Here’s a statistic that probably won’t surprise you: The average American household spent almost $5,000 per person on health care last year.
For most Americans, a hefty medical bill isn’t a question of if, but when. Even for those with insurance, over half have high-deductible plans which can mean a significant event — like a hospitalization or surgery — could cost thousands out of pocket.
Until the rising cost of healthcare is solved, saving for future medical costs is a good idea. If you have a high-deductible health plan, a Waco HSA might be the perfect option to supplement your health coverage. HSAs offer great tax advantages and, the best part is, you can set one up at TFNB today! Keep reading to learn more about this savings tool.
What is a Waco HSA?
When used in tandem with a high deductible health plan, an HSA will permit you to contribute a significant amount of pre-tax earnings into a specialized savings account that is federally insured.
These funds that you save can then be used for any number of current medical expenses, or they can be set aside for the future. The HSA belongs solely to you, and the money in the account will remain there from one year to the next, through any career changes and even into your retirement years.
Many employers offer HSAs through their benefits program, but not all. If your employer doesn’t offer an HSA, or you’re self-employed, TFNB Your Bank for Life offers HSAs in Central Texas. Drop in to your nearest TFNB location to sign up today.
What’s the Difference Between an HSA and a FSA?
These types of savings accounts have become extraordinarily popular. Yet, even so, most people still don’t understand how useful they can be. It’s not uncommon for people to confuse HSAs with flexible spending accounts (or FSAs), which were first introduced in the 1970s. By comparison, HSAs were only made available to the public in the year 2004, so they are relatively new as a financial planning tool.
FSAs permit you to use pre-tax dollars that are deducted from your paycheck for medical expenses, but in most cases, these funds have to be used before the calendar year expires, or you lose them entirely.
Because some people have confused FSAs with HSAs, they tend to want to use the funds from their HSA immediately, in fear they will lose them by the end of the calendar year. Yet, anything you contribute to an HSA has no expiration date whatsoever. You can withdraw the funds you need for healthcare expenses right now or save the money for some future need.
Benefits of a Waco HSA
For the calendar year 2021, all individuals will be allowed to contribute as much as $3,600, with families being permitted to contribute as much as $7,200, to their HSA. Anyone who is beyond the age of 55 will be allowed to contribute an extra $1,000 every year. There are quite a few tax benefits that accrue to an individual who holds a current HSA.
- Funds go into your HSA pre-tax, thereby lowering the amount of taxable income you have. This can make a big difference when tax season rolls around.
- When you make any kind of withdrawals for qualified healthcare expenses, these are also tax-free withdrawals. If your personal HSA has the option to invest funds in your account, all those earnings are also considered to be tax-free.
These are just some of the reasons why those individuals with high-deductible health plans should consider opening up a Waco HSA to begin saving.
How You Can Use HSA Funds
There is actually a relatively long list of healthcare expenses that are totally covered by your HSA. You can start by paying for doctors visits, any prescriptions you need, co-pays, and a whole slew of other healthcare expenses, such as the following:
- health expenses for your children and other qualified dependents, regardless of whether or not they’re included in your healthcare coverage
- maternity and fertility services, for instance, breast pumps, IVF, and breastmilk storage bags
- contact lenses and glasses, as well as sunglasses, safety goggles, and solution for contact lens storage
- many over-the-counter drugs such as pain relievers, cold medications, and allergy medicines
- treatment which any family member might need to combat drug addiction
- various types of complementary treatments, including massages plus chiropractor visits
- feminine hygiene products such as pads and tampons
- health supplies and first-aid supplies, such as blood pressure cuffs, glucometers, compression socks, bandages, and wraps.
Other Ways to Save on Healthcare Expenses
There are lots of ways you can save on healthcare expenses so that you don’t have to dip into your HSA savings as often or as deeply. Here are just a few tips to keep in mind:
- First, you should always make sure to use doctors and pharmacies who are within the networks specified by your healthcare insurance provider. Whenever you go outside these networks, you can count on the cost of healthcare rising dramatically.
- Many healthcare plans cover the full cost of preventive care. This could include annual exams, immunizations, and screenings. Make sure to use these preventive care benefits so that you can identify any health issues early on before they become significant problems. Try to get in the habit of using the correct type of healthcare for the appropriate circumstances.
- If you’re not experiencing an emergency, try to visit an urgent care center, call a nurse line, or visit an online doctor before you head to the emergency room. Getting the necessary level of care at the appropriate time can save you significant money in the long run.
- You can also save by using generic drugs that the FDA approves as opposed to paying for the more expensive brand-name drugs. In most cases, generic drugs work just as well as the costlier brand-name versions.
- Look to see if your healthcare plan offers discounts to encourage you to keep yourself fit, stop smoking, and monitor your own health. Then, don’t be afraid to take advantage of them! These programs can improve your lifestyle while benefiting your wallet and your health.
Open a Waco HSA Today
If you’re thinking about opening up an HSA account in Waco, consider opening one at TFNB! We make it easy to streamline your finances by offering all the accounts you need under one roof (and, just down the street!).
To learn more about our Waco HSA and to open your account, visit us to speak with one of our helpful bankers.