On May 10, 2021, the IRS decided that it will again raise the limit for Health Savings Accounts (HSA’s) for 2022 to account for inflation.

First, for some that don’t know, a Health Savings Account, or HSA, is a tax-advantaged account created to help people save for medical expenses that are not reimbursed by their high deductible health care plans. There are tax advantages to a HSA:

1. Contributions are tax deductible in the year they are made;

2. The gains on your contributions are tax free and;

3. Withdrawals are tax free IF you use them for qualified health expenses.

The new limits for HSAs aren’t much but it’s better than nothing:

1. For someone with self-only health insurance coverage – $3,650 up $50.00 from 2021

2. For someone with family health insurance coverage – $7,300 up $100.00 from 2021

There is no change for 2022 in catch up contributions. That will remain at $1000 for now. Depending on which plan you have, and if you are 55 or older, you could potentially contribute either $4,650 or $8,300 to your HSA.

Now the question is, are you eligible for a HSA? They were designed to be used by people with high deductible health care plans and the IRS defines those as follows:

1. Self-only coverage at least a $1,400 annual deductible

And $7,050 out of pocket expenses

2. Family coverage at least a $2,400 annual deductible

And $14,100 out of pocket expenses

For people on Medicare, you are out of luck and are not eligible for an HSA.

Come in to Capital Financial today, and sit down with Coach Pete D’Arruda or one of the team and see if you are eligible for an HSA. It could help you in the long term with your health expenses and save you money as well!