2024 HSA Contribution Limits And Is Caregiving Expenses HSA Eligible?

Nov 29

Key Takeaways:

New Contribution Limits: Find out about the new limits for how much you can put into your HSA in 2024 and how it affects your savings.
Caregiving Expenses: Learn which caregiving costs can be paid for with your HSA and how to use it the right way.
Maximizing Benefits: Get tips on making the most of your HSA, including how to invest and save for future healthcare costs.

Taking care of your own health is very important, and understanding HSA contribution limits can be helpful when making a plan as a caregiver.

Overview Of 2024 HSA Contribution Limits

In 2024, the IRS set limits on how much you can contribute to a Health Savings Account (HSA). For individuals with self-only coverage under a high-deductible health plan, the limit is $4,150. For those with family coverage, the limit is $8,300. People aged 55 and older can add an extra $1,000 as a "catch-up" contribution, which stays the same as in previous years.

If you need help understanding HSA contribution limits, our workshop can help Building Better CaregiversⓇ is a six-week online program designed to support and empower caregivers. It offers education and support in a convenient, online setting. We understand the difficulties and challenges of being a caregiver, that’s why we offer Building Better Caregivers as a tool to help make life a little easier for caregivers and less isolating. If you are caring for someone with a chronic condition, your HSA may cover any costs associated with taking the Building Better Caregivers workshop.

Caregivers can join at any time, work at their own pace, and participate whenever they want. Each group is made up of 30 caregivers who connect through weekly lessons, discussion boards, and one-on-one conversations, offering one another tips and support for their personal caregiving challenges.

The program is led by trained staff members many of whom have been caregivers themselves. These leaders guide discussions, share personalized resources, and keep workshops safe and supportive.

Building Better Caregivers has been recognized as a proven program by the Benjamin Rose Institute on Aging and the Family Caregiving Alliance.

“It was very helpful to learn things I might not have known and get tips and support from the others in the group. It helps just knowing there is someone who knows what you’re going through and can offer helpful tips, not just listen.”

– Building Better Caregivers Participant

Factors Influencing HSA Contribution Limits

The amount you can put into your HSA each year depends on a few things. First, whether you have health insurance for just yourself or for your whole family affects how much you can contribute. The IRS changes these limits every year based on the cost of living.

If you're 55 or older, you can put extra money into your HSA to save for retirement. Also, if your employer adds money to your HSA, it counts toward your total limit. By keeping track of all these things, you can make sure you don’t put in too much or too little.

Are Caregiving Expenses Eligible For HSA?

Figuring out if caregiving expenses can be paid with your HSA can be tricky. Usually, HSA money can be used for medical costs, like doctor visits, prescription medicine, and some types of therapy.

However, whether caregiving costs qualify depends on what kind of help is being given. For example, if a licensed healthcare worker provides care, it may be covered. But regular caregiving help, like someone helping with daily tasks, usually isn't. It's important to check IRS rules and, if needed, ask a tax expert for advice.

How To Use HSA Funds For Caregiving

Using HSA funds for caregiving expenses requires careful consideration and documentation. To use your HSA for eligible caregiving expenses, follow these steps:

Verify Eligibility

Make sure the caregiving expense is considered a medical expense by the IRS. This could include care from a licensed doctor or therapy that a doctor recommends. Look at the IRS rules (Publication 502) to see which medical costs are allowed, and check that the caregiving service fits these rules.

Maintain Documentation

Keep clear records of all caregiving expenses, like healthcare bills, prescriptions, and other proof that the expense is medically necessary. Good record-keeping is important to show the expenses are valid if the IRS asks and to explain withdrawals from your HSA.

Reimburse Yourself

If you pay caregiving costs with your own money, you can pay yourself back later using your HSA. Keep all receipts and records in case the IRS asks for proof. You don’t have to pay yourself back right away—just make sure the expenses happened after your HSA was set up, and you have proper records.

Consult a Tax Professional

If you’re unsure about your caregiving expenses, talk to a tax professional or financial advisor. They can confirm if the expenses qualify for HSA reimbursement, help you avoid mistakes, and give advice on using your HSA for the best tax benefits.

Benefits Of Using HSA For Caregiving

Using HSA funds for eligible caregiving expenses offers several benefits:

Tax Advantages

Money you put into an HSA reduces your taxable income, which can lower your taxes. When you use the money for qualified medical expenses, like caregiving, you don’t pay any taxes on those withdrawals.

Financial Flexibility

HSAs let you pay for many medical expenses easily, helping you handle unexpected caregiving costs without upsetting your budget or financial plans.

Long-Term Savings

Any money you don’t use in your HSA stays in your account and carries over each year. This helps you save for future medical and caregiving needs, building a strong safety net for later in life.

Investment Opportunities

You can invest your HSA money, like in a retirement account, to help it grow over time. This can provide more money for caregiving and other healthcare expenses as you age.

Supplementing Retirement Funds

After age 65, you can use HSA money for non-medical expenses without a penalty, although you’ll pay income tax. This makes HSAs a useful way to add to your retirement savings for other needs.

