A health savings account (HSA) is a great way to lower the pain of high deductibles and co-pays. If you have a high-deductible health plan, you can put money into an HSA taxfree. The amount you contribute to the account, up to $3,600 for self-only and $7,200 for a family, is deductible from your yearly income tax. If you are 55 years old or older, you can add an extra $1,000 as a catch-up for years you didn’t contribute.
The minimum deductible required in 2021 to use an HSA is $1,400 for self-only plans and $2,800 for family. Your employer can contribute to your HSA as well.
Health Savings Accounts have big advantages. If you change jobs or retire, you keep the account and all the money in it. You can roll the funds over each year, saving up for future health expenses. You can also use your HSA to help pay for long-term care (LTC), some of your LTC insurance premiums, and Medicare premiums. And, if you die with money in your HSA and your spouse is your designated beneficiary on that account, the account becomes theirs, free of probate.
