image/svg+xml
  • About Us
    • Management Team
    • Mission/Vision/Values
    • Awards & Recognition
    • Client Testimonials
    • Client Bill Of Rights
    • Beyond the Numbers
    • Allinial Global
  • Industries
    • Automobile Dealerships
    • Construction
    • Healthcare
    • Manufacturing
    • Not-For-Profit
    • Professional Firms
    • Real Estate
    • Technology
    • Transportation/Logistics
    • Wholesale/Distribution
  • Services
    • Tax Services
      • Tax Credits & Incentives
      • Cost Segregation
      • Estate & Wealth Management
      • International Taxes
      • Research & Experimentation
      • State & Local Tax
      • Sales Tax Compliance Management & Advisory
      • Tax Compliance
    • Assurance Services
      • ASC 606 – Revenue Recognition Adoption
      • Audit, Review, or Compilation
      • Employee Benefit Plan Audits
      • Internal Controls
      • International
      • IT Controls and Compliance
      • Operational Review
      • SOC Reporting
    • Advisory Services
      • Client Accounting Services
      • Business Valuation Services
      • Estate & Wealth Management
      • Fraud & Forensic Services
      • Litigation Support Services
      • Opportunity Zone Investments
      • Profit Improvement
      • Transaction Advisory Services
      • Women-Owned Business
    • Consulting Services
    • COVID-19 Advisory Services
  • Resources
    • Benchmarking Reports
      • Construction Benchmarking Report
      • Manufacturing Benchmarking Report
      • Not-For-Profit Benchmarking Report
      • Wholesale/Distribution Benchmarking Report
    • Blog
    • COVID-19 Resources
    • Success Stories
    • Events
    • On-Demand Events
    • Tax & Estate Planning Guides
  • Careers
    • College Students
    • Experienced Professionals
  • Events
    • Upcoming Events
    • On-Demand Events
  • Contact Us
  • Subscribe

How to Reap the Hidden Value of HSA Accounts

November 17, 2017 by Beth Germann

  • Tweet
  • Share 0
  • Share 0

November is the time of year when many companies begin their open enrollment period for health and other employee benefits.  It is an important time to re-evaluate elections and make any updates to your election offerings, due to changes in status or maximizing the value of the benefits received.

Health plan offerings have changed a great deal over the past decade, and high-deductible health plans (HDHP) have become a common options utilized by employees.  In 2003, Health Savings Accounts (HSA) were established to allow individuals to make tax-exempt contributions to pay for unreimbursed medical expenses.

Contributions to an HSA account are an “above-the-line” deduction, meaning that they will reduce adjusted gross income, and contributions to an HSA are not taxed in many states as well.  One benefit to making the election during open enrollment is that the contributions can be made automatically through payroll.

Although funds in a HSA account can be used for current medical expenses, if managed efficiently the account could have significant tax benefits:

  • Current tax savings – contributions reduce your taxable income
  • Tax-deferred growth of earnings
  • Tax-free distributions for medical expenses

One effective strategy would be to first maximize current contributions ($3,400/$3,450 single and $6,750/$6,900 family 2017/2018). This is because each dollar that can be put away will be pre-tax, resulting in immediate net savings to the taxpayer. Using the HSA for current medical expenses will allow a taxpayer to benefit from current tax savings.  If the account is allowed to grow, either because contributions exceed current medical expenses, or a taxpayer pays for medical expenses out of pocket, the taxpayer can then experience the tax-free growth benefit.  It should be noted that medical expenses paid direct can be withdrawn from the HSA account at a later time, including different year.

For younger taxpayers who incur little medical expenses, this would be a very beneficial account to fund and allow to grow over time.  For taxpayers closer to retirement, it is worth mentioning that like a traditional IRA, distributions can be taken after age 65 for non-medical purposes without a penalty.  The taxpayer would only be subject to tax on the earnings of the income.  Maximizing the value of an HSA account is a smart saving strategy for any taxpayer.

Contact Us

If you have questions about how you can best take advantage of an HSA, or more information about HSAs, a member of the Barnes Dennig tax team is available to help. Ask us a quick question here, and we’ll have someone reach out to you.

 

Unlock Ideas
& Insights

Subscribe

Learn more about smart solutions to move you forward.

From the Blog

The New Tax Credits – Zeroing in on the ERC
image/svg+xml
Last Call for 2020 Tax Planning (Yes, in April 2021)
image/svg+xml
Obamacare Tax Decision Unresolved as Statute of Limitations Looms
image/svg+xml

Categories

  • All Blog Articles
  • Assurance
  • Construction
  • COVID-19
  • Employee Benefit Plans
  • General
  • Health Care
  • International
  • Manufacturing
  • Not-for-Profit
  • Real Estate
  • Tax Services
  • Technology
  • Transaction Advisory
  • Transportation / Logistics
  • Wealth Management
  • Wholesale / Distribution
image/svg+xml
CINCINNATI
Tel 513.241.8313
Fax 513.241.8303
DAYTON
Tel 937.223.7272
Fax 937.223.1060
KENTUCKY
Tel 859.344.6400
Fax 859.578.7522
INDIANA
Tel 317.572.1130
Fax 317.863.0694

© Copyright 2021 – Barnes, Dennig & Co., Ltd. All Rights Reserved. Privacy Policy | Subscribe | Contact Us

Accountants | Auditors | Advisors | Business & Organizational Consultants | CPAs – Barnes Dennig is a Certified Public Accounting and consulting firm serving businesses and organizations in Ohio, Indiana, and Kentucky. We provide a variety of accounting, tax, assurance, consulting, and advisory services to help companies, not-for-profits, and high net-worth individuals optimize their financial outlook.  Barnes Dennig has in-depth experience with companies in the construction, real estate, manufacturing, healthcare, technology, retail (state and local tax or SALT), and not-for-profit industries as well as wealth management and financial planning services. We have in-depth expertise in mergers & acquisitions, business valuations, profit improvements, opportunity zone investments, IT Security, SOC audits, litigation support, and fraud and forensic accounting, and wealth management and estate planning.

Disclaimer: The information published to this website is for information only and is subject to change without notice. Barnes Dennig assumes no responsibility for the tax, legal or any other consequences for reporting this information. Barnes Dennig expects that all persons will consult and rely upon the advice of their counsel, accountant, tax advisor or other advisors as appropriate under the circumstances.