As the year comes to an end, you may have questions about your Health Savings Account, or HSA. This quick guide should help answer them.

Why have a Health Savings Account?

An HSA is meant to give plan owners more control over their medical expenses. The person who opens the account also controls the funds that go into it. This accomplishes two things:

  • It stays with you between jobs. Your employment status does not change the presence of the HSA.
  • It is tax-exempt. The money you put in goes further when you need to spend it.

What is this about Health Savings Account being tax-exempt?

The money that goes into your HSA is protected from taxation at every step of the transaction. It doesn’t get taxed going into or out of the account. The only catch is that you use it for medical expenses.

What are medical expenses?

These are items or procedures you have an actual health need for. Everything from LASIK surgery to contact lens solution is an allowable expense.

What is the catch?

Outside of needing to use the funds on medical expenses, there are two other things you should know about your Health Savings Account.

  • There is a contribution limit. Each plan year, you can contribute a limited amount of money to the account. For 2016, you could contribute a maximum of $3,350 if you had an individual insurance plan and up to $6,750 if you had a family plan.
  • You need to have a High Deductible Health Plan (HDHP) to qualify to open an HSA. A HDHP has a minimum deductible of $1,300 for a single person and $2,600 for a family.

Why a Health Savings Account instead of a bank account?

The HSA is an account that you add money to (tax-free) until you need to make a withdrawal for medical expenses (also tax-free). You could just set aside money into a bank account but you would have less because of taxes. Also, because HSA funds must be spent on medical expenses or supplies, it ensures that the money that goes in actually goes to those items.

Does my HSA expire?

Unlike an FSA, the funds in your HSA do not have to be spent in the plan year.

So then, why should I spend any of it? Wouldn’t it be better to save it all?

One of the main concerns with an HSA is people who refuse to spend it even when they need medical care. Your health should always be the number one priority over saving money in an account. Especially when dealing with eye health and vision quality, it is better to take preventative steps than have to treat major problems later on.

How do I use my HSA for vision care?

The funds in an HSA can be used for all aspects of vision care. No matter which step you are on, you can spend HSA money on it (as long as it comes from a medical need, such as having astigmatism). Vision exams, visits to the eye doctor, glasses, contacts, and everything that goes with them are okay to purchase.

So don’t forget to actually make use of your HSA. Health comes before savings. It’s right in the name.

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