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you could use your contributions toward this account to pay for qualified medical expenses now and into retirement.
You must take a few smart steps to get the most out of an HSA.
Kim offered nine ways to maximize your HSA contributions.
Even if you dont have an HSA now, Kim maypersuade you to consider one if youre eligible.
Enroll in an HDHP
You cant have an HSA without a qualified HDHP.
A typical HDHP has a high deductible but a low premium.
An HSAs eligibility requirements extend beyond having an HDHP.
For instance, you cant be enrolled in Medicare or have other health insurance coverage.
Your health insurance company may also suggest partner providers.
Kim suggested consideringfees and investment opportunitiescarefully when picking an HSA provider.
He said to choose a provider that can give you access to low-cost broad market index funds.
Plus, your contributions arent subject to FICA taxes.
If you have a decent income, this really adds up, Kim explained.
So, consider contributing as much as makes sense for you up to the annual limit.
And if you are 55 or older, you’re free to add an extra $1,000.
you could increase your HSA balance with what Kim said is free money.
Maximize Your Tax Savings
An HSA offers a triple tax benefit.
you might deduct your contributions from your taxes and the money grows tax-free.
Withdrawals forqualified medical expensesare also tax-free.
Kim emphasized the importance of recording all medical expenses, including receipts and transaction details.
This allows you to reimburse yourself whenever needed, even years later.
To avoid problems, Kim suggested scanning receipts and tracking each eligible expense in a spreadsheet.
By keeping thorough records, you’re able to avoidtaxes and penaltiesif the IRS audits you.
If you withdraw the money for non-medical reasons, its taxed as regular income.
However, you wont pay taxes on withdrawals for qualified medical expenses.
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