What are Health Savings Accounts (HSAs)?
A Health Savings Account (HSA) is a personal savings account which is funded with before-tax dollars and used for medical expenses.
With an HSA as the safety net, an individual can choose a lower-cost high deductible health plan and use the HSA funds to pay for the out-of-pocket expenses incurred before the health plan begins paying for expenses. The benefits are lower premiums and tax deductions when using funds for medical expenses.
The chart below shows the annual deductibles, out-of-pocket maximums, and contributions maximums (i.e., the amount that can be deposited into the HSA for the year indicated). It also indicates the amount those over 55 can use as a catch-up contribution.
Who is eligible for a Health Savings Account?
Any adult meeting the following requirements can contribute to an HSA:
•Has coverage under an HSA-qualified “high deductible health plan” (HDHP)
•Has no other medical insurance and not enrolled in Medicare
•Cannot be claimed as a dependent on tax forms
A Health Savings Account allows you to save money with a low-cost health care plan, save taxes with a deduction, and build a tax-free fund for medical expenses.
Who can contribute to a Health Savings Account?
Either the individual or the employer can make contributions—even though the account belongs to the subscriber. The money will roll over from year to year, and will go with the individual regardless of employment status.
Why open a Health Savings Account?
An HSA provides you triple tax savings: tax deductions when you contribute to your account; tax-deferred earnings through investments; and tax-free withdrawals for qualified medical expenses.
You can save for future expenses.
When you open an HSA, you get a low-cost health plan while saving for future expenses.
You can save tax dollars on medical expenses.
An HSA offers a way to save tax dollars on medical expenses that traditional insurance does not cover, such as holistic medicine, vision care, dental work, chiropractic services etc. Money from this type of savings account can also be used for long-term care insurance premiums, for COBRA premiums, and premiums for Medicare.
You can use your HSA to pay for medical expenses for yourself, your spouse and dependent children.