No. HSA money is yours to keep. Unlike a flexible spending account (FSA), unused money in your HSA isn't forfeited at the end of the year; it continues to grow, tax-deferred.
HSAs: The basics
What's more, unlike health flexible spending accounts (FSAs), HSAs are not subject to the "use-it-or-lose-it" rule. Funds remain in your account from year to year, and any unused funds may be used to pay for future qualified medical expenses.
If you're generally healthy and you want to save for future health care expenses, an HSA may be an attractive choice. Or if you're near retirement, an HSA may make sense because the money can be used to offset the costs of medical care after retirement.
Once funds are deposited into the HSA, the account can be used to pay for qualified medical expenses tax-free, even if you no longer have HDHP coverage. The funds in your account roll over automatically each year and remain indefinitely until used. There is no time limit on using the funds.
If you have used all of your HSA funds in 2019 and have been paying your medical expenses out of pocket, the personal funds used can be reimbursed to your personal checking/savings account in 2019 from your HSA contribution made in 2019.
Your HSA is yours and yours alone. ... It is yours to keep, even if you resign, are terminated, retire from, or change your job. You keep your HSA and all the money in it, but keep in mind that there may be nominal bank fees if you are no longer enrolled in your HSA through your employer.
There are also some serious drawbacks. Here's one: If you use your HSA savings for non-qualified expenses before age 65, “you'll owe an additional 20% penalty in addition to any taxes due,” Ulreich said. Generally, qualified expenses for HSAs are the same as those for claiming the medical expense deduction.
If you withdraw HSA funds and don't use them to pay for qualified medical expenses, you'll pay income tax and a penalty. Unlike an FSA, there's no “use it or lose it” provision. ... You can find HSA-qualified plans through your health insurance exchange. There's no deadline to reimburse yourself for medical expenses.
What are the Disadvantages of an HSA? Having a high deductible plan means you are going to pay more money out of pocket before your medical coverage kicks in. Your upfront costs will be higher whenever you have to use your medical coverage during the year until the deductible is reached.
You'll Pay a Penalty for Non-Qualified Medical Expenses
Because this account is intended to be used for medical expenses only, if you take money out of an HSA for non-medical reasons, you will have to pay taxes on it.
A PPO comes with higher monthly premiums compared to what you'd pay with an HDHP. But in exchange you get lower co-pays, deductibles, and out-of-pocket maximums. ... You can make decisions based on your health, rather than money: HSA advocates often point out that HDHPs make people more cautious consumers.
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