How to Set Up + Fund HSAs
This is a special blog series from Sears Insurance on Health Savings Accounts, or HSA plans, and how they work. The series includes three blog posts on various topics over the course of the next few weeks.
Last week, the Health Savings Account (HSA) blog series focused on the benefits of such an account. In this week’s post, we will focus on how to set up and fund an HSA.
Setting Up an HSA
Setting up an HSA is simple. Most local banks offer free or very low-fee HSA checking accounts that typically come with a free debit card and online bill pay. You’ll set the account up in your name and may name a beneficiary. Some HSAs even offer investment opportunities when the balance exceeds a certain amount. For example, when an account has a balance of $1,500 or more, money market investments may become available.
Funding an HSA
Contributions to an HSA can occur at anytime and are quite flexible. Employers and/or employees can contribute. When employers contribute, those contributions are not taxable and belong to you. They also count towards your annual maximum contributions. There is no funding requirement at the beginning of the year and you do not need to fund the account in advance. However, contributions must be made by the date tax returns are due, April 15 of the following year, or as we’ve seen over the course of the pandemic, the extended due date. Employees can move the funds or use as they choose. HSAs are usually spent on specific medical expenses (COBRA and other insurance premiums) and can be used to pay premiums for Medicare Part B and Part D after Medicare eligibility.
For more information on HSAs, please visit searsinsurance.info. Read the previous HSA benefits post here.
The HSA series will continue next week and cover why YP's should fund future medical expenses with an HSA.
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