Do HSA Funds Expire?

As the calendar year ends, it is important to begin reviewing your benefits packages. Even if your plan does not renew in January, the end of the calendar year can be important when reviewing your health savings account (HSA) funds. There are many benefits to having an HSA set up, but understanding how your account works is important. Knowing how much you can contribute to your HSA yearly as well as when it rolls over to the next year can be important for planning purposes. 

What is an HSA?

A health savings account (HSA) is an account that is set up through a participating bank or credit union that allows members to contribute pre-tax monies to an account, up to certain annual contribution limits set by the IRS. Members can then use the money in this account to pay for qualifying medical expenses. In order to set up an HSA, individuals must first be enrolled in a high deductible health plan (HDHP). HDHP’s are HSA compatible, meaning individuals are able to set up an HSA account while being enrolled in a plan with a lower premium. Often HDHP’s are cheaper than traditional plans because the deductible is higher and the members must satisfy the annual deductible before their benefits, like copays and coinsurance, take effect.

Do HSA Funds Expire?

Once you have contributed money to your HSA, that money does not expire. There is no expiration date on the funds in an HSA. So, you are able to roll over the account balance and continue to contribute year after year. The rollover ability of an HSA can be incredibly beneficial if you are planning to have an expensive health related year. While it can be difficult to predict your health year after year, a great example of a planned claim year would be if one is planning to have a child. Having a baby is expensive, so if one can plan to rollover funds into their HSA for a year or two before, the medical and financial procedure can be eased.

How Much Money Can I put into my HSA?

The IRS sets an annual inflation-adjusted limit on HSA contributions. These limits are for HSA contributions, HSA catch-up contributions, high deductible health plans (HDHP) minimum deductibles and HDHP maximum out of pocket maximums. For the year 2023, the IRS set the following limits for members and their families.

This means that for the 2023 year, members enrolled as self-only, can contribute up to $3,850 in pretax monies to their HSA. Members enrolled in family plans can contribute up to $7,750 in pretax monies to their HSA.

What Are the Benefits of an HSA?

There are many potential benefits to having an HSA compatible plan. When reviewing your benefits or trying to find the right plan for you, it is important to remember that health insurance cannot be looked at through a one size fits all approach. An HSA plan is not for everyone but understanding the benefits of an HSA compatible plan and reviewing your current health, financial, and familial situation can help steer you toward an appropriate plan for you.

One benefit to HSA compatible plans is that they can sometimes be more affordable than traditional options. The higher deductibles and utilization of copays and coinsurance after the deductible has been met allows carriers to offer the plans at a more cost-effective price point.

The tax benefits that come with using pre-tax money to fund the HSA are incredibly beneficial as well. Members who are enrolled in HSA compatible plans are allowed to contribute pre-tax money to fund their HSA. Using the pre-tax money can help lower taxable income and reduce tax liability. Members can also pay for health-related costs with their tax-free HSA money.

Health Insurance Quotes

When it comes to HSAs and other health insurance plans it is important to understand all your options. Cross Insurance can help you explore your options when it comes to individual or group health insurance. To find out more, contact your local Cross Insurance today or fill out our form here to request a quote.

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This article is for general informational purposes only and is not to be relied upon or used for any particular purpose. Cross Insurance shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, insurance, accounting or other professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article are that of its author and do not necessarily represent the views of Cross Financial Corp. and its subsidiaries and affiliates (“Cross Insurance”) or Cross Insurance’s management or shareholders.