Healthcare has long been a hot topic for Americans. At First Alliance, we often get questions about Health Savings Accounts or HSA's. HSA's are a really good way to save for medical expenses, and reduce your taxable income.
What Is a Health Savings Account (HSA)
A Health Savings Account is a type of savings account that lets you save money on a pre-tax basis to help you pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, co-payments, co-insurance, and some other expenses, you can lower your overall healthcare costs.
How Do I Know If I Qualify for an HSA?
The IRS defines a high deductible health plan as any plan with a deductible of at least $1,350 for an individual or $2,700 for a family. An HDHP’s total yearly out-of-pocket expenses (including deductibles, copayments, and coinsurance) can’t be more than $6,650 for an individual or $13,300 for a family. (This limit doesn't apply to out-of-network services.)
How Does an HSA Work?
Most health insurance companies offer HSA's. You can also open a separate HSA at a financial institution that offers HSA's. On an annual basis, you get to decide how much you would like to contribute to your HSA, although there are maximums outlined by the Government. If your employer offers an HSA, you can make automatic contributions right through payroll.
How is an HSA Different from a Flexible Spending Account?
An HSA is different from a Flexible Spending Account, in that unlike a Flexible Spending Account, your HSA balance rolls over from year to year. HSA's are not "Use it or lose it" type accounts.
How Long Can I Keep my HSA?
You can keep your HSA for as long as you want. Once you reach age 65, and have Medicare, you can't contribute to your HSA, but you can continue to use it to cover qualified medical expenses.
Where Can I Find More Information about HSA's?
The best resource for more information about HSA's is to visit healthcare.gov. They have information and resources to help you learn more and help you decide if an HSA is right for you.
