Daniel Stewart

3 Benefits of a Third-Party Contribution to Your HSA

A health savings account (HSA) is a wonderful way to save tax-free money to use toward healthcare costs, and many employers provide access to HSA benefits. The best part is that employers often contribute to employee HSA accounts either through straight contributions or some type of matching plan. However, you may not know that third-party contributions are also allowed.

Third-party contributions to your HSA can be made by friends, family members, or pretty much anyone. There are several benefits to having others contribute to your account, including:

1. More Money

It comes down to HSA account basics - more money coming in means more money to spend on healthcare costs. As such, the biggest benefit of third-party contributions, at least on the surface level, is that your account grows without you having to contribute extra cash.

Another element of HSA account basics to remember - there are still contribution limits when third-party contributions are made. For 2022, the single-coverage contribution limit is $3,650, and the contribution limit for family coverage is $7,300. These limits tend to change each year, so it would be a good idea to check with the Internal Revenue Service to see what the current year's limits are.

2. Contributions Are Deductible

According to the Internal Revenue Service, contributions made by third-party contributors other than employers are deductible. This could change your tax situation so, you will want to work with a tax expert if your HSA has received contributions from family and friends.

3. Contributions Are Not Taxed

Like with other types of contributions to an HSA, funds deposited by a friend or family member are not subject to tax. This can be an easy way for someone to give a gift without worrying about tax liabilities, but once again, this will depend on your tax situation as well as the tax situation of the person contributing.

To receive contributions from third-party sources, talk to your account administrator. This is the person who will be able to provide you with information about how contributions can be made and how much has already been contributed so far this year.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years' experience in business finance. You can find his thoughts at savings guide blog.