When to Spend Your HSA Rancho Cucamonga, CA
The cost of healthcare can be intimidating. Luckily, there are ways to save on insurance and out-of-pocket costs. A healthcare savings account is one strategy to help offset the cost of medical and dental expenses.
Patients with healthcare savings accounts can use them for dental services at Jia Y Lee DDS, Inc in Rancho Cucamonga and the surrounding area. Our team works with clients to determine the optimal financial strategy for treatment. Call us at (908) 285-3366 to learn more or to schedule an appointment.
An Investment Tool for Retirement
As Healthcare.gov explains, an HSA is a tax-free account people use to help cover some medical costs. To contribute to an HSA, patients must have a high-deductible insurance plan. There is a yearly limit to the amount of money contributed to an HSA plan.
Unlike flexible savings accounts, the funds in an HSA roll over each year. This allows the balance to continue to grow. Once individuals reach retirement age, they can use their HSA funds for anything, not just medical expenses. An HSA is a great investment tool for retirement since other types of retirement accounts incur taxes.
“An HSA is a great investment tool for retirement since other types of retirement accounts incur taxes.”
HSA Tax Benefits
One of the greatest benefits of opening an HSA is its lower tax liability. Lowering tax liability with an HSA allows people to keep more of their paycheck each year and give less to the IRS. Benefits to opening and contributing to an HSA include:
- Contributions: The money contributed to an HSA is not taxed. Some people set their accounts up so that contributions are automatically taken out of their pay each month. The HSA withdraws the contribution before taxes, so it does not count as income and lowers the yearly tax liability.
- Earnings: An HSA account can earn interest. Earnings on an HSA account are also tax-free. The larger an HSA balance is, the more tax-free earnings it can get.
- Withdrawals: When it is time to use a portion of the HSA account, withdrawals are also not taxed. People can use their withdrawals for any type of qualifying medical expense. There is no need to time medical expenses by the calendar since an HSA does not need to be spent by the end of the year.
“Lowering tax liability with an HSA allows people to keep more of their paycheck each year and give less to the IRS.”
Investing and Spending Strategies
The key to taking advantage of the HSA rules is to spend and invest wisely. Since there are many benefits to keeping an HSA for retirement expenses, it is important for people not to spend all their contributions. Instead, opt to spend a little on routine out-of-pocket medical or dental expenses and keep the balance growing with contributions.
Many dental expenses qualify for HSA spending. For items that are not covered by insurance, the HSA can help bridge the gap. To grow an HSA balance, it is a good idea to invest a portion of it in mutual funds, bonds, or stocks.
“To grow an HSA balance, it is a good idea to invest a portion of it in mutual funds, bonds, or stocks.”
Check out what others are saying about our dental services on Yelp: When to Spend Your HSA in Rancho Cucamonga, CA
Transferring an HSA When Changing Jobs
Another benefit of having an HSA is the ownership of it. The person who opened the HSA account is the owner, not their employer. People that move jobs and change health plans do not have to worry about losing their HSA.
Once people move to a new job and receive a new plan, they can roll their previous account into their new one. HSA balances also roll over, so there is no risk of losing any money left over in the account at the end of the year. HSA users will have access to their money for qualified expenses.
“People that move jobs and change health plans do not have to worry about losing their HSA.”
Questions Answered on This Page
Q. Why is an HSA a good investment tool for retirement?
Q. What are the HSA tax benefits?
Q. How should people spend and invest their HSA contributions?
Q. What are the steps in transferring an HSA when changing jobs?
Q. When is the right time to open an HSA?
People Also Ask
Q. What are the pros and cons of an HSA?
Q. What factors should people consider when choosing a dental insurance plan?
Q. Beyond regular checkups, what additional procedures might a dentist recommend?
The Right Time To Open an HSA
As long as a person is qualified, it is possible to open an HSA at any age. However, it may be beneficial to open an HSA at a younger age because of the power of time. Investing early on gives people the ability to have their contributions compound tax-free for longer. People should start saving with an HSA when they are young and healthy with lower health care costs.
