HSA Explained // 2021 HSA Max Contribution Limits // What is an HSA // Health Savings Account
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- เผยแพร่เมื่อ 7 ก.ย. 2024
- In this video I explain what is an HSA (Health Savings Account), we review the 2021 HSA Max Contribution Limits, and I share many of the benefits of contributing to an HSA. Additionally, some people aren't exactly sure what you can use your HSA for - so I am including a link to IRS website below for a detailed list of Qualified Medical Expenses for HSA's and I also mention several Qualified Medical Expenses in the video.
Each October, November, and December...it's OPEN ENROLLMENT SEASON and if you are curious to learn more about HSA's and getting a better understanding of how they work, then you'll like this video as well as my follow up video where I compare a HDHP vs PPO.
IRS Publication 502 (Qualified Medical Expenses): www.irs.gov/pu...
IRS Publication Announcement for 2021 HSA Limits: www.irs.gov/pu...
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ABOUT ME 👇
I've been involved in people's financial decisions for 15+ years (7 yrs Real Estate experience & 8+ yrs as a former Financial Advisor)...I now bring the financial successes, mistakes, failures, and best financial habits/tips to you through these videos.
My mission is to bring Financial Awareness to the forefront of your daily decisions so you can: improve your quality of life, increase your net worth, and grow upon your financial literacy. My videos are a reflection of my real-world experience as a real estate investor, stock market investor, student of finance, entrepreneur, and of course...my experience as a Former Financial Advisor.
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#HSA
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#HealthInsurance
DISCLAIMER: I am not a financial adviser or a certified public accountant. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.
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Which do you think is better (HDHP or PPO)?
High Deductible Health Plan vs PPO: th-cam.com/video/YWhg7E3tA0I/w-d-xo.html
Hope you have a happy Open Enrollment Season!
@Esmond Siew - You can connect a checking account to your HSA and make a deposit directly yourself...when you do just make sure you note that it is specifically a 2020 contribution and you’ll be able to use it as a deduction against your 2020 gross income figure. Hope that helps...not sure if you’ll see this or not. Cheers boss!
@@Financial_Awareness Thanks for the quick reply and the guidance! I'll give it a try! Appreciate the guidance!
@Esmond Siew - when I went to reply to your original post/question it was deleted. Was that intentional? Did you post the question then delete it or something?
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
@priscy_kk However, if you do not have access to a professional like JUDITH ANN PEACE, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments
@priscy_kk Judith Ann peace is her name
Lookup with her name on the webpage.
@priscy_kk You are welcome
Bro, you lay this all out about as thoroughly as humanly possible in just five minutes! 👍
@Paul Hanley - Thanks boss! Hope you found a good financial nugget or two in some of the videos…appreciate you! Cheers!
right now I'm a trainee from a call center agent which is focus on American Health Savings Account, watching this made me understand more about your health savings.. thank you for making this video and i subbed. Hopefully you'll make more videos about this
Right on this is a solid break down
Quality content
YOitsJohnDough - Hey, thanks for checking out this video and the channel! Appreciate you carving out time from your busy day to do that. Hope your time isn't wasted with some of the other videos...appreciate you. Cheers!
Thanks for the video! I’m wondering why open a HSA at all if I could just find another checking acct to act like an HSA... is there a reason it’s better to open an HSA? And does it have to do with claiming taxes
Sherie A - Hi! Thanks for taking the time to watch the video - hope it was useful and helpful. HSA’s do offer tax advantages over a simple checking account. There are NO income limitations and the amount you contribute is a deduction against your gross income each year, but the funds within your HSA account can be used Tax-Free as long as the money is spent on a qualified healthcare related purchase/expense. You have to have a high deductible health plan in order to be able to open an HSA...so they go hand in hand. Does that help clear it up a bit? Appreciate you & would love for you to subscribe if you haven’t already. Thanks, Sherie!
Thank you
@D Walker - It's my pleasure...thank you for taking the time to watch...cheers, boss!
Can you also make a video on FSAs? Are they worth it? From both perspectives (like if I don't want a HDHP but want an FSA and if I have a HDHP & HSA but don't want to spend the money in my HSA - is having an FSA worth it to cover my deductible)?
This was really well done. Just to clarify, if I end up at 65 can I withdraw the money tax free for anything or it still needs to be health related matters ?
