Health Savings Accounts

An HSA is designed to work with a qualified High Deductible Health Plan (HDHP). The funds in your HSA can help pay for medical expenses both covered and not covered by your health plan, including your deductible and co-insurance on the qualified plan. An HSA is your account. When used to pay your medical expenses, all of the money you contribute is tax-deductible and goes with you when you retire or change jobs. In this way, an HSA is portable.

A High Deductible Health Plan (HDHP) is a full major medical health insurance plan with maximum out-of-pocket limits and minimum annual deductibles. The requirements of a qualifying High-Deductible Medical Plan are determined by the Internal Revenue Service (IRS). These requirements are subject to change each year. There are several tax benefits of an HSA:

A Qualified Medical Expense is defined by the IRS and the expenses must be to primarily alleviate, or prevent, a physical or mental defect or illness. Here are a few examples:

HSAs were created by the Medicare bill signed by President Bush on December 8, 2003, and was designed to expand access to health care by helping individuals save for future qualified medical and health expenses on a tax-free basis. An individual who is covered by a High Deductible Health Plan can make a tax deductible contribution and use it to pay for out-of-pocket medical expenses.