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The New HSA Owners Guide

3 min read

30 sec brief

Did you just start with a new health plan and gain access to a new health savings account? Here are some of the key things that you will need to know about owning an HSA.

Now that you have a Health Savings Account, it’s time to put it to good use.

Let’s go over the basics of using your HSA.

Contribution Limits

First things first, you need to know how much you can contribute to your HSA.

For 2020, individuals can contribute up to $3,550, and families can contribute up to $7,100.

For 2019, max contributions for individuals were $3,500, and for families, they were $7,000.

If you’re 55+, you can make additional catch-up contributions of $1,000.

HSA eligibility is determined on an individual basis. As long as you have coverage under an HSA-eligible high deductible health plan (HDHP), you’re good! If your HDHP covers just you, you can contribute up to the individual amount. If your policy covers you and at least one additional person, you can contribute up to the family limit. If you’re married and covered under the same HDHP, you can both open your own HSA. You can only contribute up to the family amount between both accounts.

How Does Money Get Into My HSA?

Now that you know how much money you can contribute, you need to know how to get the money into the account.

Putting money into your Lively HSA account is easy. Here are a few ways you can contribute to your HSA:

  1. If your employer works with Lively, the funds will be pulled from your payroll and deposited directly into your account.
  2. If your employer doesn’t work with Lively and have instructed you to get your own HSA, you can provide your employer with your Lively account number and routing number. Your employer will then put the funds into your account via ACH.
  3. If you are making individual contributions (not tied to an employer), you can link your external bank account - checking or savings - and make contributions directly.

As easy as these options are, here are a few more ways to get your HSA funded.

  1. IRA to HSA transfer - as long as you are eligible to make HSA contributions, you can make a once in a lifetime transfer. This will count against your annual contribution limit.
  2. A Rollover or Trustee-to-Trustee Transfer - this applies when you want or need to move existing HSA funds from a different provider to Lively.

How Do I Use My HSA Funds?

Now that you’ve got money in your HSA, you’ll likely need to use it.

You can use your provider-branded debit card you’ll receive once you’re enrolled. You can also pay out-of-pocket using a check, credit card, or debit card and then reimburse yourself. Be sure to save your receipts so that you can have a proof of the purchase later.

Suggested Reading: Guide to HSA Withdrawals

How to Invest Your HSA Funds

A nice perk of HSAs is that you can invest the funds.

According to IRS Form 2004-50: You can invest HSA funds in the same types of investment options approved for IRAs (e.g., annuities, bank accounts, bonds, CD’s, stocks, or mutual funds).

HSAs cannot be invested in life insurance contracts or in collectibles (like alcoholic beverages, antiques, coins, gems, metals, stamps, works of art, or any other tangible personal property specified in IRS guidance under section 408(m)).

However, HSAs may invest in certain types of bullion or coins, as described in section 408(m)(3). The HSA trust or custodial agreement may restrict investments to certain types of permissible investments (e.g., particular investment funds).

To make HSA investments easy, Lively is integrated with TD Ameritrade's Self Directed Brokerage platform, giving you access to a wide variety of investment options.

Now that you’ve got your HSA set up and know how to use it, you can get back to doing what you do best while smartly saving for future healthcare expenses.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

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