Common Misconceptions About HSA And Caregiving

All Caregiving Expenses Are Eligible

Not all caregiving costs can be paid with HSA funds. Only medical expenses that the IRS says are qualified are allowed. Non-medical caregiving services usually don’t count.

You Can Use HSA Funds for Family Caregiving Services

You can use HSA funds for medical expenses for your spouse and dependents. However, general caregiving services provided by family members usually don’t qualify unless they are medically necessary and documented.

No Need for Documentation

You must keep clear records of caregiving expenses to prove they meet IRS rules. Without proper documentation, you could face penalties and taxes if the expenses don’t qualify.

Immediate Reimbursement Is Necessary

You don’t have to reimburse yourself right away. You can use HSA funds later for qualified caregiving expenses, as long as they happened after you opened the HSA and you have the right records.

HSAs Are Only for Current Expenses

HSAs aren’t just for current medical costs. They’re also great for saving for future healthcare needs, including caregiving expenses as you get older.

Understanding these points can help you use your HSA wisely for caregiving costs.

Tips For Maximizing Your HSA Benefits

To get the most out of your HSA, consider these tips:

Maximize Contributions: Add as much as you can to your HSA each year. In 2024, the limit is $4,150 for individuals and $8,300 for families. If you’re 55 or older, you can add an extra $1,000.
Invest Wisely: After setting aside enough cash for immediate medical costs, think about investing your HSA funds to grow your savings.
Keep Detailed Records: Save all receipts and records for medical and caregiving expenses. This will protect you if the IRS checks your withdrawals.
Plan for the Future: Treat your HSA as a way to save for future healthcare costs. The money can grow over time and help with unexpected medical or caregiving expenses in retirement.
Review Eligible Expenses: Check the IRS list of allowed medical expenses often to make sure you’re using your HSA funds correctly and getting the most tax benefits.
Coordinate with Other Benefits: If you have other health accounts like an FSA or HRA, plan how to use them along with your HSA to save as much as possible.

By following these tips, you can make benefits of your HSA better and make sure you are prepared for both current and future medical expenses.

Final Thoughts

It’s important to know the 2024 HSA contribution limits and which caregiving costs can be paid with your HSA. By following IRS rules, you can put in the most money, make smart investments, and plan for both today’s and future healthcare needs. Knowing which caregiving expenses are allowed helps you use your HSA money wisely.

Keeping up with changes in the laws can help you get the most out of your HSA. With careful planning, your HSA can be a big help in managing healthcare and caregiving costs, giving you both financial benefits and peace of mind.

Read Also:

Frequently Asked Questions About 2024 HSA Contribution Limits and Caregiving Eligibility

What are the HSA contribution limits for 2024?

The 2024 HSA contribution limits are $4,150 for individuals with self-only coverage and $8,300 for those with family coverage. An additional $1,000 catch-up contribution is allowed for individuals aged 55 and older.

Can I use my HSA for non-medical expenses?

Yes, after age 65, you can use HSA funds for non-medical expenses without a penalty, but the withdrawals will be subject to income tax. Before age 65, non-medical withdrawals incur a 20% penalty and are also taxed.

Are HSA contributions tax-deductible?

Yes, contributions to an HSA are tax-deductible, which can reduce your taxable income for the year.

Can both spouses contribute to an HSA?

If both spouses have their own HSA and are covered under a family plan, they can each contribute to their respective HSAs, but the combined total contributions must not exceed the family limit.

What happens to my HSA if I change jobs?

Your HSA is portable, meaning you can take it with you when you change jobs. It remains in your account regardless of your employment status.

How do I know if my health plan qualifies for an HSA?

To qualify for an HSA, your health plan must be a high-deductible health plan (HDHP) with a minimum deductible of $1,600 for self-only coverage or $3,200 for family coverage in 2024.

Can I use my HSA for over-the-counter medications?

Yes, as of recent legislation, you can use HSA funds to purchase over-the-counter medications without a prescription.

What are the benefits of investing HSA funds?

Investing HSA funds can help grow your savings over time, providing a larger pool of money for future medical expenses. Many HSAs offer investment options similar to retirement accounts.

Can I pay for dental and vision expenses with my HSA?

Yes, HSA funds can be used to pay for eligible dental and vision expenses, including exams, treatments, and eyewear.

What happens to the HSA funds if the account holder passes away?

If the HSA holder names a spouse as the beneficiary, the HSA can transfer to the spouse without tax consequences. For non-spouse beneficiaries, the HSA funds are distributed and subject to taxes.

Sources

Internal Revenue Service. "Corrections to High-Deductible Health Plan Eligibility and Employer Contribution Limits in the 2024 Publication 15-B." IRS.gov, 7 Sept. 2023, https://www.irs.gov/about-irs/corrections-to-high-deductible-health-plan-eligibility-and-employer-contribution-limits-in-the-2024-publication-15-b.
"Senior Caregiving and Health Savings Accounts." HSAstore.com, https://hsastore.com/articles/learn-hsa-senior-caregiving.html.

Maggie Reed