“Sometimes if you want to see a change for the better, you have to take things into your own hands.” –Clint Eastwood
Do you know the benefits of your Health Savings Account (HSA)? By knowing the ins and outs of your HSA, you can take full advantage and get the most bang for your buck.
So gather round, partners. Here are the cold, hard facts.
Owners of an HSA may make contributions throughout the calendar year. These contributions are deductible from your income; but there are limits. These limits are set by the IRS and are as follows for 2014.
The Good, the Bad and the Ugly
Contributions made personally out of your income are deductible up to the limits set by the IRS, while contributions made by your employer can be excluded from your income, up to the limits.
As for the funds left unused, you may leave them in the HSA to grow tax free. These funds do rollover and can be used for qualified medical expenses or other purposes throughout an account holder’s lifetime. An important difference is that the funds used for qualified medical expenses are not taxed, while funds used for other purposes will see a tax on the distribution plus a hefty 20 percent penalty.
Should an HSA account holder pass away, the designated beneficiary may continue to use the account, only if that person is the account holder’s spouse. If the beneficiary is someone other than the spouse, the HSA ceases and becomes fully taxable to the beneficiary without penalty.
The Maddox Thomson team is always here to help.
Call or email us at [email protected]