The IRS has recently unveiled important updates for Health Savings Accounts (HSAs) in 2024. HSAs continue to be a smart choice for those who want to manage their healthcare costs efficiently while enjoying valuable tax benefits. Let's explore what HSAs are, their benefits, requirements, and the key figures you need to know for 2024.
Understanding HSAs
An HSA is essentially a financial tool designed exclusively for covering qualified medical expenses for both the account holder and their family, if on a family plan. To be eligible for an HSA, individuals must be enrolled in a High Deductible Health Plan (HDHP). However, there are exceptions; you can still participate in an HSA if you have dental, vision, long-term care, accident, or specific disease insurance, even if you're on Medicare or have other health coverage.
Benefits of HSAs
HSAs come with a range of benefits:
- Pretax Contributions: You can contribute to your HSA with pretax income, reducing your taxable income for the year.
- Tax-Free Withdrawals: Funds can be withdrawn tax-free to pay for various medical expenses, including doctor visits, prescriptions, chiropractic care, and long-term care insurance premiums.
- Portability: Your HSA account remains yours, even if you change jobs or retire, providing flexibility and continuity.
Inflation Adjustments for 2024
The IRS has adjusted several key figures for HSAs in 2024, as follows:
1. Annual Contribution Limits:
- For individuals with self-only coverage under an HDHP: $4,150 (up from $3,850 in 2023).
- For individuals with family coverage: $8,300 (up from $7,750 in 2023).
2. Catch-Up Contribution: Individuals aged 55 and older can contribute an additional $1,000 in 2024, just as in 2023.
3. HDHP Definition for 2024:
- An HDHP in 2024 must have an annual deductible of at least $1,600 for self-only coverage (up from $1,500 in 2023).
- For family coverage, the annual deductible must be at least $3,200 (up from $3,000 in 2023).
- Annual out-of-pocket expenses (deductibles, co-payments, and other amounts, excluding premiums) cannot exceed $8,050 for self-only coverage or $16,100 for family coverage (up from $7,500 and $15,000, respectively, in 2023).
Seek Expert Guidance
For those with questions about HSAs, it's advisable to consult with HoganTaylor wealth managers, employee benefits professionals and tax advisors, particularly if you're considering offering HSAs in your business. They can provide insights tailored to your unique situation.
In summary, Health Savings Accounts offer substantial tax advantages and flexibility when it comes to managing your healthcare expenses. By staying informed about the annual contribution limits and requirements, you can make the most of your HSA in 2024 and beyond. Reach out to HoganTaylor Wealth for more information and to discuss your options.
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INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.
