Health Savings Accounts (HSAs)

The HSA can reduce your health insurance premiums by as much as 70%, while you set aside funds to pay for current and future medical expenses. HSA contributions are tax deductible (subject to limitations), and withdrawals are tax free when used for qualifying medical expenses. An individual may contribute up to $2,850 annually, and a family may contribute up to $5,650 annually.

Why Should I Open an HSA?

If you want to take control of your health care costs—avoiding high premiums and complicated health plans—then an HSA could be the right plan for you. These are just some of the benefits of a self-directed HSA:

• Lower premium costs than those for low-deductible health plans—enrolling in the mandatory high deductible health plans will reduce your monthly premiums, in some cases by 70%.
• Contributions are tax deductible (subject to limitations).
• Contributions can be invested (similar to a self-directed IRA)—funds can be invested in the same way as a self-directed IRA, with the possibility of accumulating tax-free or tax-deferred profits in investments that you know best.
• Assets are never taxed if they're used for qualifying medical expenses.
• Contributions can be carried over from one tax year to the next—forget about “use it or lose it” health savings accounts. Plus, when money is withdrawn to pay for qualified medical expenses, the distribution is tax free.

Eligibility

An individual or family must be covered by a high-deductible health plan (HDHP). An HDHP is a health insurance plan with a minimum deductible of $1,100 for self-only coverage or $2,200 for family coverage. Annual out-of-pocket expenses, including deductibles, cannot exceed $5,100 for self-only coverage or $10,200 for family coverage. HDHPs can have first-dollar coverage (no deductible) for preventive care and higher out-of-pocket expenses (co-pays and co-insurance) for non-network services.