Josh Is On A Mission - thanks for the warm compliment - appreciate that. At 65 you can only withdraw the funds tax free for qualified medical expenses. You can actually withdraw them for ANYTHING at that time, but you'll pay taxes on what you withdraw - but will have tax deferred growth for a while until you get to that point - so that's nice. However, just take a moment to think this through logically...who spends more money on health care...healthy young people or less healthy, older people? Generally speaking, the older you are the more health care you'll need & the list of qualified medical expenses is quite extensive. Tough to know exactly how much you'll need in an account like this without making a lot of assumptions, but think of it as a hedge against what could happen to you medically down the road. At 65 you could use this account to pay for Long Term Care premiums and premiums for Medicare Insurance in addition to all the other out of pocket items as well. Appreciate you and encourage you to check out the HDHP vs PPO video if you haven't already...a few other financial planning videos as well. Thanks, boss!
@@Financial_Awareness I like your point of view and appreciate that you wrote back. Will check out more videos, too.
@@JoshIsOnAMission - Cool man! I'm working on my next project at the moment, but excited to check out your channel as well...Real Estate Agent Life in PR caught my eye. Appreciate you.
@@Financial_Awareness for sure, let's connect
👍
@Mike Long - 👍🏻👍🏻 Appreciate you sir!
Hi K! When I contribute to a HSA, do I have to do it through a payroll deduction to capture income tax savings? Or can I also get the income tax savings if I contribute after tax dollar but later declare this on my next tax filing? I know that I will save in capital gain taxes regardless. Thank you!!
@Gonzalo Eyzaguirre - As long as you receive the proper documentation from your HSA company/provider for your personal contributions then you're set and yeah it doesn't matter. Thanks man! Cheers
Could you do 1099 contractor write off video?
Owen Hood - sure thing! It’s actually been on my radar to do. When you say “contractor” do you imply construction contractor or simply 1099 contractor in general?
@@Financial_Awareness contractor in general, I’m doing photography work where we are contracted and just want to better understand what all I came and importantly can’t write off
Understood. Got it on the radar and will bump it up in my upload schedule. Thanks boss! Appreciate you being here and checking out the videos/channel.
@@Financial_Awareness absolutely, I am looking for reliable, easily digestible content and i have gotten that so far with your videos! Ill comment if i think of other ideas too
@@indahood3991 - What a great compliment - thank you man. Yeah, for sure, if you have other thoughts/ideas please share...my Vehicle Deduction video was by request of another subscriber...so I'm open to suggestions. Thanks again! I'll try to do it soon so you (and other people) have time to get organized before end of year and next tax season.
Do You need to contribute up to the fill allowed amount for your HSA for that year, or can you contribute less
What happens if I over Contribute last year? I pay $7800
@Andrew R - Hey man, thanks for checking out this video and researching your financial planning. Good on you. Also, solid job on contributing into your HSA!
So, if you’ve over contributed to your HSA there will be consequences. First off, if you decide to pull out the excess funds, you’ll owe taxes on the amount you withdraw and you’ll have to do that no later than when you file your taxes. Second, what you may want to consider doing is leaving the excess funds in there and paying a 6% excise tax on the excess amount only...because 6% is probably smaller than your income tax rate. Lastly, adjust your contributions so this doesn’t happen again.
If you have some spare time, please feel welcome to scroll through my content library - there may be a few other videos that peak your interest. Appreciate you. Cheers!
I have a question that I am hoping you can answer.
If I have a HDHP w/HSA through my job, and my wife has her own HDHP w/HSA through her job, we can each fund up to $3600, correct? We file married filing jointly.
Adam Bazadona - Bingo! Yesssir, you are correct. The contribution limits were raised slightly for 2021 and you got it...$7,200 max total between the two of you. Appreciate the detail you shared and commend you guys for taking advantage of this account...well done! Let me know if I can help with any other questions. Thanks! 👍🏻👍🏻
@@Financial_Awareness Thank you so much for the reply...but I just realized I asked the wrong question!
So this is actually the situation. My wife’s insurance covers her and our son. So on paper she is allowed to contribute $7,200 because hers is a family plan. And mine being a single plan I am allowed to contribute $3,600.
I’m assuming we can’t actually both max out accounts our, correct? Because we file Married Filing Jointly, we can only contribute up to $7,200 total combined, correct?
