With a little luck, or good planning, an HSA can also be treated as a “Medical IRA.” Let’s say you have several years when your medical bills are low, or you can pay for your health care expense out of pocket – then the balance in your HSA can continue to grow, untaxed, for future use. In its most basic use, an HSA saves you money by allowing you pay for current health care expenses using pre-tax dollars. However, you are no longer eligible for an HSA account once you have enrolled in Medicare. For 2017, The IRS permits tax-deductible HSA annual contributions of $4,450 (individual) or $7,900 (family), with a $1,000 extra allowed for those over 55. This means that HSA contributions can help affluent investors who have been phased-out of tax benefits, and also minimize their exposure to the 3.8% surtax on net investment income. Notably, there are no income limits and no phase-out’s for HSA tax deductions. HSA deductions are above the line and can help you shrink your adjusted gross income or modified AGI before the calendar strikes April 15 th. When used for IRS-qualified medical expenses, distributions are tax-free.

HSA account interest and investment earnings are tax-free.Contributions to your HSA are made with pre-tax dollars (deducted from a paycheck) or any after-tax contributions are deductible therefore any HSA contributions reduce taxable income.Why is an HSA so compelling? A triple-threat of tax benefitsĪn HSA provides tax savings in three ways. Unlike popular Flexible Spending Accounts (FSA), with an HSA there is no “use it or lose it” provision – meaning you have the ability to invest your healthcare savings and earn a return over time.

A Health Savings Account is a tax‐advantaged account that you can use to pay for current or future IRS‐qualified medical expenses. Companies and individuals that choose a High Deductible Health Plan (typically a minimum deductible of $2,700 for a family) are eligible to enroll in a Health Savings Account (HSA) to help save for medical expenses. The passage of the Affordable Care Act (Obamacare) has changed how many Americans seek out and pay for health care. Why are HSA’s suddenly such a smart opportunity? This above the line deduction comes with no income limits or phase-out’s, making it especially attractive to high-bracket tax-payers. Need A Last-Minute Deduction Before April 15th? A Health Savings Account (HSA) Is Here To Save The Dayįacing a tax bill that was higher than expected? Establishing a Health Savings Account (HSA) may provide you a last minute deduction that can pump up your wallet even more.

Irs hsa qualified expenses 2017