Early on in their careers, people do not have to save a large amount to their HSA since there is no minimum contribution. However, saving money in an HSA while young can help people get the most out of their long-term retirement savings. We recommend developing an investment and savings strategy as early as possible.
“Investing early on gives people the ability to have their contributions compound tax-free for longer.”
Frequently Asked Questions
Q. What are some examples of qualified medical expenses for a healthcare savings account?
A. HSA withdrawals are only tax-free when spent on qualifying medical expenses. These include out-of-pocket expenses for doctor visits, medical procedures, co-pays, dental costs, vision care, medications, and feminine hygiene products. The expenses can be for the individual, a spouse, or a dependent.
Q. How much can I contribute each year to my HSA?
A. Each year, the IRS sets a limit on the amount of money someone can contribute to an HSA. For 2021, the limit for an individual is $3,600, and for a family, it is $7,200. Individuals over the age of 55 can contribute an additional $1,000 each year as a catch-up contribution.
Q. What is a high-deductible health insurance plan?
A. To qualify for an HSA, an individual must be participating in a high-deductible health plan. With these, the individual is responsible for paying a certain amount before the health insurance company steps in and starts covering expenses. The deductible needs to be at least $1,400 for an individual plan or $2,800 for a family plan.
Q. What are the penalties for withdrawing funds for ineligible purchases for an HSA?
A. There is a penalty when using an HSA to pay for things that are not qualifying medical expenses. First, you have to pay taxes on that money as it now counts as income. Next, if you are younger than 65, you are charged another 20% penalty on the funds. To avoid this, do not withdraw HSA funds for non-medical expenses.
Q. Who else can contribute to my HSA?
A. Some employers also make contributions to their staff's HSA plans. If your job contributes to your HSA, be sure that you do not go over the IRS contribution limit. Excess contributions will result in a 6% tax penalty.
Scan here to view this page, When to Spend Your HSA, on mobile
Dental Terminology
Call Us Today
There are many advantages to HSA, from managing the costs of some dental treatments to investing for retirement. Our team can help you understand how these savings accounts work and what expenses qualify. Call us at 908-285-3366 for more information or to schedule an appointment.
Helpful Related Links
- American Dental Association (ADA). Glossary of Dental Clinical Terms. 2025
- American Academy of Cosmetic Dentistry® (AACD). Home Page. 2025
- WebMD. WebMD’s Oral Care Guide. 2025
About our business, license, and website security
- Jia Y Lee DDS, Inc was established in 1999.
- We accept the following payment methods: American Express, Cash, Check, Discover, MasterCard, and Visa
- We serve patients from the following counties: Los Angeles County, San Bernardino County and Riverside County
- We serve patients from the following cities: Rancho Cucamonga, Alta Loma, Upland, Ontario, Fontana, Rialto, Chino, Colton, Eastvale, San Bernardino, and Loma Linda
- CA (License #43358). View License Information and Specifics
- National Provider Identifier Database (1992849939). View NPI Registry Information
- Healthgrades. View Background Information and Reviews
- Norton Safe Web. View Details
- Trend Micro Site Safety Center. View Details
Scan here to open directions to Jia Y Lee DDS, Inc on mobile
Back to top of When to Spend Your HSA
Related Posts
A Family Dentist Can Treat Your Child
Getting a professional dental checkup and cleaning every six months is not just important for adults. Children need this type of care too, and a family dentist can provide it. There are several reasons parents should schedule routine dental appointments for their children early in life. Doing so can help kids maintain good oral health…
Welcome To Jia Y Lee DDS, Inc
We are committed to providing quality service to residents located In the Rancho Cucamonga, CA area. Our website has additional information about the following topics: Dentist, Cosmetic Dentist, Family Dentist, General Dentist, Emergency Dentist, Dental Implants, All-on-4 Dental Implants, Implant Supported Dentures, Dentures and Dental Crowns.
Explore additional topics covered on our website:
Call Us Today
Scan here to call Jia Y Lee DDS, Inc on mobile