Individuals or families covered under a high-deductible health insurance plan during the year are eligible to contribute to an HSA. Here is some information on HSAs from Reed Tinsley, a Houston CPA and consultant:
- Money contributed into an HSA is tax-deductible. Either you contribute into an HSA on your own, or your employer contributes on your behalf.
- Money invested within the HSA is your money and grows tax-deferred. Unlike Flexible Spending Accounts (FSA) offered to you as part of your employee benefit package where you set aside a set amount of money to pay for your family’s healthcare costs with pre-tax dollars, there is no “use it or lose it” pitfall with HSAs.
- Money can be withdrawn tax-free from your HSA at any time to pay for your family’s healthcare expenses.
- Any money remaining in your HSA upon your reaching the age of 65 is available to subsidize your retirement.
For more information about HSAs, check out IRS Publication 969 (pdf).
Reed’s website is here.