Home Vision Insurance FSAs and HSAs

FAQ: Can I carry over HSA money?

A health savings account (HSA) is a special benefit plan offered by some employers. If your employer provides an HSA, you are able to deposit pre-tax dollars and can withdraw from this account tax-free so long as the funds are used to pay for eligible expenses.

And unlike a flexible spending account (FSA), your HSA funds automatically roll over from year to year, keeping past investments available to pay for future medical expenses.

There are two types of HSA carryover options. The standard HSA rollover requires no action on your part. Your funds shift from year to year and are available when needed. More importantly, the beginning of each new year resets contribution limits and allows you to add funds to the accounts again.

The second option is transferring HSA funds to a new account. But, you could get charged a 20% penalty by the Internal Revenue Service.

To maintain the tax-savings benefits of the HSA and avoid the penalty, only one rollover is allowed per one-year period. The one-year period starts the day you initiate the rollover. You then have 60 days to deposit the funds into your new HSA before risking taxation on the funds.

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