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At Bend, we’re all about making health savings accounts easy for everyone. And part of making HSAs easy is providing accurate information upfront, so you can make the most informed decision on if an HSA is right for you.
Unfortunately, there’s a lot of misinformation out there regarding HSAs. And believe me, we’ve heard pretty much every myth in the book (and online) regarding just about every aspect of health savings accounts.
The good news is, HSAs are pretty straightforward, and we’re here to help you get the right HSA information upfront.
So, we’re back with another installment of our “Dispelling the HSA Myth” series, aimed at debunking popular HSA topics that are just plain incorrect.
In our inaugural Dispelling the HSA Myth blog post, we covered why HSAs aren’t just for the old and wealthy. Next, we covered why HSAs aren’t just for the young and healthy. And for this installment, we’re focusing on why HSAs aren’t only for single people.
Are HSAs a good choice for single people? Absolutely. But are they only a good choice for single people? Absolutely not.
We hope our Dispelling the HSA Myth blogs help you find some clarity no matter where you’re at in your HSA journey, whether you’re a seasoned accountholder or just exploring the option of an HSA being the right choice for your specific circumstance.
So without further ado, let’s dispel yet another HSA myth.
As a single individual, you’ll find many short and long-term upsides to having a high-deductible health plan (HDHP) with an HSA. You have the unique opportunity to take an active role in controlling your healthcare costs while bettering your overall financial health and well-being.
From a financial standpoint, you save upfront on premium costs when you opt for an HDHP with an HSA versus having a traditional HMO/PPO insurance plan. Simply put, an HDHP with an HSA is much more affordable than a traditional insurance plan. That monthly savings can add up quickly, and can be contributed straight into your HSA for even more tax-free savings and growth (more on that in a second). Plus, if you have an employer who contributes to your HSA, you get that added financial benefit that you wouldn’t otherwise receive with traditional health insurance and no HSA. And by only needing individual coverage, your premium costs—and deductible—will be significantly lower than if you required family coverage.
The “triple tax savings” an HSA offers can often play an even more critical role if you’re single, since you may not be able to benefit from a tax perspective in ways that those who are married and have dependents and other options for tax breaks and benefits can. With an HSA, your HSA contributions are 100% tax deductible, your HSA funds can be used tax-free for any qualified medical expenses and those funds grow tax-free from day one.
And from a planning and saving standpoint, with only yourself to be concerned about, planning your contributions, saving and investing for future expenses can often be easier than when dealing with a spouse or an entire family.
Let’s take a quick look at just some of the other unique advantages an HSA offers to those who are single:
HSAs are all about flexibility, which is a great thing when you’re single—as well as when you’re no longer single.
So, if your circumstances change and you need to move from individual coverage to family coverage, you can do so without penalty or any interruption of your funds, and you can then contribute up to the family coverage maximum annual HSA contribution limit, adjusted based on when you make the switch.
Let’s run through a quick example.
Say you have an HDHP with an HSA and begin the year with individual coverage. That means, for 2020, you can contribute a maximum of $3,550 to your HSA (or $4,550 if you’re 55 or older and take advantage of the $1,000 HSA catch-up contribution).
But, on July 1, your circumstances change and you switch to family coverage. With family coverage for 2020, you can contribute a maximum of $7,100 to your HSA (or $8,100 if you’re 55 or older and take advantage of the $1,000 HSA catch-up contribution). However, since you made the switch mid-year, you’ll need to prorate your new maximum contribution limit through a little math:
Hopefully it’s clear HSAs are an excellent choice for those who are single. And hopefully it’s equally clear they’re also an excellent choice for just about everyone else.
Combining an HSA-eligible HDHP with a health savings account is a simple equation with a powerful outcome for those of all ages, income levels, relationship statuses and health circumstances. Using an HSA with an HDHP allows accountholders of all kinds to take full advantage of three types of tax savings, while also having a dedicated, portable, never-expiring savings account to invest and use for present and future medical expenses—whether just for yourself or for a present or future spouse and family. And along with their flexibility, numerous tax advantages, investment opportunities and rollover capabilities, HSAs also offer a variety of other benefits to everyone who uses them.
If you’d like to learn more of the specifics on why HSAs are a great choice no matter who you are, take a few minutes to read our blog dedicated to why HSAs work for everyone.
With Bend HSA, we’re here to help you make the most of your health savings account—no matter who you are or whether you’re single or not. We offer a simple-to-use, secure HSA with a superior user experience and unmatched customer service and support—for clients of all ages, income levels and relationship statuses!
Connect with us today and let’s build your best HSA together.