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  • 3 Health Savings Account Myths

    March 22, 2021

    Are you leaving money on the table? You may already know the tax-saving power your Health Savings Account (HSA) offers, because you're a savvy saver. But could you be doing more? Check your knowledge.

    Here are three popular myths, debunked.

    • An HSA offers the same tax savings as a 401(k) or IRA.

      Myth! While a traditional retirement plan may help reduce your taxable income today with pre-tax contributions, eventually you'll have to pay taxes on many withdrawals. Your HSA comes with a triple-tax feature; contributions, withdrawals* and earnings are all tax-free!

      And there's more. Your HSA dollars stretch even further! Unlike a 401(k), you don't have to pay the FICA tax on your HSA funds. This is a mandatory payroll tax used to fund Social Security and Medicare.

    • An HSA is an employer-sponsored plan, so you can't keep it if you change jobs.
      Myth! HSA's are individually registered accounts, which means you own the assets. Even if you change jobs or retire, you can take it with you – it's portable.

    • There are limits to how much you can contribute to an HSA based on your income.
      Myth! Unlike an IRA that has limits set by the IRS, there are no income limits to be eligible to contribute to the HSA.

    Does the thought of saving more in your HSA feel like a stretch?

    Yes, maximizing your HSA contributions is a savvy thing to do. But if you're like many Americans, saving more may feel just out of reach. Learn about a strategy to help save.

     

    Ready to take the next step?

    You can increase your HSA contributions today, or at any time during the plan year. And if you're 55 or older, you may be eligible to contribute an additional $1,000 above the IRS limit each year.

    For more information on HSA contribution limits, visit PayFlex.com. Happy saving!