Posted
on Tuesday, December 26, 2023
in
Health Savings Accounts
Managing Your HSA During Life Transitions
Managing your Health Savings Account (HSA) during life transitions is essential for maintaining your financial health and ensuring you have the necessary funds for medical expenses.
Once you’ve contributed to an HSA, that money is yours. Therefore, you get to decide what to do with the money in your HSA during these possible transitions in your life.
Loss of a Job: How to Manage Your HSA
Losing a job is a challenging experience, and it can have an impact on your health insurance coverage. If you have an HSA through your previous employer, you have a few options to consider.
- You can leave your HSA where it is and continue contributing to the account. However, instead of contributing pre-tax dollars directly from your paycheck, you now must make contributions with post-tax dollars because you no longer work at the employer that sponsors your HSA plan.
- If your HSA was started elsewhere, you can transfer your funds to a First National Bank HSA and consolidate your health savings accounts.
- If you get a job with a different company and they offer an HSA, you may choose to transfer the money from your past employer’s offering to your new employer-sponsored account.
Job Change: Transitioning Your HSA
If you accept a job with another company, you’ll need to determine what you should do with your existing HSA. Fortunately, you have several options.
- If your new employer also offers an HSA, you can transfer the administration of your account to the new employer. If you select this option, the new company will provide you with a form authorizing the new HSA administrator to take over the account. There are no penalties imposed if you choose this option.
- You can rollover your existing HSA account and move the money into a new HSA account within 60 days. If you exceed the 60-day window, you will pay taxes and be assessed a 20% penalty.
- You can also keep everything the same and leave your HSA with your old employer’s HSA administrator. You can continue to withdraw funds for medical expenses as you have been. However, you cannot continue to contribute to the account unless your new employer offers a high-deductible health plan.
Marriage: Combining HSA Benefits
Getting married is an exciting life event, and it may also bring changes to your healthcare coverage and HSA.
- If both you and your spouse have separate HSAs, you can continue to maintain your individual accounts. However, you should be aware that the maximum annual contribution limit applies to the combined contributions from both spouses. This means that you will need to coordinate your contributions to ensure you do not exceed the limit.
- Alternatively, you and your spouse can choose to consolidate your HSAs into a single account. This can simplify the management of your funds and make it easier to track your healthcare expenses. To do this, one spouse will need to transfer their HSA funds to the other spouse's account. It is important to note that this transfer should be done as a direct HSA administrator-to-HSA administrator transfer to avoid any potential tax consequences.
Birth and Adoption of Children: Expanding Your HSA Usage
The birth or adoption of a child is a joyful and busy time, and it may also have an impact on your healthcare needs and HSA usage. With the addition of a new family member, there will likely be an increase in medical expenses. Thankfully, your HSA can help you manage these costs. You can use the funds to pay for prenatal care, childbirth, vaccinations, pediatrician visits, and other eligible expenses related to your child's health.
It is important to plan ahead and estimate the healthcare expenses associated with having a child. This will help you determine how much to contribute to your HSA and ensure you have enough funds to cover the medical costs. Keep in mind that as your family grows, you may need to adjust your HSA contributions accordingly. Additionally, you should review your health insurance coverage to ensure it provides adequate benefits for your new family member.
Conclusion
Whether you experience a job loss, job change, marriage, or the birth/adoption of children, understanding your options and making informed decisions will help you navigate these transitions smoothly. By effectively managing your HSA, you can take control of your healthcare expenses and secure your financial well-being.
If you have an HSA or are considering opening one at First National Bank, take the time to evaluate your healthcare needs and plan your contributions accordingly.
- health savings account