Are you setting up an HSA account in 2019? You could be saving more than you realize if you start by assessing your potential with an HSA Contribution Calculator.
Below you'll find many ways this tool could help you make better HSA contributions along with other helpful tips. If you find this calculator useful, please pass it along to your friends.
The HSA Calculator allows you to match your HSA contributions to your needs, your income, and your expected growth.
If you're saving for a rainy day, even if you're in good health, the fact that you could use your HSA as part of your retirement means there's no reason to wait.
To start your journey toward smarter savings, you need to understand the first step of working with an HSA calculator. Your path is partially determined by how much the IRS allows you to contribute. It's also determined by where you are in life.
Understanding how much to save is a part of figuring out whether you should even worry about contribution limits. If you have a year where you've got low or limited income, you need to abide by your personal limitations.
To get a general idea, try this great calculator.
Since the IRS will determine your tax rate by how much you give over to your HSA and retirement accounts, they put limits on what you could be saving.
People with higher incomes pay a higher tax rate, and they often look for ways to build wealth while cutting down their tax bills. Also, the federal government wants to encourage people to save for health care and retirement, so they offer benefits and credits for saving.
However, since there's a bit of a catch 22 as to how you need to have money to save it, the limits allow the government to keep people from evading taxes entirely. As your HSA account can become a retirement account after a few years, the government tries to manage the needs of the many versus the greed of a few.
As of 2019, the limit on contributing to your HSA is $3,500 per individual.
If you're over 55, that number goes up to $4,500. As you turn 60, your HSA begins to function a lot like a traditional IRA.
To open up an HSA, you must first have a high deductible health plan (HDHP).
Some companies reward their employees by contributing a percentage to match their employee's HSA contributions. If your employer is contributing, you need to take this into account.
When you use a calculator, you'll have to add your deposit to the amount your employer contributes. If they contribute into your account and you go over, you could end up having to either return the money or face a penalty.
Their dollars count toward your limit.
Yes, you'll need to keep track of how much you put in your account in a given year. Even if you use your account, you still need to abide by the limits. Contributing $3,500 this year and spending all of it still puts you over the edge.
If you fail to keep track of what you contribute from year to year, you might go over without realizing. Make it a habit of posting your HSA contributions somewhere where you keep all of your financial paperwork.
Everyone has a distinct set of needs when it comes to medical care. Some of us have close relationships with our doctors because of chronic illnesses or treatments. Others only see their PCP for an annual checkup.
If the last two years were fairly typical for medical spending, track down your spending records to see what you really need from year to year. For the most part, you should be letting your savings grow for significant expenses.
When you're considering your HSA plan, you don't have to think of it as a glacially paced account that builds value at a nearly invisible rate. You could be managing your account to grow quickly. If you love the stock market and investing, set up a self-directed HSA to increase the value of your account at a rapid pace.
All that you need is a custodian from your financial institution to help manage your account, and you'll be able to direct the future of your finances at your pace.
The future value of your account doesn't have to be beholden to static and slow-moving interest rates. If you're going to want your contributions to have some serious value to help pay for your medical bills or to use as part of your retirement, self-direct your HSA.
If you're in a position where your HSA isn't covering everything you need, it's time to consider alternatives. Your HSA can be used as a retirement plan because of how it functions after you turn 60. However, if you're depending on it for retirement and find yourself dipping into it often, you need to separate your money.
While some people use credit cards to pay for big medical bills, that can be dangerous. The numbers can add up fast, and you could end up underwater quickly. It's hard to get out of credit card debt, so avoid this option.
If you set up an HSA with your regular financial institution, consider looking for additional loans from them. If you can get loans from a trusted institution, you can better negotiate your interest rate and how much your monthly payments will be.