A Health Savings Account (HSA) is a tax-exempt account you set up to pay or reimburse certain medical expenses you incur.
Who can get an HSA?
You must be an eligible individual to qualify for an HSA. To be eligible, you must be enrolled in a high-deductible health plan (HDHP), meaning the deductible are as higher or higher than these (which most plans are!):
| 2017 Levels | Self-only coverage | Family coverage |
| Minimum annual deductible | $1,300 | $2,600 |
| Maximum annual deductible and other out-of-pocket expenses* |
$6,550 | $13,100 |
| * This limit doesn’t apply to deductibles and expenses for out-of-network services if the plan uses a network of providers. Instead, only deductibles and out-of-pocket expenses for services within the network should be used to figure whether the limit applies. |
You cannot be enrolled in Medicare and you cannot be claimed as a dependent on someone else’s tax return for the previous year. Each spouse who is an eligible individual who wants an HSA must open a separate HSA. This means you cannot have a joint HSA.
Where and How do you get an HSA set up?
You do not need permission or authorization from the IRS establish an HSA. You set up an HSA with a bank, an insurance company, or anyone already approved by the IRS to be a trustee of individual retirement arrangements (IRAs) or Archer MSAs. The HSA can be established through a trustee that is through or different from your health plan provider. Your employer may already have some information on HSA trustees available to you.
What happens to the money you put in the HSA?
The contributions remain in your account until you use them. There is no deadline for self-reimbursements of qualified medical expenses incurred. HSA participants can take advantage by paying for medical costs out of pocket and retaining receipts but allowing their accounts to grow tax-free. Money can then be withdrawn years later for any reason up to the value of the receipts. The interest or other earnings on the assets in the account are tax free. Uses, call distributions, are tax free if you pay qualified medical expenses. HSA’s are “portable.” That means it stays with you if you change employers or leave the work force.