With the tax filing deadline just a week away, there is still time (but not much) to contribute to a Health Savings Account (HSA) for 2013. Eligible individuals can contribute up to $3,250 for individual coverage and $6,450 for family coverage. An additional catch-up contribution of $1,000 is available to eligible individuals 55 and older. Contributions must be made by April 15, 2014 for the 2013 tax year. If you haven’t fully contributed to your HSA in 2013 there’s still time.
4 Reasons to Contribute the Maximum to Your HSA
- Funds roll over from year-to-year and earn interest (or can be invested). There is no “use-or-lose” risk with an HSA.
- You own the account. An HSA is owned by the accountholder. If you change employers or no longer work, you keep the account and can continue to spend the funds.
- HSAs provide the best tax-advantage available. Funds go into the HSA tax-free, earnings grow tax-free, and when used for medical expenses, all funds remain tax-free.
- It can be used as an additional retirement account. If you have to choose between funding an HSA to the maximum and funding an Individual Retirement Account (IRA), choose the HSA. At age 65, HSA funds can be used for any expenses and ordinary taxes apply (just like an IRA). But, if you have medical expenses, HSA funds remain completely tax-free. If you think you won’t have medical expenses, Fidelity Investments estimates a 65 year old couple will need over $240,000 to cover health care expenses throughout retirement (and that estimate is expected to rise).
TIme is running out! If making a 2013 Contribution to an HSA through Benefit Resource, follow the prior year contribution instructions. Be sure to indicate the contribution year.
