Does HSA Carryover to Next Year? All You Need to Know

Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses, but one common question that arises is whether the funds in an HSA carry over to the next year. The short answer is yes, HSA funds do carry over from year to year, unlike flexible spending accounts (FSAs) where funds are typically forfeited at the end of the year.

HSAs offer a host of benefits, including:

• Tax advantages: Contributions to an HSA are tax-deductible, grow tax-free, and withdrawals for qualified medical expenses are also tax-free.
• Annual contribution limits: The IRS sets limits on how much you can contribute to your HSA each year. For 2021, the limit is $3,600 for individuals and $7,200 for families.
• Portability: HSAs are portable, meaning that the account stays with you even if you change jobs or health insurance plans.

When it comes to the funds in your HSA, here are some key points to keep in mind:

• Balance carryover: The funds in your HSA roll over from year to year with no expiration date.
• Interest and investment earnings: Any interest or investment earnings on the funds in your HSA also roll over tax-free.
• Retirement savings: Once you turn 65, you can use the funds in your HSA for non-medical expenses without penalty, although taxes will apply.

It's important to note that HSAs are only available to individuals enrolled in a high-deductible health plan (HDHP). If you have an HSA, be sure to take advantage of the carryover feature to help build a nest egg for future healthcare expenses.

Yes, Health Savings Accounts (HSAs) allow you to carry over funds each year, providing a safety net for managing your healthcare expenses without the fear of losing your hard-earned savings.