Monday, April 8, 2013

Don’t forget April 15th deadline for HSA contributions

Tick tock. Tick tock.

This time of year you can almost hear the clock ticking as we rush to beat the April 15th deadline for filing income taxes.

But in the hustle to add, subtract, multiply and divide, it’s easy to forget a money-saving deadline that comes the same day as tax day. April 15th is also the very last day to make a contribution into a health savings account (HSA).

An HSA is a medical savings account available to consumers enrolled in a high-deductible health plan. The funds contributed to an HSA are not subject to federal income tax, nor are any accumulated income earned in an HSA. Consumers can pay for insurance premiums, deductibles, co-pays, prescription drugs and other eligible medical costs from the HSA throughout the year and can then roll over unused amounts into future years, potentially creating a kind of medical expense nest egg over time.

And according to the experts, you absolutely should save money for future medical needs. A recent study by Fidelity Benefits Consulting estimates that a 65-year-old couple who retired in 2012 will need $240,000 just to cover their medical costs in retirement.

Having an HSA tends to make people pay more attention not just to what they are paying for healthcare, but also to the care they receive. A study by UnitedHealthcare shows that five percent more of HSA members sought preventive care than a peer group of traditional PPO members. HSA members were 16-percent more likely to get cervical or prostate cancer screenings and those with heart conditions were 20-to 40- percent more likely to get important tests.

A UnitedHealthcare study also found that both physician groups and employees saved money with HSAs. The cost per consumer decreased three percent to five percent in the HSA plan during a three-year period. Plan participants had 22 percent fewer hospital admissions and 14-percent fewer emergency room visits.

HSAs are becoming more popular as more employers and individuals learn about the benefits. The Insurance industry trade group America’s Health Insurance Plans reported in 2012 that more than 13.5 million Americans with individual or employer group coverage had an HSA-qualified plan, an increase of 18 percent from 2011.

The federal government gives employees and employers (who are allowed to add funds to the HSAs of employees) until April 15th of the year to add funds to an HSA account for the prior year. That means that if you have an HSA and some extra funds, you can cut your taxes while adding to your nest egg for future medical care. The HSA limits for 2012 are $3,100 for an individual and $6,250 for a family. HSA holders 55 and older can contribute and deduct an additional $1,000.

So what are you waiting for? If you have an HSA, contribute as much as you can up to the maximum before April 15th. And if you don’t have an HSA and you want to learn more about them, visit

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