How to Manage a Health Savings Account Hsa

HSA refers to a Health Savings Account, and is a good plan for some people. Users who have a high deductible health plan can deposit money into the account, which can then be used for medical related expenditures. The bonus is that money deposited into the account are tax free. However if the money is taken prior to retirement, and used to pay for non-health related items, the user may accumulate penalties.

The money deposited into an HSA can be invested in stocks, bonds, mutual funds, and certificates of deposit. Be aware though that while the depositor is, in effect, the account holder and allowed to make all decisions, there are things they cannot do with the money. For instance, the money cannot be used as collateral for a loan, or used for other items. The user is also expected to keep track of the funds in the account, and will not be notified if the account is overdrawn.

There are also other options on what to do with the money. The user can move the HSA money into another HSA, or move money from a retirement plan into the HSA. However the applicable annual limits with still apply. The current limits are $2,850 for an individual, and $5,650 for a family per year, but money can be rolled over from year to year.

Though it seems slightly complicated, it can be quite easy to manage an HSA, as long as the user determines a few things ahead of time.

-Is this an investment, or something that needs to be used?

The user also needs to decide on how to fund the HSA. They can either pay each month, or pay as much as possible to begin with and then pay when needed. When it comes to withdrawing from the HSA, the user needs to begin by only doing so to pay for necessary health care related spendings. Health care expenses included those not covered under their insurance such as glasses or contacts, and come over the counter medications. After that, try to withdraw as little as possible to protect the investment. The user is wise to remember that if they withdraw from the program, they can no longer deposit funds, but the money remains in their name.