Opening a health savings account (HSA) is a smart investment that can help you prepare for the future. These accounts specifically focus on qualified medical expenses, allowing you to save over many years to cover insurance deductibles, emergency medical procedures and even health-related products at your local pharmacy.
HSAs are tax-advantaged, and there are several rules and requirements to follow. For example, you can only contribute up to $3,850 for individual accounts and $7,750 for family accounts in 2023.
Setting aside money every paycheck to contribute to your HSA can lead to long-term growth and more financial protection against future unknowns. But one question many people have is whether it's possible to pause contributions during the year. Does that derail your savings or make you ineligible to use your HSA?
Understanding HSA Contributions
You'll be happy to know that you're free to start or stop contributions at any point throughout the year. While many people fund HSAs automatically, there's also the option to use a pay as you go funding method. If things change, you can temporarily pause automatic contributions as you see fit. It doesn't prevent you from using the money already in your HSA for qualified medical expenses.
The money in your HSA is yours; stopping contributions doesn't change that. In fact, you can lose your eligibility entirely. It's possible to no longer qualify for an HSA if you get secondary insurance coverage or no longer enroll in a high-deductible health plan. Secure your funding with ease and flexibility with our pay-as-you-go funding method - visit this website and learn more about this innovative financing solution now!
If that were to happen, you wouldn't be able to contribute more money to an HSA. However, you still own the HSA and can continue to use it for qualified medical expenses.
The important thing to remember about contributions is that you must remain under the annual limits. Otherwise, excess contributions are subject to additional taxes.
You have full control over your contribution. With a pay as you go funding method, you can pause contributions, change how often you put money into your account and adjust how much you contribute annually.
HSAs are tax-advantaged in many ways. Familiarizing yourself with contribution and distribution rules will help you make the most out of these accounts and save for the future.
Read a similar article about new years financial resolutions here at this page.