As we head into a new year, it`s important to take a look at the changes that may occur in the world of financial planning. For those who have a Health Savings Account (HSA), one key area to keep an eye on is the HSA agreement. The HSA agreement is a legal document that outlines the terms and conditions of your account, and it is important to stay informed about any updates that may occur.
In 2020, there were several changes made to the HSA agreement that may impact your account. For example, the contribution limits for tax year 2020 increased slightly, with individuals allowed to contribute up to $3,550 and families up to $7,100. Additionally, individuals over the age of 55 were allowed to make an additional $1,000 catch-up contribution.
It`s also important to note that the HSA agreement may vary depending on your provider. Some providers may have certain restrictions or requirements that differ from others, so it`s important to read your agreement carefully. For example, some providers may require a minimum balance to be maintained in order to avoid fees, while others may allow for flexible investment options.
Another change that occurred in 2020 was the inclusion of telehealth services as a qualified medical expense. This means that if you use your HSA funds to pay for telehealth services, such as virtual doctor visits, they will be considered a tax-free expense. This change is particularly important given the current pandemic, as many individuals may be utilizing telehealth services more frequently.
It`s also worth noting that the CARES Act, which was passed in response to the COVID-19 pandemic, made some temporary changes to HSA rules. For example, HSA funds can now be used to purchase over-the-counter medications without a prescription, and certain high-deductible health plans (HDHPs) can cover telehealth and other remote care services before the deductible is met.
Overall, it`s important to stay up-to-date on any changes to your HSA agreement in order to make the most of your account. Consider reviewing your agreement at least once a year, and reach out to your provider with any questions or concerns. With careful planning and management, your HSA can be a valuable tool for your financial future.