A HSA is by far the best tax advantaged investment ever devised by mankind. Contributions are tax exempt. Withdrawals before age 65 for qualified medical expenses are tax exempt. Withdrawals at age 65 and used for any reason are tax exempt.
HSA accounts can be strategically be used to save money for retirement, in conjunction with a 401(k) or IRA account.
HSA Limits
For calendar year 2023, the annual limitation on deductions under Internal Revenue Code Section 223(b)(2)(A) for an individual with self-only coverage under a high deductible health plan (HDHP) is $3,850. And for calendar year 2023, the annual limitation on deductions under Code Section 223(b)(2)(B) for an individual with family coverage under an HDHP is $7,750.
HDHP Limits
For calendar year 2023, a “high deductible health plan” is defined as a health plan:
- with an annual deductible that is not less than $1,500 for self-only coverage;
- with an annual deductible that is not less than $3,000 for family coverage;
- for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $7,500 for self-only coverage; or
- for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $15,000 for family coverage.
At age 65, you can withdraw money from an HSA penalty-free to cover anything your little ole heart desires.
HSA’s are becoming more popular these days.
