Can I make a Deductible Contribution to my Health Savings Account?
Health Savings Accounts (HSAs) are a unique investment vehicle, in that they not only allow for tax-deductible contributions, but they also allow for tax-free distributions for medical expenses. Not only does your contribution to your HSA reduce your tax bill, but all the growth from the account is tax-free as well. HSAs are a great investment vehicle for your medical expenses if you are allowed to contribute to one.
Do you have a High Deductible Health Plan (HDHP) with a deductible of at least $1,350 for individuals ($2,700 for families) and a maximum of $6,750 out-of-pocket expense ($13,500 for families)?
If you don’t have a HDHP with a minimum deductible of $1,350 and a maximum of $6,750 for out-of-pocket expenses, then you will not be allowed to contribute to an HSA account.
Will you be covered by a non-HDHP (such as Medicare Part A) for the entire year?
If you are covered by a non-HDHP for the full year, you will not be eligible for an HSA. If you are not covered by a non-HDHP, move on to the next question.
Are you claimed as a dependent on another person’s tax return?
Individuals claimed as dependents will not be eligible to contribute to an HSA, although the person claiming you as a dependent may be eligible. If no one can claim you as a dependent, you are HSA eligible.
Contributing to an HSA is very tax-advantageous, and it is a great tool for saving for medical expenses. Check out this flowchart to learn more.
If you would like to schedule a call to talk about the best strategies for Health Savings Accounts, please give us a call at 303-440-2906 or click here to schedule a time to speak with us.
Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.
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