Health Savings Accounts


What exactly is a Health Savings Account (HSA)?
Health Savings Accounts (HSAs) are tax-exempt accounts where funds grow to pay for medical expenses they were created to help give control back to consumers and lower healthcare costs. HSAs provide a financial incentive for consumers to select a High Deductible Health Plan (HDHP), HDHPs have lower monthly premiums than traditional plans The HSA/HDHP combination provides consumers with more incentive to shop carefully for healthcare services.

An HSA is your account. If you switch jobs, the HSA goes with you. Your money rolls over every year. There is no “use it or lose it” requirement.

Who Can Have an HSA?

Any adult can contribute to an HSA if they:

  • Have coverage under an HSA-qualified “High Deductible Health Plan” (HDHP).
  • Have no other first-dollar medical coverage (other types of insurance like specific injury insurance or accident, disability, dental care, vision care, or long-term care insurance are permitted).
  • Are not enrolled in Medicare
  • Cannot be claimed as a dependent on someone else’s tax return.

High Deductible Health Plans

In order open an HSA, you must have a qualified High Deductible Health Plan. The IRS determines the guidelines for qualified HDHPs.

2016 offers individuals and families additional opportunities to save for current and future health care with a Health Savings Account (HSA):

  • HSA holders can choose to save up to $3,350 for an individual and $6,750 for a family (HSA holders 55 and older get to save an extra $1,000 which means $4,350 for an individual and $7,750 for a family) – and these contributions are 100% tax deductible from gross income.
  • Minimum annual deductibles are $1,300 for self-only coverage or $2,600 for family coverage.
  • Annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) cannot exceed $6,550 for self-only coverage and $13,100 for family coverage.

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Here are some key points about contributions:

  • Contributions cannot exceed your HDHP deductible or the IRS Contribution Limit, whichever is lower.
  • Contribution limits are prorated based on the start date of your HDHP.
  • Anyone can make a contribution to your HSA.
  • Your contributions are tax deductible.
  • If your employer contributes to your HSA, that contribution is done on a pre-tax basis
  • Any pay-roll deductions through Section 125 for your HSA are also on a pre-tax basis

Here are some key points about distributions:

  • You can use your money tax-free at any time for eligible medical expenses.
  • When you turn 65, you can use the money for non-eligible medical expenses. The money is subject to income tax, and there are no IRS penalties.
  • If you are under age 65 and use your money for non-eligible medical expenses, you will be subject to income tax and a 20% tax penalty.
View the HSA Flow Chart