Top Five Reasons to Open an HSA in 2014

As employers search for ways to lower their health care costs, many are encouraging employees to sign up for a high-deductible health insurance policy paired with a health savings account. An HSA gives you a triple tax break: Your contributions are sheltered from income taxes, the money grows tax-deferred, and the funds can be withdrawn tax-free for medical expenses. It’s like a supercharged flexible spending account that never expires, and it can even serve as an extra retirement-savings fund. Most employers also add a few hundred dollars to the accounts each year as a bonus.

We’ve chosen our top five reasons to open an HAS in 2014:

#1 Deduct up to $8,550 on your 2014 tax return.

You can deduct your HSA contribution and save money even if you do not itemize your taxes. With deduction amounts of up to $8,550 (family maximum contribution of $6,550 for 2014 plus two $1,000 catch-up contributions if you are between 55-65) the tax savings can be substantial. You must have two HSAs, husband and wife, to get the full $8,550.

#2 Cut your insurance costs.

High deductible health plans can be significantly cheaper than low deductible plans. Your savings, when put into an HAS, can be used to cover your entire medical expenditures for the year, or better yet, rolled over and saved for future years.

#3 Pay for eligible medical expenses tax-free.

HDHP you must open your HSA before you incur any medical expenses. Use your HSA to pay for eligible medical expenses tax free. See HSA Resources’ list for a list of eligible and not eligible expenses.

#4 No “Use it or Lose it” provisions.

There’s no need to spend the end of the year stocking up on glasses, contacts and other things you don’t need just so you can spend everything left in your health care account. With an HSA the fund belong to you. There are no use it or lose it provisions. Any unused funds stay in your HSA for your benefit in the future. Even better, earnings on the HSA are not taxable. See the HSA Resources’ Distribution Worksheet for a complete list of eligible distribution reasons.

#5 Start a Heath Savings Account with only $25.

Low on cash? Opening an HAS won’t break your bank. HAS offers a low $25 account deposit requirement to get started. Since you must open your HAS before you incur an expense, it makes sense to open your account as soon as your insurance starts. Some customers open with the minimum amount and add more when they need it.

For other resources, take a look at HSA Resources’ Tax Savings Worksheet to see how much you can save and their Contribution Worksheet for details. Catch-up contributions must go into each spouse’s respective HSA so no more than $7,550 can go into one HSA and you need two HSAs to contribute the full $8,550 limit.

For more information, visit HSA Resources’ website or call 866-757-4727.