A Health Care Alternative
HSAs and Tax Deductions
You can still contribute to your health savings account (HSA) for 2020 before April 15, 2021 (or before you file your taxes, whichever comes first)
and count the contribution as a last-minute tax deduction toward your 2020 income tax filing.
What Is a HSA?
A Health Savings Account (HSA) is an account used in conjunction with a high-deductible health plan (HDHP). The funds in the account are used to pay for IRS-qualified medical expenses such as services applied to the deductible, dental, vision, and more. This type of account offers savings and tax advantages that a traditional health plan can't duplicate.
How Does a HSA Work?
The person enrolled in the HDHP is the owner of the HSA account. The owner determines when and how funds are deposited. A debit card will be linked to your HSA account allowing payment for eligible medical expenses.
Who Can Contribute to a HSA?
- Owner of the Account
- Family Member or any other person
Catch-Up contributions towards the previous year's balance may be made up until the tax deadline. Contributions must be made in cash. Stock or property aren't allowed.
HSA owners age 55+ have the chance to add an extra $1,000 to their HSA each year above the annual contribution max.
What Are the Benefits of a HSA?
- Funds roll over from year-to-year
- Contributions are made pre-tax
- Earns Interest
- No time limit for using the money after you incur an expense
- Earnings from interest and investments are tax-free
- Contributions stay with you even if you change jobs
- Money may be used for yourself, your spouse or tax dependents
- Withdraw money whenever you want
After age 65, funds may be withdrawn for any purpose without penalty, but may be subject to income tax when not used for IRS-qualified medical expenses.