ABCs of HSAs
We cover the basics of health savings accounts.
Megan Pacholok: As open-enrollment season approaches, you may be considering a high-deductible healthcare plan with a health savings accounts or, as they are more commonly known as, an HSA. Well, what is a high-deductible plan? How can you use your HSA? What are the benefits and the limitations? And what is the “triple tax advantage” everyone talks about with HSAs?
Let’s take a look.
A high-deductible health plan is a type of health insurance plan that offers lower premiums in exchange for higher deductibles compared to other types of healthcare plans.
A health savings account, or HSA, is a tax-advantaged vehicle to save for qualified medical expenses. They are available to people enrolled in high-deductible healthcare plans.
Of course, there are some conditions to qualify for an HSA and some limits to keep in mind:
First, to qualify for an HSA, your high-deductible healthcare plan must have a deductible of at least $1,400 for an individual coverage or $2,800 for family coverage.
The high-deductible health plan's annual out-of-pocket expenses, including deductibles but not premiums, cannot exceed $7,050 for self-coverage and $14,100 for family coverage.
Finally, HSA participants have annual contribution limits. Those covered by an individual plan can contribute up to $3,650, while those covered in a family plan can contribute up to $7,300.
Note, if offered, employer contributions do count toward these maximums. Also, individuals over the age of 55 can save an additional $1,000 each year.