Adam Bazadona - Your figures/assumption is correct. Doesn’t matter which paycheck/income it comes from...married filing jointly as a household you are capped at $7,200 for 2021. Could be $0 from your income and $7,200 from your wife’s...or any combination of the two. The way you own your insurance is irrelevant and what matters is your tax filing status which is what gets you to the $7,200 cap. Glad you clarified - good question!
Thanks for asking this question as I’ve been trying to find the answer to it. When filing taxes it says that we overpaid because it is not showing my husband as having a separate insurance plan. We both have plans and we didn’t max out $7100 either. This is confusing me.
@Heather Dewberry - Happy to help if I can. Let me know if you’ve got questions. Appreciate you checking out the video and doing your research. Cheers!
I see you mentioned maximum contributions for self-only and family, but what about self + spouse maximum contributions for over 55? Also, I currently have an HSA with a HDHP through my employer, and I am furloughed. I am afraid I may lose my job and health coverage entirely sometime this year if we are forced to close. QUESTION: Can I contribute the maximum amount in one lump sum before I lose my coverage? In other words if $3,600 is the maximum contribution for the year, is $1,800 the max if I only have coverage for 6 months or $300 per month?
@Jim Handler - Appreciate you taking the time to watch this video - thank you! Yes, you are correct...I may not have mentioned the catch up contributions for 55+ is an additional $1,000 on top of the normal 2021 limits ($3,600 for Self & $7,200 for Self + Family/Spouse). So, if you are 55+ and married you can do a total of $8,200 in 2021.
I'm so sorry to hear you are concerned about loosing your position. Not a fun emotion to experience. My heart goes out to you and hope you'll land on your feet should that happen. Yes, you can contribute the full $8,200 into your HSA if your budget allows for it (or any amount up to that maximum). You can do it in lump sum or per paycheck/month...whichever your cash flow / savings allows. There's no 'max coverage for 6 months'...you can do the full amount...if you normally do this through your paychecks then you'll simply have to contact your HSA provider (HSA Bank as an example) and set up your checking account for you to make a direct contribution yourself (as opposed to only through your paychecks). Does that help provide a little more clarity? How else may I help? Would love to invite you to subscribe if you haven't already...appreciate you. Cheers!
@@Financial_Awareness Thank you. Just called my HR rep and she said self + spouse is only $4,600. she may be wrong, but now I am confused . If you have any documentation I can send to her I would appreciate it. thanks
@Jim Handler - Hmmm...interesting. I'm assuming you're married based on your original comment/question. If you are 55+ and have 'self only' HDHP coverage then $4,600 max would be correct. If your HDHP coverage is NOT Self only, but rather 'self + spouse' (or as the IRS calls it, 'family' coverage) then you are allowed to do the normal $7,200 + $1,000 catch up contribution. If you are married, but have ONLY 'self coverage' within your HDHP plan then yes, your limit is $3,600 + $1,000 catch up contribution.
Here is a link directly to IRS (www.irs.gov/pub/irs-prior/i8889--2019.pdf - go to page 3 left column...and this one...www.irs.gov/pub/irs-pdf/p969.pdf - go to page 6 left column...more examples on page 7). I've never heard of 'self & spouse' coverage...the IRS only deems two types: "SELF Coverage" & "FAMILY Coverage"...again, it is my understanding that self + spouse is the same as 'family' in the eyes of IRS regarding HDHP Coverage which dictates HSA contribution eligibility.
Regarding limits on HSA's - does your employer contribute anything to your HSA? If so, that would limit what you are able to contribute. The $8,200/year for 2021 is the max based on eligibility and you plus employer contributions. Additionally, if your HR contact is taking into consideration your eligibility due to being furloughed (or a potential termination date) then that could be why you're limited from the max contribution amounts. Bottom line, unless your employment eligibility is preventing you from doing the full $8,200 then I believe your HR contact is wrong...that said though, I do not know your specific situation and you/she does....so I could be wrong due to not knowing your full employment situation. Does any of that help your understanding of your situation? Please let me know because you've got me curious...and I accidentally hit 'cancel' instead of 'reply' and had to type all this up again after eating dinner tonight...LOL. So now I'm committed to making sure we get this right. hahaha! Cheers boss!
