If you’re generally healthy and you want to save for future health care expenses, an HSA may be an attractive choice. Or if you’re near retirement, an HSA may make sense because the money can be used to offset the costs of medical care after retirement.
Hereof, what is the purpose of HSAs?
A type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in a Health Savings Account (HSA) to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs.
Similarly, what can HSA be used for 2021?
List of HSA-eligible expenses
- Acne laser treatment.
- Ambulance fees and emergency care.
- Artificial limbs.
- Birth control pills, injections, and devices, such as IUDs.
- Blood pressure monitors.
- Body scans.
Why HSA is a bad idea?
The Downside of HSAs
HSAs might also not be a good idea if you know you will be needing expensive medical care in the near future. When you have a copay, you know how much it will cost to visit the doctor but it can be difficult to find out the cost of medical care when you are paying yourself.
While the option of opening an HSA is attractive to many people, choosing a PPO plan may be the best option if you have significant medical expenses. Not facing high deductible payments makes it easier to receive the medical treatment you need, and your healthcare costs are more predictable.
A guide to help you
Contribute the maximum amount. In 2021, the IRS allows individuals to contribute $3,600 to an HSA, and $7,200 for families. If you are over age 55 you can contribute an additional $1,000. If your employer is also contributing to your HSA, it counts toward this annual maximum.
The 7 Best Health Savings Account (HSA) Providers of 2021
- Best Overall: HealthSavings Administrators.
- Best for No Fees: Lively.
- Best for Families: The HSA Authority.
- Best for No Minimum Balance Requirement: HSA Bank.
- Best Investment Options: Fidelity.
- Best Mobile App: HealthEquity.
- Best for Employers: Further.
HSA – You can use your HSA to pay for eligible health care, dental, and vision expenses for yourself, your spouse, or eligible dependents (children, siblings, parents, and others who are considered an exemption under Section 152 of the tax code).