Health Savings Accounts

An HSA can reduce your health insurance premiums 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.
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— by enrolling in mandatory high deductible health plans you potentially reduce your monthly premiums.
  • 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.
  • Distributions are tax-free when money is withdrawn to pay for qualified medical expenses.
  • Contributions can be carried over from one tax year to the next—unlike the "use it or lose it" requirement imposed upon flexible spending accounts.

Eligibility and Contribution Limits

In order to be eligible to set up an HSA, an individual must first be covered under a high-deductible health plan (HDHP). Furthermore, the individual is generally prohibited from possessing other types of health insurance coverage unless such coverage is considered disregarded coverage. Disregarded coverage includes insurance related to accident, disability, vision, dental care or long-term care and also includes insurance providing coverage regarding a special disease or illness or insurance paying a fixed amount per day for hospitalization coverage. In addition, an individual is not an eligible individual for purposes of an HSA with respect to any month during which the individual is enrolled in Medicare Part D or in any other Medicare benefit program.
It is important to note that an HDHP can offer either self-only or family coverage. Below are contribution limits and the requirements for eligibility.
Health Savings Account (HSA) Contribution Limits
High Deductible
Health Plan Coverage
Standard Limit
(under age 55)
Catch-up Limit
(Age 55 - 65, 65 and older if you qualify)
Individual (Self Only) $3,450 $4,450
Family $6,850 $7,950
High Deductible Health Plan Requirements
High Deductible
Health Plan Coverage
Minimum Deductible
of at Least:
Annual Out-of-Pocket Expense Limit
Individual (Self Only) $1,350 $6,650
Family $2,700 $13,300
2018 CESA Contribution Deadline is 4/15/2019
It is also important to note that an HDHP can impose higher out-of-pocket expenses (co-pays and co-insurance) for any services provided by non-network providers.