Can my HSA carry forward into the new year?

Check eligibility on the go — browse 7,000+ HSA-eligible products in the free app.

HSAs roll over funds beyond year-end

One common question many people have about health savings accounts (HSAs) is whether their funds can carry forward into the new year. The short answer is yes, HSAs are unique in that the funds you contribute to them can carry forward year after year, unlike flexible spending accounts (FSAs) which have a 'use it or lose it' rule.

Many individuals frequently wonder if the funds they accumulate in their health savings accounts (HSAs) can roll over into the next year, and the answer is an emphatic yes. Unlike flexible spending accounts (FSAs), which impose a 'use it or lose it' rule, HSAs allow your contributions to carry forward indefinitely.

How HSAs work: contributions and qualified use

HSAs offer a great way to save and invest for future medical expenses, with the added benefit of tax advantages. Here's how it works:

• You can contribute to your HSA through pre-tax payroll deductions or make post-tax contributions and deduct them on your tax return.
• The funds in your HSA can be used to pay for qualified medical expenses, including deductibles, copayments, and certain other expenses like prescription medications, vision care, and dental treatments.
• Any unused funds in your HSA at the end of the year remain in your account and continue to grow tax-free.

Annual IRS limits and future healthcare value

It's important to note that there are annual contribution limits set by the IRS for HSAs. In 2021, the limit for individual coverage is $3,600 and $7,200 for family coverage.

Overall, HSAs are a valuable tool for saving for healthcare costs both in the present and the future. By allowing your funds to carry forward year after year, you can build up a substantial sum to cover medical expenses in retirement or unexpected health issues.