How Much Should You Put in Your HSA?

One common question many individuals have when opening a Health Savings Account (HSA) is, 'How much should I contribute?' This decision can vary depending on several factors, such as your health care needs, financial situation, and future goals. Here are some considerations to help you determine the right amount to put in your HSA:

Factors to Consider:

• Health Care Needs: Evaluate your typical medical expenses, including doctor visits, prescriptions, and procedures, to estimate how much you may need in your HSA for the year.
• Financial Situation: Take into account your income, other saving goals, and any employer contributions to decide how much you can afford to contribute to your HSA.
• Tax Benefits: Remember that contributions to an HSA are tax-deductible, so contributing more can help lower your taxable income.
• Future Goals: Think about any upcoming medical expenses, such as planned surgeries or treatments, and consider saving extra to cover these costs.

Guidelines for Contribution:

While the IRS sets limits on how much you can contribute to your HSA each year, the exact amount is ultimately up to you. However, it's important to keep in mind the following guidelines:

• For 2021, the maximum annual contribution limit for individuals is $3,600 and $7,200 for families.
• If you are 55 or older, you can contribute an additional $1,000 as a 'catch-up' contribution.

Ultimately, the right amount to put in your HSA will depend on your individual circumstances. It's essential to strike a balance between saving enough to cover medical expenses while also considering your overall financial goals.

Deciding how much to contribute to your Health Savings Account (HSA) can be daunting, but with the right considerations, you can find an amount that fits your needs and enhances your financial health.