How Much Can You Fund an HSA?

When it comes to funding a Health Savings Account (HSA), individuals have the opportunity to contribute a certain amount each year to help cover medical expenses. The maximum contribution limit may vary depending on several factors, such as age, health plan coverage, and tax filing status. Here's what you need to know about funding your HSA:

1. Contribution Limits:

• For 2021, the annual contribution limit for individuals is $3,600, and for families, it is $7,200.
• For those aged 55 and older, an additional catch-up contribution of $1,000 is allowed.
• These limits are subject to change each year due to inflation adjustments.

2. Tax Benefits:

• Contributions made to an HSA are tax-deductible, reducing your taxable income for the year.
• Interest and investment earnings within the HSA are tax-free.
• Withdrawals for qualified medical expenses are also tax-free.

3. Employer Contributions:

• Some employers may contribute to their employees' HSAs, providing an additional funding source for healthcare costs.
• Employer contributions are not considered part of the employee's taxable income.

4. Rollover Feature:

• Unlike Flexible Spending Accounts (FSAs), funds in an HSA roll over from year to year, allowing for long-term savings and growth.

By understanding the contribution limits, tax benefits, employer contributions, and rollover feature of HSAs, individuals can make informed decisions about funding their accounts to meet their healthcare needs.

Understanding how much you can contribute to your Health Savings Account (HSA) is essential for maximizing your healthcare savings. For the tax year 2023, the contribution limit for individuals is set at $3,850, while families can contribute up to $7,750. Additionally, if you're aged 55 or older, you can take advantage of a catch-up contribution of $1,000, allowing you to save even more for those unexpected medical expenses.