Do You Lose Your HSA Balance Each Year? Understanding How HSA Works

Many people often wonder whether they lose their HSA balance each year. It's a common misconception, but the truth is that unlike other types of accounts, your HSA balance does not disappear at the end of the year. In fact, Health Savings Accounts (HSAs) offer a unique advantage of allowing you to roll over your balance from year to year without any expiration.

HSAs are a great way to save for future medical expenses while enjoying tax benefits. Here's how it works:

• Contributions to your HSA are tax-deductible
• Interest or investment gains on your HSA are tax-free
• Withdrawals for qualified medical expenses are also tax-free

This means that your HSA balance can continue to grow over the years, providing you with a valuable resource for healthcare costs in the future. Unlike Flexible Spending Accounts (FSAs) where the balance typically does not roll over, HSAs offer more flexibility and long-term savings potential.

It's important to note that there are limits to how much you can contribute to your HSA each year. For 2021, the contribution limit for an individual is $3,600, and for a family, it's $7,200. If you're 55 or older, you can make an additional catch-up contribution of $1,000.

So, rest assured that your HSA balance is safe and will continue to be available for your healthcare needs in the future. Take advantage of the benefits of an HSA and start saving for your medical expenses today!

Many folks often ask, 'Do I lose my HSA balance at the end of the year?' The answer is a resounding no! Unlike some accounts, your HSA balance rolls over annually, ensuring you can allocate those funds for your future healthcare needs.