- the individual can make tax deductible contributions to the HSA even if you do not itemize deductions;
- the employer can make contributions that are not taxed to either the employer or the employee; and,
- employers sponsoring cafeteria plans can allow employees to contribute untaxed salary through salary reduction.
To encourage saving for health expenses after retirement, individuals age 55 and older are allowed to make additional catch-up contributions to their HSAs. Once an individual enrolls in Medicare they are no longer eligible to contribute to their HSA.
Amounts contributed to an HSA belong to the account holder and are completely portable. Funds in the account can grow tax-free through investment earnings, just like an IRA.
Funds distributed from the HSA are not taxed if they are used to pay qualified medical expenses. Unlike amounts in Flexible Spending Arrangements that are forfeited if not used by the end of the year, unused funds remain available for use in later years.
* Quoted entirely from the United States Department of Treasury web site. This information is provided for you here as a convenience and is not ment to suppliment nor replace that document.
|