Health savings accounts haven’t gotten anywhere near the amount of press — nor the attention from workers — that their advocates believe they deserve.
That could be because workers really don’t understand HSAs.
Nor are they aware of the multiple tax benefits that such accounts can provide — and that’s on top of their primary purpose: offering a means of saving to cope with steadily increasing health care costs.
Coupled with high-deductible health plans, HSAs offer employees the opportunity to set money aside to pay those high deductibles, as well as to save even more to pay other out-of-pocket medical expenses not covered by the health plan.
But workers often don’t save much more than the minimum; in fact, a recent study found that not even one percent of respondents maxed out allowable HSA contributions.
That means they failed to capitalize on the many other advantages that HSAs offer.
That could be because they confuse the rules governing HSAs with those governing flexible spending accounts — which have use-it-or-lose-it rules that don’t apply to HSAs — and are afraid of losing any additional funds they might save over the minimum.
But there’s plenty more benefit to be had from an HSA, over and above its help with health care expenses.
Here’s a look at seven benefits to be had from using HSAs to the max. Workers, listen up.
1. Contributions to HSAs are deductible from gross income.
In fact, if they’re made via payroll deduction, they’re pretax — which means you don’t have to sit around and wait for a refund.
And considering that the 2015 maximum allowable contribution is $3,350 for individuals or $6,650 for families (those over 55 can add an additional $1,000 to those amounts), that can mean your tax bill could take a substantial hit.
(For 2016, the maximum allowable, for families only, will rise just $100.)
2. HSA money rolls over from year to year.
Unlike an FSA, an HSA is not subject to use-it-or-lose-it rules — which means that the money you save inside an HSA can grow, literally, for years if you save more than you need for qualified health care expenses within a given year.
This is a great thing for multiple reasons; keep reading to see what they are.