A Health Savings Account (HSA) allows employees to set aside money pre-tax to help pay for qualified medical expenses. When open enrollment rolls around, you will get the option to elect how much you would like to contribute from your paycheck to your HSA. You can also contribute directly from your bank or via check as well. Note that employees can only have an HSA if they have a qualified high-deductible health plan (QHDHP). For more information on what an HSA is, read our blog: Should You Invest in an HSA?
If you plan to elect a QHDHP, an HSA is an excellent perk to consider. HSA funds are your funds, even if you leave your employer, plus the funds roll over year to year, so you never lose them. Many people don't realize the tax and retirement savings potential that come with HSAs. Some things to think about before investing:
Calculate your healthcare costs
Take your healthcare costs from last year or a year when healthcare costs were more average for you and use that amount or the IRS limit of $3,850 for individuals or $7,750 for family, whichever is lower.
Also, try to predict your healthcare costs as best you can for the upcoming year (including prescriptions, doctor visits, surgeries, dental/orthodontics, etc. The sum of these can be a great starting point for the minimum amount you should contribute.
Match Your Deductible
If you're unsure what you'll spend, you can try to at least cover your deductible. Check your plan information or contact your HR rep to determine your specific plan's deductible.
Expect the Unexpected
One of the hardest parts of healthcare budgeting is planning for the unexpected. If you are typically incurring a lot of medical expenses, it will probably benefit you to increase your election by adding some 'buffer funds' on top of what you know you'll spend. You may consider forgoing extra wiggle room if you're generally healthy and a relatively low healthcare user.
Employers who offer an HSA under a Cafeteria Plan receive a federal tax reduction and can help boost employee satisfaction. Medcom Benefit Solutions administers HSAs with a one-debit card solution that will accommodate multiple benefits on the same debit card, such as a Limited FSA and/or Dependent Care Assistance Plan. We also offer participants 24/7 online access, including BillPay options and the ability to make additional after-tax contributions to the HSA. Contact us at firstname.lastname@example.org or 800-523-7542 for more info.