Do You Have to Use Your HSA Funds in the Year Deposited? - Everything You Need to Know about HSA Funds

One common question that many people have about Health Savings Accounts (HSAs) is whether you have to use your HSA funds in the year they are deposited. The good news is that unlike Flexible Spending Accounts (FSAs), HSA funds do not have a 'use it or lose it' rule.

Here is what you need to know about using your HSA funds:

• Unlike FSAs, HSA funds rollover from year to year. This means that any unused funds in your HSA account at the end of the year will continue to be available to you in the following years.
• There is no time limit on when you have to use your HSA funds. You can choose to use them for qualified medical expenses at any time, now or in the future.
• If you use your HSA funds for non-qualified expenses before the age of 65, you will be subject to a 20% penalty in addition to regular income taxes. After the age of 65, you can use your HSA funds for non-qualified expenses penalty-free, but you will still have to pay regular income taxes on the amount.

It's important to note that HSA funds are meant to be used for qualified medical expenses, including deductibles, copayments, and other healthcare costs. By using your HSA funds wisely, you can save money on healthcare expenses and prepare for future medical needs.

One common question that many people have about Health Savings Accounts (HSAs) is whether you are required to use your HSA funds in the year they are deposited. Thankfully, the answer is no! Unlike Flexible Spending Accounts (FSAs), HSA funds do not come with a 'use it or lose it' limitation.

Here's a deeper dive into using your HSA funds:

• Your HSA funds can roll over from year to year, meaning any amount left in your account at the close of a year is available for future use.
• There's absolutely no expiration date on when you must use HSA funds. Feel free to wait until you're ready to cover your qualified medical expenses.
• You should be aware that if you dip into your HSA funds for non-qualified expenses before turning 65, a hefty 20% penalty will apply on top of regular income tax. Once you hit 65, you can access your HSA funds for non-qualified expenses without penalty, although taxes will still apply.

Remember, HSAs are intended for covering qualified medical expenses, like deductibles and copayments. By managing your HSA wisely, you can save significantly on healthcare costs and set aside funds for future medical needs.