• If you didn't hit your maximum contribution limit in any given year, you have the ability to make up the difference until April 15th.
• Once you're 55 years old, you have the ability to make "catch-up contributions," which essentially allows you to contribute $1,000 more a year than what your maximum was previously. This allows you to make up for contributions you might not have been able to make while you were younger.
• There's no such thing as a joint account. If you want to truly maximize the amount you can save and take advantage of something like the ability to make catch-up contributions, both you and your spouse must have a Health Savings Account.

Using an HSA for Retirement Planning

• Your HSA is a tax-deferred account, similar to a 401k or an IRA. But unlike these common retirement accounts, a health savings account isn't tied to your income level. This means you’re your deduction won't be phased out like a traditional IRA contribution can be.
• Like other retirement accounts, the money in your HSA can be invested and grow tax-deferred.
• Once you reach the age of 65, you're free to take money from your HSA to pay for non-medical expenses without penalty. You will pay taxes on that money, whereas for medical use, you wouldn't, but there's no additional penalty.

Strategic Distribution Timing

Another great thing about an HSA is that you can use it to reimburse yourself months or even years after you've incurred a medical expense. Why would you want to wait? If you're able to pay for any medical expense out of pocket at the time it occurs, the money in your HSA essentially becomes a rainy day fund.

For example, if you pay for $10,000 dollars of medical expenses out of pocket over a five-year span without tapping into your HSA, you have the ability to take that money out whenever you'd like. If your car breaks down, you can reimburse yourself that $10,000. If you want to apply it toward your child's college, you can do that. Because you paid the medical expenses yourself, you can tap into your HSA for that money whenever it makes sense for you.

An important thing to know if you do plan to use this method is that you need the documentation to prove that you did, in fact, pay those medical expenses. So make sure you're very organized and keep track of anything you'll want to be reimbursed for in the future.

HSAs are very versatile and provide you with financial security in different ways. They're portable, so they go with you no matter where you work, they don't expire, so you can keep growing your account for the future, and you can even cover dependents who aren't on your insurance. There are plenty of good reasons to start building up your health savings account. If you are eligible for an HSA, you should consider taking advantage of this unique tool. If you have any questions on this topic, please contact us.

Contributor: Aaron Langemeier, Accounting Intern