@@Financial_Awareness Thank you so much for your quick response, added links and time. I really appreciate it.
@Jim Handler - My pleasure. ...but did we get it all sorted out? Was your HR person correct? Was any of my info helpful? If you don’t to share personal info I’ll understand, but I’m simply curious.
So you have to have insurance (high deductible or otherwise) in order to have an HSA?
Yes
I am 68 years old and was laid off in march 2019. Prior to my last day at work, I made a deposit of $6500 into my HSA family plan; I was using turbo tax for my 2020 tax year and the software requested that I request a withdrawal of portion of my $6500 and it is not allowed to make a lump sum deposit. Just recently I received the IRS form 1099-SA stating that I received distribution which includes the $6500. And I did not use any of that $6500 for medical. My question is that do I have to pay taxes on my 2021 taxes? Also is there a penalty? Technically I have paid taxes in 2020 tax year.
@Moho Mami - Well first of all, I am terribly sorry to hear you have to go through this mess...dang. Bummer. If I was in your shoes I would first contact your HSA company and ask if they can re-classify or re-characterize the portion of the $6,500 that you had to withdraw and make sure that they DO NOT classify / characterize that withdrawal as an ineligible withdraw. Second, I would reach out to a CPA (or Turbo Tax) and ask them for some one-on-one guidance & help...seeing as their software told you to do something and you followed through with it. Third, once you have all that buttoned up I would then reach out to the IRS....but if you're able to get a firm understanding and fix the matter by working with TurboTax/a CPA then maybe you don't have to call the IRS.
Lastly, I'm sorry again, but yes, you may have to pay a penalty for withdrawing the funds & not using them on qualified HSA expenses....even if TurboTax told you to do so. If that does happen & you do have to pay a penalty - that would suck and I would chalk it up to a 'learning experience' and to not do it again. So frustrated for you! Sorry.
Hey, thanks for checking out the video and channel...keep me in the loop and let me know how this unfolds. Cheers, boss!
I have a question the max is 3600 per year. So if the money is roll over next year I need to get that 3600 invested???
@Noona Lee - Do you 'need' to get that $3,600 invested...Nope. You do not have to. Some HSA providers have certain thresholds your account has to hit in order to be able to start investing your funds....so scroll and poke around on your HSA website to learn more...give them a call as well and I'm sure they can help walk you through it. Keep in mind that when you go to actually USE these funds (with a qualified medical expense) you'll need to first liquidate your investment position and move the funds to settled cash before you can use it....so consider keeping some of your account in cash (maybe $1,000???)...and invest the rest...totally up to you, boss! Thanks for checking out the video...cheers!
After retire..can u use the funds for anything? Or did i miss this
@negusdawoo - Even after you leave the work force you'll still need to spend these funds on qualified expenses. If you do spend the funds on anything else other than a qualified expense there will be additional fees. There are several qualified expenses that you'll still incur during your retirement years though...so I wouldn't worry too much about it.
If you leave your employer, do you loose access to your HSA funds?
@Anthony Curry - No, sir, you do not. Your HSA account will stay with you as those funds belong to you. In situations where your employer makes a contribution into your HSA account on your behalf and you contribute nothing...then in that scenario there could be some sort of a vesting schedule, but it is my understanding that all your contributions and possibly even what your employer contributes as well - will all remain yours. Hope that helps, Anthony...hey thanks for checking out this video...hope there are a few others within my content library that are helpful to you on your financial journey. Cheers, boss man!
Can I fund HSA if I don’t have any HDHP
Nope.
@@Financial_Awareness can I select HDHP one year for hsa and later switch to regular health plan and use hsa funds tax free?
Based on how I understand the rules/use of these funds…I believe once you put money into your HSA, the account can be used to pay for qualified medical expenses tax-free…even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.
How can I open an account
If my previous employer got bought out.
And new employer doesn’t have HSA
I need someone we can trust.
I went online there are many to choose from.
Who do you recommend?
Would be helpful
What is HDHP?
thank you
vegansLucko - You're welcome! Hope you have a healthy 2021 with no health concerns...cheers! Let me know if I can help or if you have any questions.
@@Financial_Awareness I am currently working on formulating a question. I need a couple more days of research on what my work is offering to know exactly what to ask lol.
@@vegansLucko - No worries...it's all good. Happy to help however I can whenever it comes to mind.