What is an HSA?
Health Savings Accounts (HSAs) work in conjunction with high-deductible health plans and offer a straightforward way to pay for deductible and other Qualified Medical Expenses. If you enroll in a HSA - compatible health plan, you may open a tax-deductible, interest-accumulating account. Your plan will specify if it is HSA compatible. All HSA compatible plans have an individual deductible of at least $1,300 (2016).
How does it work?
In a nutshell, here’s how the HSA works: You deposit tax-deductible money into your HSA and use that money to pay for Qualified Medical Expenses which can include your medical deductible and prescription drugs costs and many other Qualified Medical Expenses. If you don’t use the money in your HSA in one year, it rolls over to the next year, all while accumulating interest and shielded from taxes.
How do I open an HSA?
You may establish a Health Savings Account through your current bank, although a small monthly maintenance fee usually applies. Or, you may establish an HSA through your healthcare carrier (for example, CareFirst's BlueFund or United Healthcare's OptumBank). Often, health carriers have a relationship with a bank to offer No-fee HSAs. You may call your health carrier to learn more about these options.
How much money can I deposit into the HSA?
For 2016, you may deposit a total of $3,350 into your HSA if you are enrolled in an individual health plan. If you have a family health plan, you may deposit a total of $6,750. If you are 55 or older, you may contribute an additional $1,000 whether you have an individual or family HSA.
What exactly does the HSA money pay for?
The HSA funds that you deposit pay for a wide variety of medical and medically-related expenses, including prescriptions, eyeglasses, doctor’s visits, and chiropractic visits. You may view the IRS list of Qualified Medical Expenses here: IRS List.
Where can I get more information?
These websites offer a host of additional information about HSAs: