Health & Benefit: How much should I put in my HSA?

Health & Benefit: How much should I put in my HSA?

For many people, fall is the time for selecting health insurance benefits for the following calendar year. If you have selected a high deductible health plan (HDHP) that qualifies for a health savings account (HSA), you might be wondering, “How much should I put in my health savings account?” The short answer is that you should contribute the maximum prorated amount allowed by the IRS, if that’s financially viable for you.

For 2020, you can contribute a maximum of:


Into a…

Per month contribution


Individual HSA

About $295/month


Family HSA

About $591/month


If you are 55 or older, you can contribute an extra $1,000 annually for a total of $4,550 on an individual plan or $8,100 on a family plan—these are called “catch-up contributions.”

Monthly cash flow is a valid concern. If you’re uncomfortable contributing the IRS’s maximum amount to your HSA through pre-tax payroll contributions, it is still to your advantage to have an HSA and contribute the amount that you are comfortable with.

An HSA is only offered with high deductible plans, which usually come with lower monthly premiums. This may leave more funds available to make a higher HSA contribution realistic. And, with money tucked away in an HSA account, the expenses toward a higher deductible can be as manageable—if not more so—than a traditional low-deductible plan.

Dollars going into HSAs have a “triple tax” advantage.

  1. Contributions made to the HSA are not taxed. Before income tax is assessed, your monthly HSA contribution gets taken out of your pay and put into an HSA account.
  2. When you use HSA funds for qualified medical expenses, today or at any point in the future, those withdrawals are not taxed. Conversely, until you turn 59.5, withdrawals from your 401(k) are subject to both income tax and a 10 percent penalty.
  3. Earnings on interest and investment gains are not taxed.

Note: You can also contribute to your HSA with money you’ve already been taxed on; if this is the case, you will claim your tax savings on these dollars in the form of deductions when you file your annual taxes.

Plus, your HSA balance rolls over every year. It can be taken with you from job to job and into retirement, which empowers you to save long-term for future medical expenses. The importance of building long-term savings is evident in this estimate from HealthViewServices:

A 65-year-old couple in good health retiring in 2019 will need $387,644 to pay for healthcare costs for the remainder of their lives. As this figure only continues to rise each year, one can only imagine how staggering it will be for those who will be retiring a few decades from now.

Need help determining how much you should set aside in your HSA each month to reach your retirement savings goal? Consider using WEX Health’s free HSA Goal Calculator to help you determine the right amount for you with consideration to your health plan coverage type, deductible amount, number of years before retirement, monthly healthcare expense and more.

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