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Home » Health, Health Insurance, HSA's

Why I will be Maxing out my HSA in 2014

Last updated by on April 19, 2016

Update: the 2015 maximum HSA contribution has been announced and there is an increase over 2014.

Along with the other tax advantaged accounts, the IRS recently announced increases in limits to one of my favorite savings vehicles – HSA’s.

Good news – there was a slight increase in maximum contribution to HSA’s, despite the maximum 401K contribution (with its higher max) and maximum IRA contribution staying the same (more on that in a bit).

Back to my love for HSA’s. HSA’s are like a turbo-charged IRA, offering pre-tax contributions, growth through investment, and tax-free distributions.

Unlike with FSA’s, contributions roll over from year-to-year, and you own the account, meaning it goes with you regardless of future employer or health plan.

There is a catch. You must be enrolled in an HDHP in order to be eligible to contribute to one. HDHP’s are classified as plans that have:

  • An annual deductible of at least $1,250 for self-only coverage or $2,500 for family coverage (same as last year); and
  • Annual out-of-pocket expense maximums (e.g., deductibles, co-payments, and other amounts, but not premiums) up to $6,350 for self-only coverage or $12,700 for family coverage (up from $6,250 and $12,500 last year).

Here are the 2014 maximums on HSA contributions…

2014 Maximum HSA Contribution Limits

2014 HSA maximum contributionThe 2014 HSA contribution maximum contributions go up slightly from the 2013 maximum HSA contribution levels:

  • Single Plan: $3,300 (up from $3,250)
  • Family Plan: $6,550 (up from $6,450)

As with 401K’s there is a catch up contribution for those age 55 and over. The 2013 HSA catch-up contribution is $1,000 for both single and family plans.

In most cases, you’ll have to decide your HSA contributions for the following year during your open enrollment. Your employer will usually let you contribute a specified amount evenly across all pay periods.

Why I will Max out my HSA Contribution

I really only saw the light with HSA’s in 2012, but now that I have, 2014 will be the third straight year I will max out my HSA contribution.

Here’s why – yes, I am relatively young and healthy now, but, sooner or later, health care costs will catch up with me.

HSA’s allow you to build a significant cushion to protect yourself from future costs. Why pay for health care costs with after-tax dollars if you could pay with pre-tax dollars?

Afraid of hoarding too much? When you turn 65, you can use HSA funds on not just medical expenses, but anything, without penalty.

And remember, the entire time, you can grow your contributions through investments, just like any other retirement account.

At the same time, I’m making a fairly respectable income at the moment and contributing to an HSA cuts my present tax bill.

To top it off, my employer contributes $2,000 (tax free) to my HSA for being enrolled in its HDHP. This has allowed me to achieve the rare feat of making money on health insurance!

If all of that sounds appealing and you’re interested in more on HSA’s, check out the previous links in this article or IRS publication 969. Also, check out my list of the best HSA accounts if you’ve left an employer and want to move your current HSA to a new one (fees do vary quite a bit).

HSA Discussion:

  • Will you be maxing out your HSA this year or in 2014?
  • What do you like or dislike about HSA’s?

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Steve says:

    I can’t speak for all HSA accounts, but mine doesn’t allow investing until I reach $2000. Considering I only put in enough for the company match (it’ll match penny for penny up to $400 and then nothing), and I routinely use my HSA for co-pays and prescription drugs, it’ll likely be awhile until I’m able to actually invest. I think they’re a good deal, especially with company matches, but I wouldn’t really consider them investments for most people.

  • Great post! I plan to do the same. I still need to meet the maximum for 2012. I received an added bonus at work that I didn’t plan for and didn’t increase my HSA contribution early enough within the year. To keep my taxable income down I plan to make a contribution with my after tax dollars. I still have to verify, but apparently when I file my taxes it will settle out and I can achieve the tax-free status for that contribution for 2012.

    • Natalie H says:

      You are correct. You will get your federal income tax back, but you won’t be able to get back any FICA paid on that amount. If your employer offers paycheck deduction, always use it to save on FICA taxes too.

  • Ryan says:

    I’ve never heard of this. Im still fairly young but this sounds fantastic(as long as I stay healthy when I’m young). After reading your article I did a quick look at HDHP/HSA’s.

    Im getting married soon and she will have decent salary as I go to school full time. We are both healthy and young. I just do not really understand HDHP’s? Do employers sometimes offer these plans that qualify for HSA’s? Or is this an individual plan only?

    I’m just wondering for future reference. If I should wait until either my wife or I have an employer who offers such a plan or just go ahead and do it myself. Im only 22 so I have plenty of time. I just like planning my finances more than the average guy.

    • G.E. Miller says:

      Employers offer HDHP’s sometimes (not all the time), and you can buy them individually. Even some of the new exchange plans (i.e. catastrophic plan) are HDHP’s. Not every HDHP plan offers a paired HSA though.

      • Michelle says:

        Catastrophic plans are not HDHP’s and do not qualify you to contribute to an HSA. Bronze level plans on the new exchange qualify as HDHP’s however. That’s the type of plan I have for this year, which allows me to continue contributing to my HSA account.

  • Ben says:

    HSAs are great until you lose your HDP and ability to contribute…. I switched jobs recently and only had an option to go on a HMO. The remaining amount in my HSA (which I can continue to use for qualified medical expenses) did not meet the limit to not have a monthly service charge imposed by my HSA bank. Now, I can’t get the amount above the minimum threshold, and I can’t take the money out without penalty except for medical expenses.

    But rock on GE on maxing this out!

  • Ron Ablang says:

    I have been nearly maxing out since day one (2009) and I have almost $15k in the HSA now. I have 2 kids born in 2 different years since then so I’ve hit the max deductible in those 2 years.

  • Tim says:

    For me the HSA was and still is the way to go. I’ve very active and healthy 30 y/o male. I currently go to the Dr once a year for my physical and on a few occasion for something else..

    In 3 years since starting my HSA the balance is currently about $11k which I have $9k invested in index funds at Fidelity. I could stop contributing to it… but with the tax savings and growth and tax free withdrawal…

    I’ll use this in retirement to pay my medical premiums or fees.. Sounded like a good plan to me to be prepared for the future. Unlike the rest of today’s aging generations that only live for the hear and now.

  • DLB says:

    Nice for all of you with disposable income. This still doesn’t help most Americans who live paycheck to paycheck and can’t contribute. Something else needs to be done for all of those folks.


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