Planning Ahead for a Growing Family

Are you planning for a baby in the near—or not-so-near—future? If so, have you given any thought to how you can best use your HSA to cover the expenses you're likely to incur, and how you can maximize your HSA benefits while you're growing your family?

You probably already know that you can use your HSA funds to cover the out-of-pocket medical costs that go along with having a baby. That includes the obvious costs (like having to meet your health plan's deductible), but it also includes things like pregnancy and fertility tests and, as long as you get a letter of medical necessity, the cost of hiring a doula.

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Save accordingly...

You should expect that you'll meet your health plan's deductible the year you have a baby, and in most cases, the full out-of-pocket maximum—so be sure you know how much that is. But there is also a wide range of products for babies and moms that can be purchased with tax-free HSA funds.

You'll also want to get familiar with HSA-eligible products and services ahead of time, so that you can either use HSA funds to pay for them or save your receipts and reimburse yourself from your HSA at some point in the future.

Consider contributing your personal max...

If you have an HSA-qualified high-deductible health plan (HDHP), it's a good idea to be fully funding it in preparation for the cost of having a baby. For 2025, you can contribute up to $4,300 if the HDHP covers just yourself, and up to $8,550 if it covers at least one other family member.

Keep in mind that if you currently have self-only coverage under your HDHP and you're planning to add your new baby to your health plan, you'll be allowed to contribute more to your HSA at that point.

If your HDHP already covers at least one other family member, the addition of your new baby won't change your contribution limit, since the full family limit applies anytime you have two or more people covered on the plan. But if you currently have self-only HDHP coverage and you add your baby to your plan, that makes you eligible to contribute the family amount ($8,550 in 2025) to your HSA.

Don't forget past expenses...

As you plan for your growing family, keep in mind that you can use HSA

funds to reimburse yourself for expenses that you incurred in the past, as

long as the HSA was already established when you incurred the expense.

So, as long as you already have your HSA when your baby is born, you

can put money in it later on and then take that money back out, tax-

free, to pay yourself back for the out-of-pocket costs from the birth.

If you don't have the money up-front and have to set up a payment plan

with your doctor or hospital, this can be a good way to ensure that you're

getting to use tax-free money to cover your out-of-pocket costs, even if

you're having to stretch the repayment out over a longer period of time.

A quick word about adoption

The costs associated with adoption are not considered qualified medical expenses, so you can't use your tax-free HSA funds to cover them (you're always able to withdraw money from your HSA for whatever purpose you like, but you'll be subject to income tax and a 20% penalty if you use the money for something other than qualified medical expenses). But as soon as the child becomes your tax dependent, his or her medical expenses can be covered using tax-free funds from your HSA.

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Planning Ahead for a Growing Family

Save accordingly...

Consider contributing your personal max...

Don't forget past expenses...

A quick word about adoption

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