- Before-Tax Contributions. Your contributions to the account are made on a before-tax basis. Contributions can be made up to the IRS limit, which the government sets once a year. The IRS limits for 2020 are:
- Employee Only—$3,550
- Employee + One or Employee + Family—$7,100
- Age 55 or Older—$1,000 more
- Tax-Free Earnings. All earnings on the money in your account grow tax free.
- Tax-Free Withdrawals. When you use the money to pay for qualified medical expenses, the withdrawals are tax free.
BUILD UP YOUR HSA NEST EGG
Depending on how you use it, your HSA can be a valuable addition to your retirement savings portfolio. If you save (rather than spend) your HSA dollars, you can build up your HSA balance for future use. You can even invest your HSA dollars and watch it grow tax free with investment earnings.