HSAs were designed to help you take more control of your healthcare. With an HSA, you can save money tax-free to pay for almost any medical cost. HSAs are tax-advantaged accounts for consumers who are covered by high deductible health insurance plans.
You can only open an HSA if you are enrolled in a high-deductible health plan (HDHP). An HDHP has a deductible of at least $1,100 for individual plans, and $2,200 for family health plans. You will need to check with your health plan administrator to determine if your health plan is eligible for an HSA.
All of your funds in a HSA are completely tax-free. There are two ways to deposit tax-free savings in an HSA:
- If your employer has a fringe benefits program, you may be able to deposit funds into an HSA directly from your paycheck. The HSA funds go in before income taxes are taken out, so all the money in an HSA is tax-free.
- If your employer doesn’t have a fringe benefits program, you can claim your HSA deposits as a deduction on your next federal tax return. When you withdraw money, you won’t get taxed as long as it pays for a qualified medical expense. With these tax benefits, it’s like the federal government is helping you pay for your health care costs.