Positive changes to HSAs
As 2019 comes to a close, maxing out those health savings accounts will reduce your overall tax liability. Next year, you’ll be able to save even more tax-free dollars. The new limit for HSA contributions for 2020 is going up for individual coverage and for family coverage, the IRS announced last week, bringing totals to $3,550 and $7,100, respectively. HSAs are often tied to high-deductible insurance plans and offer a way to save tax-free for future medical expenses. For every dollar you contribute to your HSA, it will effectively reduce your taxable income for the year. These HSA funds are held in a local bank or credit union and will accrue interest tax-free. When you use them for qualified medical expenses, you also withdraw that money tax-free. Unlike flexible spending accounts, or FSAs, HSA funds carry over year over year and will follow you from job to job. The new change for 2020 is a positive one, and everyone with an HSA account should max out those benefits.