Maximum Contributions to Your HSA Bring Maximum Savings!

For most of us, February – April is the time to wait for tax forms to arrive in the mail, gather documentation, search for lost receipts, or just plain procrastinate. For those taxpayers lucky enough to have participated in an HSA in 2011, this is also a time that you should consider contributing the maximum legal amount.

Individuals are allowed to contribute up to $3,050 and families can contribute up to $6,150. Individuals who are over 55 can contribute an additional $1,000. Contributions must be made prior to April 17, 2012 to be eligible for a 2011 tax deduction.

What’s the benefit of contributing the maximum into your HSA?

• Reduces your taxable income. The more money you deposit into an HSA, the less you pay Uncle Sam in taxes come April 15th.
• Funds can be withdrawn for any reason without having to obtain advanced approval:
  • Tax-free withdrawals can be made for qualified medical such as doctor co-payments, durable medical equipment, and transportation expenses related to medical care.
  • Non-medical related withdrawals can also be made, but are subject to income taxes and a 20% penalty. The penalty is waived for persons who have reached the age of 65 or have become disabled at the time of the withdrawal, in which case only income tax is paid, and in effect, the withdrawn amount has grown tax deferred (similar to an IRA).
• HSAs roll over year to year, so there are no worries of losing it at the end of a plan year like most FSAs. This prevents wasteful “last minute” medical spending that can further injure the healthcare system.
• HSAs earn interest. Potential return depends upon the interest rate at which your investment grows, and on how much of your deposit is used to pay medical bills. Investments can be placed in savings accounts paying 1 - 4%, or in stocks, bonds, or mutual funds with higher potential returns. 
• HSAs are yours to keep. Your HSA account belongs to you, even if your employer is the one who made the contributions. If you leave your current employer, you haven’t lost your HSA.
• HSAs have the potential for significant savings. Over time, if medical expenses are low and contributions are made regularly to the HSA, the account can accumulate significant assets that can be used for health care tax free or used for retirement on a tax-deferred basis.

To learn more about Workable Solutions HSAs, visit Workable University at http://www.workableu.com/hsa. Workable University is designed to educate participants and employers so that everyone gets the most out of their benefits. Let Workable Solutions guide you through consumer-driven health plans and design a solution that is right for your company.