Do I Need to Use My HSA Before the End of the Year?

As the end of the year approaches, many people with Health Savings Accounts (HSAs) may wonder if they need to use up their funds before the year ends. The good news is that unlike Flexible Spending Accounts (FSAs), the funds in an HSA roll over from year to year, so there's no requirement to use them up by the end of the year.

However, there are some factors to consider when deciding whether to use your HSA funds:

• Even though funds roll over, it's still a good idea to use them for eligible health expenses to save for future medical costs.
• HSAs offer triple tax advantages - contributions are tax-deductible, funds grow tax-free, and withdrawals for qualified medical expenses are tax-free.
• Using your HSA funds wisely can help you build a healthcare nest egg for the future.
• Remember that HSA funds can also be used for non-medical expenses in retirement, although these withdrawals would be subject to income tax.
• Check your HSA balance regularly and plan ahead for major medical expenses to make the most of your HSA.

As we approach the end of the year, it's natural for those with Health Savings Accounts (HSAs) to question whether they should quickly utilize their funds. Fortunately, HSAs differ significantly from Flexible Spending Accounts (FSAs) in that your balance rolls over to the next year without any penalties, eliminating the pressure to spend it all by December 31st.