After a long bout of self-employment, I became a full-time employee for a wonderful company several years ago and, in the process, was offered health insurance as part of my benefits package. As someone who went without health insurance for many years, it was a welcome benefit, and although I was excited to have access to good medical care, it took me some time to learn how to get the most out of my medical benefits. In addition to medical and vision benefits, I was also given my first health savings account (HSA). The HSA program was new to me, but once I learned how to utilize it well, it became one of my very favorite benefits. In fact, in later years when I once again became self-employed — and therefore began self-paying for medical insurance — I made sure to select a plan that would allow me to access an HSA.

An HSA is a health and wellness benefit for people with qualifying high-deductible health plans (HDHPs) that can help offset their deductibles. Single individuals under 55 years of age can contribute up to $3,650 per year. For families, the annual limit is $7,300. For HSA holders over the age of 55, an additional $1,000 can be contributed each year. 

Health savings account funds can be used for all kinds of medical, health, vision and dental expenses. There is a detailed list of what does and does not qualify on Healthcare.gov, and it’s a good idea to become acquainted with this list to avoid any complications come tax time. Some examples of medical expenses that can be paid for with HSA funds are co-pays, contacts and contact supplies, allergy care, mental health services, chiropractic care and medical bills of all types. But by far the best benefit of using an HSA is that it can teach you how to budget for medical and health-related expenses that aren’t covered by your insurance plan.

What makes this type of savings account truly a godsend is that it motivates me to set aside an annual budget for my health and wellness. In years past, I found it difficult to find the funds to pay for things like new glasses, medical appointments and acupuncture. But once I got into the habit of setting aside those extra funds, I felt a great sense of security knowing that I had a little bit of “extra” cash on hand to help me prioritize my health and well-being. At the end of the year, the bank that manages your HSA will issue a tax form to include with your end-of-year filing, and the funds that you contributed to your HSA will be tax deductible.

There are several restrictions on HSAs that are important to note. First, though the funds in an HSA roll over into future years, if you change your coverage so it drops below the high-deductible threshold, you will still be able to access your funds, but will no longer be able to contribute to your account. This matters because funds contributed to an HSA are pre-tax, which means they can have a significant impact on your final tax bill each year. Second, all purchases made with an HSA debit card must be medically related.

If you are on a high-deductible health plan, you might qualify for a health savings account. Check with your provider to see if this benefit is available to you, then set up your account and start saving. Research HSA providers online and ask your bank or credit union if it offers an option that meets your needs. Make sure you understand all associated fees and the process by which you will deposit your contributions. Then double-check the link of qualifying expenses, and you’re ready to use pre-tax dollars to cover medical and wellness services. 

Sometimes we need a little encouragement when it comes to funding our own health and well-being. Health savings accounts make it just a touch easier to prioritize spending money on our most important asset: our health.