEHB High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), you gain a powerful tool to help offset out-of-pocket medical expenses. Let’s look at some of the benefits.
HSA Contributions
HSAs receive equal monthly contributions funded by a portion of your premium, also known as a premium-pass through. Annual contribution amounts differ depending on your plan and the number of people covered. Self-only coverage contributions are in the $750 – $1,200 range, while self-plus-one or self-and-family vary from $1,500 – $2,400.
Voluntary HSA Contributions
On top of what your plan puts into your HSA, you have the option to contribute additional funds. If you’re a self-only enrollee, your HSA deposits max out at $4,150 per year, for self-plus plans, it’s capped at $8.300. If you’re 55+, take advantage of the added $1,000 yearly catch-up contribution. Voluntary contributions carry many tax advantages: they can either go in pre-tax as a payroll deduction or as lump-sum contributions that can be deducted when you file your taxes. Plus, these funds grow tax-free and there’s no tax for withdrawals used on qualified healthcare expenses.
Spending Your HSA Funds
Not only can your HSA account help you pay down out-of-pocket expenses required to meet your high deductible, but it can also cover everyday items like over-the-counter pain remedies, feminine hygiene products, and allergy medicine. Since you own your HSA, you can carry it with you into retirement and use it to help pay premiums for Medicare Part D and B, as well as premiums for long-term-care insurance.
“Plus, these funds grow tax-free and there’s no tax for withdrawals used for qualified healthcare expenses.”
HSA Advantages When You’re 65+
Life happens, and you may be faced with a situation where you need to use your HSA for a non-qualified medical expense. That would usually result in a 20% penalty being applied on top of your normal tax rate. However, once you turn 65, this penalty is suspended and any withdrawals you make will only be subject to your normal tax rate.
Investment Options Through Your HSA
Much like an Individual Retirement Account (IRA), HSAs are managed by a financial services company. This gives you the flexibility to invest your unused funds in a wide variety of options – often more than what is available through your TSP. Since you own your HSA account, you can take it with you even if you switch your healthcare enrollment option or leave federal service.
Let an FRC® trained advisor help you make the most of your HSA benefits.
