You may be familiar with the idea of using a Health Savings Account (HSA) to set aside tax-deductible money for medical expenses. But for older adults, there are extra benefits that can make an HSA account especially attractive.
A refresher on HSAs
Before you open an HSA, make sure you’re eligible to do so.
These tax-advantaged savings accounts are exclusively available to people covered by high-deductible health plans. For 2022, that means any individual plan with a deductible of at least $1,400 or $2,800 for a family.
An HSA offers three enticing tax advantages: You set aside pre-tax money that isn’t subject to federal income tax when you spend it on qualified expenses, plus your savings grow tax-free. You can use HSA money to pay down your deductible or to offset other covered medical expenses, like prescription drugs and dental care.
The funds in your HSA also roll over each year, which means you don’t have to use it or lose it before the end of the year. This also provides a way to slowly build up the savings in your HSA during years that you don’t exhaust the funds.
Benefits for older adults
As you get older, the perks of your HSA become even sweeter.
After age 55, you can make catch-up contributions to your HSA on top of the regular contribution limits. The amount allowed for catch-up contributions varies from year to year; check the latest documentation to see how much you can put aside in your HSA.
Once you enroll in Medicare, you’re no longer eligible to contribute to an HSA—but if you have a healthy amount stocked away, you can continue using your HSA funds well into retirement and while you’re covered by Medicare. You can use HSA funds to offset the cost of anything from copays to medical equipment that isn’t covered by insurance, like hearing aids.
Another perk of an HSA as you age: HSA money generally can’t be used to pay for health insurance premiums, but if you’re enrolled in Medicare, you can use your HSA money to pay premiums for Medicare Part B, Part D and prescription coverage.
Open an HSA today
Ready to open an HSA at WaterStone Bank? A bank representative can help you determine your maximum yearly contribution so that you can make the most of your HSA savings well into retirement. By opening your HSA at WaterStone Bank, you’ll also receive checks and a debit card for easy access to your funds when you need them.
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