What If You Don't Spend HSA Money on Medical Expenses?

Health Savings Accounts (HSAs) have become increasingly popular as a way for individuals to save money for medical expenses while enjoying tax benefits. However, you may be wondering what happens if you don't spend your HSA funds on medical costs.

Here's what you need to know:

• If you choose not to spend your HSA funds on eligible medical expenses, the money will continue to grow tax-free in your account until you decide to use it.
• Unlike Flexible Spending Accounts (FSAs), there is no 'use it or lose it' rule with HSAs. The funds roll over from year to year, allowing you to save for future medical needs.
• Additionally, once you turn 65, you can withdraw the money for non-medical purposes without penalty, although you will pay ordinary income tax on the amount withdrawn.
• If you withdraw HSA funds for non-medical expenses before age 65, you will incur a 20% penalty in addition to paying income tax on the distribution.

Have you ever thought about what happens to your HSA funds if you don’t use them on medical expenses? Well, the good news is that your Health Savings Account (HSA) allows your money to grow tax-free indefinitely. You can accumulate savings for future health needs without worrying about immediate spending.