Health Savings Account (HSA) Contributions

The Health Savings Account (HSA) strategy is a tax deduction for eligible individuals who contributed to a qualified savings account for medical expenses. Qualified medical expenses include deductibles, copayments, coinsurance, and other medical expenses. The contributions are deductible, invested within the HSA, and can be withdrawn tax-free when used to pay for qualified medical expenses.

Confirm these points before using this strategy:

• You’re enrolled in a High-Deductible Health Plan (HDHP).
• You haven’t received Veterans Affairs (VA) benefits within the prior three months, except for preventive care, unless you have a disability rating from the VA.
• You’re not enrolled in Medicare, TRICARE or TRICARE for Life.
• You’re not enrolled in a Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA).

To use this strategy:

• Establish an HSA through your employer or participating financial institution.
• Make HSA contributions up to the annual contribution limit.

The maximum annual contribution for 2023 is:

• $3,650 for individual HSAs
• $7,750 for family HSA

An additional $1,000 catch-up contribution is allowed for taxpayers age 55 and older.

I.R.C § 223 - In the case of an individual who is an eligible individual for any month during the taxable year, there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a health savings account of such individual.