What Happens to the Money from Your HSA at the End of the Year?

Health Savings Accounts (HSAs) have become increasingly popular as a way for individuals to save for medical expenses while enjoying tax advantages. If you are wondering what happens to the money from your HSA at the end of the year, here are the key points to keep in mind:

1. Rollover Feature: Unlike Flexible Spending Accounts (FSAs), the funds in your HSA do not expire at the end of the year. The money you contribute to your HSA rolls over from year to year, allowing you to build up a nest egg for future healthcare costs.

2. Ownership: The money in your HSA belongs to you, regardless of whether you change jobs or health insurance plans. This portability gives you the flexibility to continue using the funds for eligible medical expenses.

3. Investment Options: Some HSA providers offer investment options that allow you to grow your savings over time. By investing your HSA funds wisely, you have the potential to increase the value of your account.

4. Penalties: While HSAs provide tax benefits, it's essential to use the funds for qualified medical expenses. If you withdraw money for non-medical purposes before the age of 65, you may incur taxes and penalties.

5. Retirement Savings: Once you reach the age of 65, you can withdraw funds from your HSA for any reason without penalties, although taxes still apply if not used for qualified medical expenses. This makes HSAs a valuable tool for saving for healthcare costs in retirement.

Overall, the money from your HSA remains in your account until you choose to use it, providing a flexible and tax-efficient way to cover medical expenses now and in the future.

When it comes to Health Savings Accounts (HSAs), one of the most appealing features is that any unspent funds at the end of the year simply roll over into the next year, allowing you to take your time when it comes to managing healthcare expenses.