You’re probably using your HSA all wrong

You’re probably using your HSA all wrong

– It’s not use it or lose it – any money left over at the end of the year rolls over – The money is yours, so it goes with you if you leave your job – You have to be enrolled in a “high deductible healthcare plan” to make contributions to your HSA

Mistake #1: Using the money for every eligible expense

Your HSA can be used for obvious things like doctor’s visits and prescriptions, along with less obvious things like sunscreen, band-aids, pregnancy tests and even condoms, but does that mean you HAVE to use your HSA for them? 

I don’t want to sound like your mom, but just because you can do something doesn’t mean you have to. When it comes to your HSA, unless you’re going to be using a credit card

Why I no longer use my HSA for little expenses

I totally did this – because I’d been used to estimating my annual expenses in order to elect how much to put in my FSA and not risk losing any of it (key difference here is that S stands for spending instead of saving), I stuck with that same habit when I first started my HSA

Mistake #2: Only funding the account to that year’s estimated expenses

Figuring out how much to put in your HSA

I mean, really you should try to put the maximum amount in, especially if you’re saving more than your employer match in your workplace retirement account (aka 401(k) or 403(b), etc.). The HSA has better tax benefits (no taxes going in OR coming out)

This was another mistake I made, which neglected the fact that I could always switch back to an HSA-eligible plan later so there was no need to spend what I had in my account just because I wasn’t currently adding to it anymore.

Mistake #3: Spending down your account after switching plans

I work with a young woman who knows that within the next 5 years, she’s going to need a hip replacement. Based on the current medical plans available to her, her preferred providers are out of network and acupuncture isn’t covered by her insurance.

How one woman is using her HSA to prep for an eventual hip replacement

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