How much do you regularly contribute to your HSA? Do you have one? In this article we’ll go over how to maximize your HSA contributions by using discount codes (check out websites like discountpuppy.co.uk) to find extra room your budget.
What is an HSA?
Perhaps we should start here, in case some of our readers don’t already have an HSA. HSA stands for ‘Health Savings Account’, it’s a tax-advantaged medical savings account that’s meant to be an emergency fund for any medical bills that may come up. In order to open an HSA you must be enrolled in a high-deductible health plan. This means that you pay a lower premium, but should you have a medical bill the insurance company won’t pay as much of it. However if you have your HSA and have been contributing to it regularly then that won’t be a problem. The idea is that when a medical expense does come up you will be able to cover it with your HSA and you won’t need to haggle with an insurance company about what is and isn’t covered. And, if you have relatively few medical bills then you can use your HSA as a source of income after you retire.
‘Tax Advantaged’? I like the sound of that!
‘Tax-advantaged’ means that you will not need to pay federal income tax on money deposited into this account. As long as you use the funds for qualified medical expenses, you won’t ever pay income tax on it. And yes that does include medications, even over-the-counter ones. Let’s say you’re really lucky and you go your whole life without needing to use the money in your HSA. If you withdraw it after retirement age, you will have to pay some income tax on it but likely not as much as if you had just taken the income back when you made the contribution. If you want to withdraw it before you retire for non-medical or non-qualified expenses, you will incur early withdrawal penalties. It’s best not to do that.
How to use discount codes to ‘find extra money’ for contributions
Many people are doing most if not all of their shopping online these days, and there is always a link or a little box on the checkout form that says ‘Have a coupon code?’. Most people just shrug their shoulders and move on to payment because they don’t have a code. But did you know that there are many websites out there dedicated to just gathering active promo codes? We linked one of them at the beginning of this article, and there are many more. Your best bet is to do a Google search for the name of the company you are making a purchase with and ‘discount code’ or ‘coupon code’. You should get tons of results back. You may need to try a couple of different codes before you find one that works for you, but there will be one out there I guarantee.
Another good tip is to join mailing lists for websites you regularly purchase from. Because the online retail space is so competitive all companies offer promo codes to try and entice customers to purchase from them. If you are patient with your purchases there will always be a sale or a promotion and you can save a lot of money that you can then put towards your HSA instead.
How much can I contribute?
In 2021 the maximum amount you can contribute in a year is $3600 per person, or $7200 per married couple. If you are over the age of 55 they also allow an extra $1000 as a ‘catch-up’ contribution since you are starting your fund later in life. The yearly contribution limit has increased since HSAs were first introduced in 2004, and it’s possible they may increase in the future. Any money that you don’t spend within the year rolls over and accumulates, and then you may contribute up to the maximum again the following year. So it’s possible to have tens of thousands of dollars in the account if you have been contributing for a few years with relatively few withdrawals.
How difficult is it to get the money out?
Not at all, you are not required to get approval for expenses before withdrawing the money from the account. Some accounts will provide you with a debit card, others might give you cheques, and some will allow you transfer money online. Remember though, if you withdraw the money before the age of retirement and it’s not for an approved medical expense you will have to pay early withdrawal penalties.
Start an HSA today if you don’t already have one, and maximize your contributions with coupon codes
The sooner you can start and the more you can put in early on the better off you will be. Being a little thrifty so that you can have the peace of mind that an HSA will provide you is well worth the effort.