Does HSA Run Out at the End of the Year? - Understanding the Ins and Outs of Health Savings Accounts

Health Savings Accounts (HSAs) have gained popularity as a smart way to save for medical expenses while enjoying tax advantages. However, one question that often comes up is whether HSA funds expire at the end of the year.

Unlike Flexible Spending Accounts (FSAs), which have a 'use it or lose it' rule where funds may not roll over at the end of the year, HSAs are different in this aspect. Here's why:

• HSAs are owned by the individual, meaning the money belongs to you, not your employer.
• The funds in an HSA do not expire at the end of the year.
• Any unused balance rolls over from year to year, allowing you to accumulate funds for future medical expenses.

It's important to note that HSAs have a yearly contribution limit set by the IRS, which for 2021 is $3,600 for individuals and $7,200 for families. Additionally, if you change insurance plans, you can still keep your HSA and continue using the funds for qualified medical expenses.

So, in short, no, your HSA does not run out at the end of the year. It's a valuable tool for saving and paying for healthcare costs both now and in the future.

Health Savings Accounts (HSAs) are a fantastic way to save money for medical costs and reap tax benefits. A question many people have is whether these accounts run out at the end of the year.

The great news is that HSAs are fundamentally different from Flexible Spending Accounts (FSAs), which typically have the 'use it or lose it' rule. Here’s what sets HSAs apart:

• HSAs are personally owned. The funds belong to you and not to your employer.
• Your HSA funds never expire, even when the calendar flips to January.
• Funds that you don’t use this year roll over to next year, giving you the opportunity to build a financial cushion for future healthcare costs.

Bear in mind, there is a contribution limit set by the IRS, which is $3,650 for individuals and $7,300 for families for 2022. Plus, should you switch insurance plans, you can still hold your HSA and use the accumulated funds for eligible medical expenditures.

So, to put it simply, no, your HSA balance does not vanish at the year's end. Instead, think of it as a smart financial tool for preparing for both immediate and future healthcare needs.