What is a Health Savings Account (HSA)?

A Health Savings Account (HSA) is a tax-exempt savings plan for people with high-deductible health care plans. With an HSA you can put money aside to save for future medical expenses. There are certain advantages to putting money into an HSA, including favorable tax advantages. You control the money, deciding on how to spend it on your health care needs. Whatever you don’t spend is yours to keep, forever.

Is a Health Savings Account Right for You?

You may want to consider an HSA if:

  • You’re currently participating or are thinking of participating in a high-deductible health plan (HDHP).
  • You’re self-employed or self-insured and want a cost effective HDHP health insurance solution that will help you build financial security.
  • You’re a business owner and want to offer a HDHP alternative to your employees. An HSA may help lower your overall health insurance costs.

What is a High Deductible Health Plan?

A high-deductible health plan (HDHP) is a type of health insurance plan that offers lower monthly premiums than more traditional plans like PPO’s or HMO’s in exchange for a higher deductible.

Who is Eligible for a Health Savings Account?

You’re eligible for an HSA if you:

  • Are covered under a qualified high-deductible health plan (HDHP) on the first day of the month**;
  • Are not enrolled in Medicare (generally not yet age 65);
  • Are not able to be claimed as a dependent on another person’s tax return; and
  • Are not covered by a non-HDHP that provides any benefit that is also covered by your HDHP.

*Any person considering opening a Health Savings Account should consult a tax advisor first to determine the tax consequences of doing so.
**Always check with your insurance provider to be certain that the high-deductible health plan you are considering is HSA-qualified.

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