Did You Make Any After-Tax Contributions to an HSA or Archer MSA?

When it comes to saving for healthcare expenses, Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs) offer tax advantages that can help you reduce your out-of-pocket costs. One common way to contribute to these accounts is through pre-tax payroll deductions. However, you may also have the option to make after-tax contributions. Did you know that making after-tax contributions to an HSA or Archer MSA can be beneficial in certain situations?

When you make after-tax contributions to an HSA, you can still enjoy tax savings. The contributions you make with after-tax money are tax-deductible, meaning you can deduct them from your taxable income when you file your taxes. This can help lower your overall tax bill and save you money in the long run. Additionally, these after-tax contributions can grow tax-free within your HSA, allowing you to use the funds for qualified medical expenses without paying taxes on the withdrawals.

Similarly, if you have an Archer MSA, making after-tax contributions can provide you with tax benefits. While contributions to an Archer MSA are typically made on a pre-tax basis, you may choose to make additional after-tax contributions. These after-tax contributions are not subject to federal income tax, and any earnings on these contributions are tax-free if used for qualified medical expenses.

It's important to note that the contribution limits for HSAs and Archer MSAs are set by the IRS each year. For 2021, the annual contribution limit for individuals with self-only coverage is $3,600 for HSAs and $3,650 for Archer MSAs. For those with family coverage, the limits are $7,200 for HSAs and $7,300 for Archer MSAs. If you are 55 or older, you may be eligible to make catch-up contributions of up to $1,000 to your HSA.

Making after-tax contributions to a Health Savings Account (HSA) or Archer Medical Savings Account (MSA) can offer a unique opportunity for individuals looking to maximize their healthcare savings.