Resources & Insights

Maximize Your 2018 Tax Breaks with an HSA

April 17, 2018

Tax season just wrapped up but it’s not too early to start thinking about next year’s return, especially if you’d like to find new deductions to help lower your tax bill.

Did you know you can maximize your tax breaks with an HSA? Money deposited into an HSA isn’t just tax-deductible. It also grows tax-free and can be used without owing tax to pay for medical expenses.
CCIG’s Scott McGraw.

Under the Tax Jobs and Cuts Act of 2017, the new standard deduction on your 2018 return will be $12,000 for single filers and $24,000 for married couples filing jointly. Those amounts were nearly doubled compared to their previous levels, so fewer people are likely to itemize deductions next April.

On the other hand, you could lower your tax bill further by establishing a Health Savings Account. The tax advantages of an HSA – which are linked to high-deductible health plans – have existed for as long as these accounts have been around. In fact, you can claim a tax deduction for contributions you, or someone other than your employer, make to your HSA even if you don’t itemize. In other words, HSA contributions are excluded from your gross income.

Money deposited into an HSA isn’t just tax-deductible. It also grows tax-free and can be used without owing tax to pay for medical expenses.

If you’re considering an HSA, the maximum amount individuals with family coverage can contribute is now $6,900 annually. The maximum for people with individual coverage in 2018 is $3,450 a year. If you’re age 55 or older, you can make an additional $1,000 catch-up contribution to your HSA.

HSAs, while still underutilized, are growing in popularity.

In 2017, there were 22 million HSA accounts totaling more than $45 billion in assets, an increase of 11 percent in the number of accounts over the previous year, according to the latest figures.

In the simplest terms, HSAs help you offset the out-of-pocket expenses of high-deductible health insurance plans. For many people, they’re a great option for paying for “qualified” health expenses with tax-free dollars.

What, exactly, is a qualified health expense?

Well, it includes the usual, including medication and ambulance trips and visits to the optometrist, among other things. But it also includes expenses that your health plan might not, including massage therapy and chiropractic care.

The money you put into an HSA also can help you pay for a service animal, construction of wheelchair ramps in your home and dental care.

Unlike money in Flexible Spending Accounts, HSA balances roll over year after year — even if you change jobs or insurance plans.

And because of that, HSAs have the potential to accumulate large amounts of savings which can compound tax-free over time, enhancing the retirement savings you’re building through your 401(k)s or individual retirement accounts.

Having said that, HSAs, like so much about healthcare insurance plans nowadays, can be complicated. As always, just reach out to us; we’re happy to help answer any of your questions.

Scott McGraw is Vice President of CCIG’s Employee Benefits division. He can be reached at 720-330-7924 or

CCIG is a Denver-area insurance brokerage with the full-service capabilities of a national brokerage. We do more than make sure you have the right policy. We also help you manage your long-term cost of risk with our risk and claims management expertise and a commitment to service excellence.

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