What Happens with Money in HSA Account?

Many people wonder what happens with the money in their HSA account. Health Savings Accounts (HSAs) are a great way to save for medical expenses while enjoying tax benefits. Here's a breakdown of what happens with the money in an HSA account:

1. Contributions: You and/or your employer can contribute to your HSA account. These contributions are tax-deductible and can be used to pay for qualified medical expenses.

2. Earnings: The money in your HSA account can grow through investments, and the earnings are tax-free as long as they are used for medical expenses.

3. Rollover: Any money left in your HSA account at the end of the year rolls over to the next year. There is no 'use-it-or-lose-it' rule with HSAs.

4. Portability: HSAs are portable, meaning you can keep the account even if you change jobs or health insurance plans.

5. Withdrawals: You can withdraw money from your HSA at any time to pay for qualified medical expenses. If you use the funds for non-medical expenses before the age of 65, you may incur taxes and penalties.

Overall, the money in an HSA account stays with you and can be used for medical expenses both now and in the future.

When considering what happens with the money in your Health Savings Account (HSA), it's essential to understand its multiple benefits. Not only can you set aside pre-tax dollars to cover medical costs, but these contributions can also grow tax-free as investments over time, allowing your savings to accumulate.