What is an HSA?
A Health Savings Account (HSA) is a type of medical savings account that allows you to save money to pay for current and future medical expenses on
a tax-free basis. In order to be eligible for a HSA, you must be covereed by a high-deductible plan and not have any other health insurance. HSAs are a good option for individuals who want to protect themselves from catastrophic health-care costs, but don’t anticipate many day-to-day medical costs. They also can serve as a lower-cost alternative to more traditional health plans for small businesses.
a tax-free basis. In order to be eligible for a HSA, you must be covereed by a high-deductible plan and not have any other health insurance. HSAs are a good option for individuals who want to protect themselves from catastrophic health-care costs, but don’t anticipate many day-to-day medical costs. They also can serve as a lower-cost alternative to more traditional health plans for small businesses.Here’s how the program works… An HSA must be paired with a health insurance plan that requires an annual deductible of at least $1,100 for individuals or $2,200 for families. Despite the high deductibles, some plans still offer full coverage or require ony a small copayment for preventative care, such as an annual physical or a well-child checkup.
High-deductible plans typically have lower premiums than more traditional plans, but they may have the potential for higher out-of-pocket “stop-losses.” Individuals (or their employers) may contribute up to $2,900 for single people and $5,900 for families toward their HSAs.
These contributions are tax-deductible. Moreover, if the money is used for health-related expenses, it is never taxed. A final attractive feature of HSAs is that they can pay for expenses that your regular health plan ordinariy doesn’t cover, such as eyeglasses and hearing aids.