Can I Add to and Get Distribution from HSA? - Understanding Your Health Savings Account

Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses while saving on taxes. One common question many individuals have is whether they can add funds to their HSA account and also take distributions from it. The answer to this question is yes, with certain conditions and limitations.

Here's a breakdown of how you can both add to and get distributions from your HSA:

• Adding Funds:
• You can contribute to your HSA account either through payroll deductions, contributions from your employer, or making individual contributions.
• There are annual contribution limits set by the IRS, which are adjusted each year. For 2021, the limit for an individual is $3,600, and for a family, it is $7,200.
• Individuals aged 55 and older can make catch-up contributions of an additional $1,000 per year.
• Getting Distributions:
• You can take distributions from your HSA to cover qualified medical expenses for yourself, your spouse, or dependents. These can include costs such as doctor visits, prescription medications, and certain medical devices.
• It's essential to keep records of your medical expenses and receipts in case of an IRS audit to prove that the distributions were used for qualified healthcare expenses.
• If you withdraw funds for non-qualified expenses before you turn 65, you will be subject to income tax and a 20% penalty. After the age of 65, you can withdraw funds for any reason without penalty, though income tax would still apply if not used for qualified medical expenses.

By understanding the rules and guidelines surrounding adding funds to and taking distributions from your HSA, you can maximize the benefits of this savings tool.

Health Savings Accounts (HSAs) are not just for saving; they’re also about smart spending. Many individuals often wonder how they can contribute to their HSA and also withdraw funds when needed. The good news is that it’s entirely possible to do both, provided you follow certain guidelines.