- Self-Directed IRAs
- Other Tax-Advantaged Accounts
- Self-Directed Investment Options
- How to Get Started
- The Equity Trust Advantage
- Resources for Individual Investors
- Specialized Custody Solutions
- Custodial Accounts
- Alternative Investments
- Innovation & Technology
- Resources for Investments
- About Us
A Health Savings Account, with its potential triple tax benefits, can be a powerful way to save for healthcare-related expenses in retirement. Who can open an account, and what are the qualifications? Find the answers to your HSA questions below.
1. What is a Health Savings Account (HSA)?
An HSA is like an IRA for health care expenses. It allows you to control costs by reducing health insurance premiums and putting money into an account to pay for current and future health care expenses. Contributions can be made to the account annually with pre-tax dollars, subject to limitations, much like contributions to IRAs. Contributions and earnings in the account can be withdrawn to pay for qualified medical expenses at any time without tax consequence.
2. Can anyone set up a Health Savings Account?
HSAs have eligibility rules. To be eligible for an HSA, you must:
- Be covered by a High Deductible Health Plan (HDHP)
- Not be covered by any other health insurance
- Not be entitled to Medicare benefits
- Not be claimed as a dependent on another person’s tax return.
There are some qualifications. If you are covered by an HDHP, but have insurance policies that cover specific injuries or diseases, you are not disqualified. The same is true of Accidental Death and Disability coverage, long-term care coverage, dental care plans, and vision plans.
3. What is a High Deductible Health Plan?
An HDHP has been defined by the IRS as a health plan with a minimum deductible of $1,400 for an individual plan and $2,800 for family coverage. An HDHP must also have out-of-pocket expenses, like deductibles and co-pays, which don’t exceed $7,050 for individual plans or $14,100 for family coverage in 2022. Out-of-pocket expenses can be higher for services that are provided outside the plan network.
4. How much can I contribute to my account?
If you have a self-only account, you may contribute up to $3,650 to an HSA in 2022. If you have a family plan, you may contribute up to $7,300 in 2022. A catch-up provision allows account holders age 55 to 65 to contribute an additional $1,000 per year.