This Is What Happens To Your Health Savings Account (HSA) When You Quit Your Job
16 Oct 2019
Approx Reading time: 2 minutes
Health Saving Account (HSA) is portable and it offers a multifaceted solution that helps in saving for future expenses in healthcare and retirement. Regardless of how you opened the account even if it was with an HDHP from your former job you will still keep your HSA.
Your money in HSA enjoys tax benefits
Interestingly everything in the account is yours from the contributions from your employer to interest and your contributions. The money you contribute benefits from tax credits to specific limits and your money grows on a tax-free basis. When you withdraw the amount to pay for healthcare you will not pay taxes.
You can use the amount to pay for your healthcare expenses even health insurance premiums because that is part of healthcare. It is possible to use the HSA as your retirement account but you could only withdraw the amount when you reach 65 years. If you withdraw the cash for any other purpose you will have to pay the 20% penalty for early withdrawal. After hitting 65 years you will use HAS amount to pay for Medicare Advantage, Medicare Part B or Medicare Part D.
HSA for individuals with High Deductible Healthcare Plan
Those who qualify for HSA are those with HDHP with a deductible income of around $1,350 for an individual and $2,700 for a family. There are also limits on the amount to contribute and this year it is $3,500 for an individual and $7000 for a family. This will grow to $3550 and $7100 next year respectively.
The HAS account is advantageous since it grows your cash provided you leave to stay put. You should not have concerns regarding what will happen to your HAS once you quit your job if it has connections to your workplace healthcare plan. Unlike Flexible Spending Accounts (FSAs) that you either use or lose the money saved in the health saving, the HAS is yours to keep. There is no requirement to spend your money on a certain date and you can keep accumulating your money and enjoy tax advantages.