What is Changing with HSA in the New Tax Law?

Health Savings Accounts (HSAs) are a valuable tool for individuals to save for medical expenses while enjoying tax benefits. With the new tax law in place, there are several changes affecting HSAs that you need to be aware of.

One significant change is the increase in contribution limits for HSAs. In 2021, the maximum annual contribution for individuals with self-only coverage is $3,600, and for those with family coverage, it is $7,200. These limits have increased from the previous year, allowing individuals to save more money tax-free for healthcare expenses.

Another change impacting HSAs is the expansion of eligible expenses. Under the new tax law, over-the-counter medications can now be purchased with HSA funds without a prescription. This change provides individuals with more flexibility in how they can use their HSA funds to cover medical costs.

Health Savings Accounts (HSAs) have become increasingly popular as a means of saving for healthcare costs while also enjoying significant tax advantages. With recent changes brought about by the new tax law, it's essential for individuals to be informed about how these alterations could affect their financial planning.