You May Have Access to This Amazing Savings Account in 2024 -- Even if You Didn't in 2023

By Maurie Backman | Originally posted on The Motley Fool

The nice thing about savings accounts is that anyone with money can open one. And if you have extra funds at your disposal, you may be in a position to open a certificate of deposit (CD) if you're all set on emergency savings.

HSAs, or health savings accounts, are a bit more exclusive in that you need to meet certain criteria via your health coverage to be able to fund one. But if you're eligible for an HSA, you stand to benefit in a really big way. So even if you didn't have HSA access in 2023, it pays to see if things have changed for 2024.

The upside of HSAs

You can contribute money to a savings account or CD, but it's going to come in the form of after-tax income. And the interest you earn in a CD is also taxable.

With an HSA, your account is funded on a pre-tax basis, so your contributions shield some of your income from taxes. Also, you can invest your HSA to grow your balance, and investment gains are tax-free. Withdrawals are also tax-free, provided they're taken to cover qualifying medical expenses.

Now, it's easy to confuse HSAs with FSAs, or flexible spending accounts. After all, they're both accounts used for healthcare spending, and both are funded with pre-tax dollars.

But the similarities largely end there. With an FSA, you have to spend your full plan balance year after year or risk forfeiting your money. With an HSA, you can carry your balance forward for as long as you want. In fact, with an HSA, you're actually encouraged not to take immediate withdrawals, but rather, invest your money, since it grows tax-free.

You might, for example, put $5,000 into an HSA, leave that balance alone for several years, and watch it grow to $12,000. And the best part? Your $7,000 gain is yours to keep free and clear of taxes.

See if you can fund an HSA in 2024

Perhaps you were unable to fund an HSA in 2023 or other previous years. But the rules for HSA eligibility change on a yearly basis, so it may be that your plan qualifies now when it didn't before.

A more likely scenario, though, is that you got a new job this year with a new health plan to go with it, and as such, you're able to fund an HSA. Or maybe you stayed with the same employer but chose a different type of plan it offered.

Either way, if you have self-only coverage (meaning, you're not covering a spouse or children as well), you can qualify for an HSA this year with a minimum deductible of $1,600 and an out-of-pocket maximum of $8,050. If you have family coverage, your minimum deductible is $3,200 and your out-of-pocket maximum is $16,100.

From there, your contribution limit for 2024 is $4,150 for self-only coverage or $8,300 for family coverage. If you're 55 or older, add $1,000 to whichever of these limits applies to you.

Of course, don't sweat it if you're unable to max out an HSA this year. If it's your first time being eligible for one of these plans, you may need to make room in your budget for contributions. But it definitely pays to take advantage of an HSA for the tax benefits, as well as the benefit of having access to funds for healthcare expenses.