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Starting a family is an exciting time, but it also comes with many stressors, like figuring out who's going to watch the baby or if you need to buy a bigger house. For some, even the process of family planning leading up to conception can cost thousands of dollars.
Having a baby and taking care of its medical needs is expensive. Giving birth can cost a significant amount in out-of-pocket costs, not to mention paying for 18 years' worth of medical care. Having an HSA can help reduce the costs associated with having a family, especially if you plan ahead. Here are some ideas.
Increase your HSA contributions
If you're planning to have a family or are currently pregnant, it's time to increase your HSA contributions. The average cost of childbirth is $4,500 after insurance which means you'll have to pay thousands out of pocket when you deliver. You can ease the burden by saving that amount in your HSA, which has an annual contribution limit of $4,150 if you participate in the high deductible health plan as an individual in 2024. Fortunately, you and your spouse can save even more money in an HSA if you're both under an HSA compatible insurance plan, participating as a family. Two-person or family health plan participation allows you to set aside up to $8,300 in one year, which may help cover prenatal care, delivery, and postpartum doctor's visits.
When you pay for health care expenses with an HSA, you get to deduct those contributions on your taxes. Plus, qualified withdrawals from an HSA are also tax-free. There's also no deadline on using the money in an HSA so you can start saving now and use the money anytime: in five, ten, or twenty years — it’s entirely up to you. As long as you're on an HSA eligible plan while making HSA contributions, you can use the funds anytime you like for you, your spouse or an eligible dependent that you claim on your taxes.
Plus, even if your insurance plan doesn't cover your child, you can still use HSA funds to cover your child’s health care expenses like services, prescriptions, specialist appointments, certain medical supplies, dental care, vision-related bills, and more, even if the other parent pays for their medical premiums. Family planning items like condoms and fertility kits and pregnancy tests are also eligible.
Set up automatic contributions
The easiest way to save for health-related costs is to have an employer that offers HSA pre-tax contributions from payroll. But if that's not an option, you can set up automatic transfers from your bank account to your HSA account, which is usually at another bank. For example, if you can afford to save $200 a month in an HSA, setting up monthly withdrawals from your checking account to your HSA can help ensure you never forget a transfer.
Automatic contributions will help you save for health-related expenses even when things are going great. Think of it as an emergency fund for medical bills — you'll only dip into it when you really need it, like if your child breaks their arm or needs multiple fillings. If you plan ahead, you can even use an HSA for braces or other costly services.
If you're ready to start saving for medical bills, consider setting up an HSA. Learn more about them at our online Learning Center, including what supplies are and aren't covered and what specific procedures qualify.
As always, the information provided in this article should not be considered legal or tax advice. Please consult a licensed professional for appropriate advice given your individual situation.
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