How to Fund and Spend from an HSA
You can contribute to an HSA if you have a high-deductible health plan. The IRS sets annual contribution limits, so check the current year’s cap before funding your account. Many employers offer payroll deductions, but you can also deposit directly.
Spend HSA funds on qualified medical expenses like doctor visits, prescriptions, and dental care. Use your HSA debit card or reimburse yourself after paying out of pocket. Keep receipts for tax purposes because the IRS may require proof.
How to Invest HSA Money for Retirement
HSAs offer a unique advantage: you can invest unused funds for long-term growth. After reaching a minimum balance (usually $1,000 or more), most HSA providers allow you to move money into mutual funds or other investment options.
Treat your HSA like a retirement account. Pay current medical bills with cash when possible and let your HSA balance grow tax-free. After age 65, you can withdraw funds for any purpose without penalty—though you’ll pay income tax if it’s not for medical expenses.
What FSA Funds Cover and How to Avoid Forfeiting Them at Year-End
FSAs cover a wide range of eligible expenses, including copays, prescriptions, and certain over-the-counter items. Check your plan’s list of approved purchases to avoid surprises.
Unlike HSAs, FSAs have a “use-it-or-lose-it” rule. Most plans require you to spend funds by year-end or within a short grace period. To avoid forfeiting money, track your balance throughout the year and stock up on eligible items before the deadline. Some employers offer a small rollover or grace period, so confirm your plan details early.